A725

An Act concerning loan redemption for certain veterinarians and supplementing chapter 71C of Title 18A of the New Jersey Statutes.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. There is established a Veterinary Medicine Loan Redemption Program within the Higher Education Student Assistance Authority to provide for the redemption of eligible qualifying loan expenses of program participants who work in the State for five years of service at an approved site in the State.

2. As used in this act:

"Approved site" means a site located within a State designated veterinary underserved area or within five miles of a State designated veterinary underserved area.

"Authority" means the Higher Education Student Assistance Authority.

"Eligible qualifying loan expenses" means the cumulative outstanding balance of student education loans, borrowed from a financial institution or a governmental or nonprofit agency that engages in student education loan lending, covering the cost of attendance in an undergraduate degree program of an institution of higher education and a graduate degree program of an accredited school of veterinary medicine, including the following: tuition; educational expenses and fees; and room and board. Interest paid or due on qualifying loans that an applicant has taken out for use in paying the cost of attendance in an undergraduate degree program of an institution of higher education and a graduate degree program of an accredited school of veterinary medicine shall be considered eligible for reimbursement under the program.

"Executive director" means the executive director of the Higher Education Student Assistance Authority.

“Full-time” means a minimum of 40 hours per week for a minimum of 45 weeks per year.

"Large animal veterinary care" means a type of specialty veterinary care that focuses on the health and productivity of large animals and farm animals, exclusive of dogs and cats and inclusive of cows, horses, goats, pigs, chickens, sheep, and other livestock.

"Program" means the Veterinary Medicine Loan Redemption Program established pursuant to this act.

"Program participant" means a veterinarian who contracts with the authority to engage in the practice of veterinary medicine at an approved site in exchange for the redemption of eligible qualifying loan expenses provided under the program.

"State designated veterinary underserved area" means a geographic area designated in this State by the Secretary of Agriculture, in consultation with the New Jersey Horse Council, the New Jersey Association of Equine Practitioners, the New Jersey Veterinary Medical Association, and the New Jersey Farm Bureau, on the basis of a large animal veterinarian shortage affecting the area. The secretary shall annually establish a list of State designated veterinary underserved areas and transmit the list of State designated veterinary underserved areas to the authority by January 1 of each year, except that the first list shall be transmitted not later than 90 days after the effective date of this act.

"Total and permanent disability" means a physical or mental disability that is expected to continue indefinitely or result in death and renders a participant in the program unable to perform that person's service obligation, as determined by the executive director or the executive director’s designee.

3. a. To be eligible to participate in the program, a program participant shall be a:

(1) resident of the State; and

(2) veterinarian licensed, or eligible to be licensed, to practice in this State as a veterinarian.

b. Nothing in this section shall prohibit a program participant from initiating the program’s application process and identifying and committing to employment at an approved site prior to the establishment of State residency or being issued a State veterinary license. Nothing in this section shall prohibit a program participant, who otherwise meets the eligibility requirements enumerated in subsection a. of this section, from initiating the program’s application process if the applicant sufficiently demonstrates that the applicant intends to establish a veterinary practice that will qualify as an approved site.

4. a. In administering the program, the authority or its designated agent shall contract only with a veterinarian.

b. The contract shall require a program participant to serve full-time for at least a five-year period at an approved site in the service of a veterinary medicine practice, of which at least one-third of the overall activity at that practice is dedicated to the protection and enhancement of large animal veterinary care. The contract shall also require that, in order to receive redemption of a loan under the loan program, a program participant dedicate no less than 75 percent of the participant’s work at the approved site to large animal veterinary care.

c. The contract shall specify the applicant's dates of required service, the total amount of eligible qualifying loan expenses to be redeemed by the State in return for service, and the schedule of payments for the term of the contract.

