Nursing Scholarship Program

Applicant Information Bulletin: School Year 2009-2010
Defaulting on the Scholarship Commitment: Breach of Contract

If a participant:  

1. fails to maintain an acceptable level of academic standing in the nursing program;
2. is dismissed from the nursing program for disciplinary reasons;  
3. voluntarily terminates the nursing program; or
4. fails to provide health services in an NSP service site for the applicable period of time as specified in his or her NSP contract; then the participant will be liable to the Federal Government to:
5. repay all funds paid to the participant, or on the participant’s behalf, under the NSP and;
6. pay interest on such amounts at the maximum legal prevailing rate from the date of default. 

The amount owed, including interest, must be paid within 3 years of the date of the participant's default.

Delinquent Debt

Failure to repay the NSP debt within 3 years has the following consequences:

1. The debt will be reported to credit reporting agencies. — During the three-year repayment period, the debt will be reported to credit reporting agencies as “current.”  If the debt becomes past due, it will be reported as “delinquent.”
2. The debt will be referred to a debt collection agency and the Department of Justice. — Any NSP debt past due for 45 days may be referred to a debt collection agency.  If the debt collection agency is unsuccessful in receiving payment in full, the debt may be referred to the U.S. Department of Justice for enforced collection.
3. Administrative offset — Federal and/or State payments due to the participant (e.g., an IRS income tax refund) may be offset by the U.S. Department of Treasury to repay a delinquent NSP debt.  Also, recovery through Administrative Wage Garnishment may be enforced to repay a delinquent NSP debt.
4. Medicare/Medicaid Exclusion. — Delinquent defaulters who are unwilling to enter into, or stay in compliance with, an agreement to repay their scholarship debt can be excluded from participation in Medicare, Medicaid and other Federal health care programs.  See section 1128 of the Social Security Act.

Next Section > Waiver, Suspension or Cancellation of the Service Obligation