5. a. Maximum redemption of a loan under the loan redemption program shall be 100 percent of the eligible qualifying loan expenses for full-time service for five years of service, except that the amount of qualifying loans which may be redeemed for a participant under the program shall not exceed $30,000 in any year.

b. No amount of loan redemption shall be provided for service that is less than full-time and for service in which less than 75 percent of the participant’s work at an approved site is dedicated to large animal veterinary care. No amount of eligible qualifying loan expenses shall be redeemed for services performed for less than a full year.

c. The loan redemption shall be reimbursed as follows:

(1) first year of service, 12 percent of principal and interest;

(2) second year of service, 20 percent of principal and interest;

(3) third year of service, 20 percent of principal and interest;

(4) fourth year of service, 24 percent of principal and interest; and

(5) fifth year of service, 24 percent of principal and interest.

6. The executive director or the executive director’s designee, in consultation with the Secretary of Agriculture, shall match program participants to State designated veterinary underserved areas. Nothing in this section shall prohibit a program applicant or participant from identifying an approved site for consideration and approval of the program.

7. The executive director or the executive director’s designee shall select the program participants from among those applicants who meet the eligibility criteria of the program, subject to available funds and available approved sites. The executive director or the executive director’s designee shall accord priority to applicants in the following manner:

a. first, to any applicant who is willing to fill openings at an approved site with the most significant veterinary medicine shortages; and

b. second, to any applicant who graduated from a high school or institution of higher education located in New Jersey.

In the event that there are more applicants who have the same priority than there are program positions, the executive director or the executive director’s designee shall select program participants by means of a lottery or other form of random selection.

8. a. A program participant, as a condition of participation, shall be required to adhere to performance standards established by the executive director or the executive director’s designee.

b. The standards shall include, but not be limited to, requirements that a participant:

(1) maintain residency in the State;

(2) maintain a license to practice veterinary medicine in the State;

(3) remain current with payments on student loans;

(4) enter into a mutually acceptable contract with an approved site;

(5) maintain satisfactory performance of services rendered at an approved site; and

(6) report to the authority or its designee, on a form and in a manner prescribed by the authority or its designee, on the program participant's performance of services rendered at an approved site prior to repayment of the annual amount eligible for redemption.

9. A program participant who has previously entered into a contract with the authority may nullify the agreement by notifying the authority in writing and reassuming full responsibility for the remaining outstanding balance of the loan debt. In no event shall service at an approved site for less than the full calendar year of each period of service entitle the program participant to any benefits under the program. A program participant seeking to nullify the contract before completing the fifth full year of service shall be required to pay 50 percent of the redeemed portion of indebtedness in not more than one year following nullification of the agreement.

10. In the case of a program participant's death or total and permanent disability, the authority or its designee shall nullify the service obligation of the program participant. The nullification shall terminate the authority's obligations under the loan redemption contract. In the event of a program participant's death or total and permanent disability, the authority shall not require repayment of the prior redeemed portion of indebtedness.

11. A person who knowingly or willfully furnishes any false or misleading information for the purpose of receiving loan redemption benefits under the program is guilty of a crime of the fourth degree.

12. a. The executive director or the executive director’s designee is authorized to terminate a program participant's service in the program in the case of:

(1) the program participant's conviction of a crime or an act of gross negligence in the performance of service obligations;

(2) suspension or revocation of the program participant's license or certification to practice; or

(3) the program participant's breach of the performance standards established pursuant to section 8 of this act.

b. A program participant who fails to repay an amount due the authority under the program may be subject to actions initiated by the authority or its designee, which may include, but are not limited to, recovery of the amount due by an action brought in a court of competent jurisdiction or through the offset of State tax refunds or rebates, making this information available to credit reporting agencies, and exclusion from eligibility for any student assistance benefits administered by the authority, as well as action by the federal government, to the extent that any loan redemption benefits are federally funded, to recover any amount due it as permitted by federal law. In any action brought by the authority or its designee in a court of competent jurisdiction pursuant to this subsection, the program participant shall be liable for: the debt incurred, interest on the debt at the maximum legal prevailing rate as determined by the United States Treasurer, and the administrative and court costs associated with collection of the debt.

13. A veterinarian who is participating in the federally administered Veterinary Medicine Loan Repayment Program (7 U.S.C. s.3151a) shall not be eligible to participate simultaneously in the program established under this act.

14. a. There is annually appropriated from the General Fund to the Higher Education Student Assistance Authority the sum of $500,000 to effectuate the purposes of this act.

b. The Higher Education Student Assistance Authority shall accept and use exclusively for the program any donation of monies from private or nonprofit organizations.

15. This act shall take effect immediately and shall first apply to the first full State fiscal year next following the date of enactment, except that the Higher Education Student Assistance Authority and the Secretary of Agriculture may take such anticipatory administrative action in advance as shall be necessary for the implementation of the act.

STATEMENT

This bill establishes a Veterinary Medicine Loan Redemption Program to address the current large animal veterinarian shortage in this State. The program will be administered by the Higher Education Student Assistance Authority (HESAA).

Specifically, the bill provides for redemption of eligible qualifying loan expenses for veterinarians who work for no less than five years at an approved site. An approved site is a site located within a State designated veterinary underserved area or within five miles of a State designated veterinary underserved area. The bill defines a State designated veterinary underserved area as a geographic area designated in this State by the Secretary of Agriculture, in consultation with the New Jersey Horse Council, the New Jersey Association of Equine Practitioners, the New Jersey Veterinary Medical Association, and the New Jersey Farm Bureau, on the basis of a large animal veterinarian shortage affecting the area. The secretary is required to annually establish a list of State designated veterinary underserved areas and transmit that list to HESAA.

Program participants are required to be State residents and be a veterinarian licensed, or eligible to be licensed, to practice in this State, agree to practice at an approved site, and agree that the practice is full-time and that at least 75 percent of the participant’s work is dedicated to large animal veterinary care. In return for this commitment, the program participant’s eligible qualifying loan expenses will be reimbursed. Maximum loan redemption under the bill will equal 100 percent of the eligible qualifying loan expenses for full-time service in return for five years of service, except that the amount of qualifying loans which may be redeemed for a participant under the program is not to exceed $30,000 in any year. Under the bill, no amount of loan redemption is to be provided for service performed by a program participant that is less than full-time and for service in which less than 75 percent of the participant’s work at an approved site is dedicated to large animal veterinary care. No amount of eligible qualifying loan expenses is to be redeemed for services performed for less than a full year.

The bill provides that in the case of a program participant's death or total and permanent disability, HESAA will nullify the service obligation of the program participant. The nullification will also terminate HESAA's obligations under the loan redemption contract. In the event of a program participant's death or total and permanent disability, HESAA will not require repayment of the prior redeemed portion of indebtedness.

The bill provides that $500,000 will be annually appropriated from the General Fund to HESAA for the Veterinary Medicine Loan Redemption Program.

Since New Jersey currently does not have its own veterinary medicine school, the provisions of this bill are intended to establish a cost-effective path to addressing the large animal veterinarian shortage by incentivizing veterinary school graduates to reside in the State and practice in areas of the State experiencing large animal veterinarian shortages.

From 1990 to 2007, the State provided for a “contract” program with veterinary schools in other states to “buy” seats reserved exclusively for New Jersey students. This program allowed New Jersey residents vying for seats at out-of-State veterinary schools to only compete against each other for those seats, not the entire population of applicants at large. The program also provided funding that permitted those students to attend the out-of-State veterinary schools at in-State tuition rates. However, this program resulted in residents leaving the State for veterinary school, with no promise that they would return to practice in New Jersey.

Several other states have implemented veterinary loan redemption programs similar to the program established by this bill, including Arkansas, Georgia, Kansas, Minnesota, Missouri, Nebraska, Ohio, Texas, and Wyoming. The program established by this bill will incentivize residents of this State, who attend out-of-State veterinary schools, to return to New Jersey to perform services in a veterinary practice that is dedicated to large animal veterinary care, in exchange for a redemption of their veterinary school loans over a relatively short period of time. This program will provide enormous benefits for large animal owners living in areas of this State with a shortage of adequate veterinary medicine services. Additionally, this program will not penalize program participants with respect to tax liability. Under current federal and State law, amounts of student loan redemption, loan forgiveness, or loan cancellation are not considered income for purposes of taxation.