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Loan Repayment Program Participation

Home > About the Programs > Intramural LRPs > Loan Repayment Program Participation


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Loan Repayment Program Participation

Service Agreement and Progress Reviews

Initial contracts for the AIDS and CR-LRPs are executed to cover a consecutive two-year period. For the General LRP, initial contracts cover a consecutive three-year period. Participants agree to conduct qualified research as NIH employees for the entire two- or three-year period as required, while the NIH agrees to make loan repayments and tax liability reimbursements according to a LRP-determined repayment schedule.

LRP participants and their advisors/supervisors must Submit Form annual progress reports to the LRC. The LRC reviews the research accomplishments and plans of participants in consideration of continued LRP support.

Extending Participation

Participants may apply to continue their LRP participation if their total repayable debt has not been repaid during their initial two- or three-year contracts. Renewal contracts are issued for one-year periods and based upon the same criteria as the initial contract. Additionally, a demonstration of research accomplishments during the previous contract are required. Progress toward development as an independent basic science or clinical investigator is a major factor in renewal of LRP support. Participants must appear before the LRC in person, and present a 10-minute (maximum) oral progress review describing their research as follows: introduction, methods, results, and conclusions. Participants in certain NIH fellowship programs should focus on their training and development, and not research projects. LRP renewal participants should consult with their research mentors for specific guidance on the approach and content of their renewal presentation. Research mentors are strongly encouraged to attend the renewal meeting.

Loan Repayments

Each participant must have total eligible educational loans which exceed 20 percent of annual NIH base salary (“debt threshold”).

NIH salaries vary by position and grade. For participants appointed under the Commissioned Corps, NIH salary is comprised of base pay plus Basic Allowance for Subsistence (BAS) and Basic Allowance for Housing (BAH). Special and bonus pays, such as board certified, variable, and contract pays, are not included in the LRP salary calculation. For physicians appointed in the civil service who qualify for a Physicians Comparability Allowance (PCA), the amount of the allowance is not included in the salary calculation; however, receipt of loan repayments will reduce the PCA amount (see “Physicians Comparability Allowance (PCA) Recipients”.)

NIH will repay the remaining educational debt (“repayable debt”) as follows:
  • At the rate of 25% of the repayable debt for each year of qualified service, for those who are on a two-year or three-year contract, up to a $35,000 maximum per year;
  • For the first, second and third year of qualified service, otherwise qualified applicants for the General Research LRP, who are participating in ACGME accredited clinical training programs, payment of repayable debt will be no more than $17,000 per year.
  • One-year continuation renewal contracts, beyond the second year (or third year, for contracts under the General Research LRP), may be entered into if the total repayable debt has not been repaid during the initial 2- or 3-year contract;
  • If the applicant's contract is renewed, the NIH will repay at the rate of 50% of the remaining repayable debt up to a $35,000 maximum; or 100% of the repayable debt if it is $10,000 or less.
For more information on repayable debt, click here.

Payments are to be made on a delayed quarterly schedule after completion of qualified research, unless otherwise agreed to by the Secretary and the participant. After a loan repayment is sent to a lender, a subsequent repayment is released contingent upon lender confirmation of the prior payment's receipt and the account balance. Participants are responsible for obtaining verification from their lenders of payment crediting and account balances. Accounts are monitored to ensure accurate crediting of LRP repayments and to avoid lost or misapplied payments.

Physicians Comparability Allowance (PCA) Recipients

Under 5 C.F.R. § 595.105(e), PCA recipients who are accepted into the LRP must have their PCAs reduced by the amount of loan repayments received under the LRP. For additional information, PCA recipients should consult with their IC personnel office or your ICD LRP Coordinator (see Appendix I.)

Physicians Special Pay (PSP) Allowance Recipients

Under 5 C.F.R. § 5379, PSP recipients who are accepted into the LRP may have the amount of PSP that normally would be paid offset by an amount up to the annual loan repayment. The offset, if any, is discretionary, and determined by the employee's IC. PSP is not part of basic pay for determination of the debt threshold. For additional information, PSP recipients should consult with their IC personnel office or your IC LRP Coordinator (see Appendix I.)

Tax Liabilities

Loan Repayment Program repayments made to lenders and tax payments made to the IRS represent taxable income for program participants. This income is reported annually to the IRS and the participant on Form W2. To fully or partially offset Federal tax liability increases, the LRP makes payments equal to 39 percent of the total loan repayment amount directly to the participant's IRS (Federal tax) account simultaneously with each loan payment. Participants are responsible for paying any taxes resulting from loan repayment that are not covered by the 39 percent payment -- including Federal, State and local taxes. Participants should seek professional financial guidance regarding the tax consequences resulting from the LRP repayments.

Example of Benefit Payments

Example No. 1

Dr. Smith has $51,900 of outstanding, qualified educational loans (principal and current interest) for which she has applied for repayment by the AIDS-LRP. She is selected to participate in the AIDS-LRP and is to be employed as a Clinical Fellow by the Commissioned Corps, USPHS. Her annual NIH base pay at the date of program eligibility is expected to be $25,000, but she also anticipates receiving $14,000 in subsistence, quarters, and variable housing allowances plus $5,000 in variable special pay.

Dr. Smith's debt threshold is $7,800, or 20 percent of her $39,000 NIH salary ($25,000 base pay plus $14,000 in allowances only). Thus, she qualifies for participation in the AIDS-LRP, since she has total debt exceeding her threshold amount.

Dr. Smith qualifies to receive $48,000 in repayments. For the initial two-year contract, the AIDS-LRP agrees to repay one-fourth of the repayable debt for each year of qualified service, or $12,000 per year for a total of $24,000 in her initial 2-year contract. She will have to apply for renewal contracts to receive additional payments toward the remaining repayable debt. If a renewal contract is awarded, Dr. Smith would receive payments at the rate of one-half of the remaining repayable debt for the renewal period or $12,000 in loan repayments.

In addition, Dr. Smith will receive tax reimbursements, equal to 39 percent of the loan repayments made to her lenders, to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are deposited with the Federal Reserve Bank for credit to her IRS tax account.

Example No. 2

Dr. Jackson has $95,000 of outstanding, qualified educational loans (principal and current interest) for which he has applied for repayment in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds. He is selected to participate in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds and is to be employed as a Clinical Fellow by the Clinical Center. His annual NIH salary at the date of program eligibility is expected to be $50,000.

Dr. Jackson's debt threshold is $10,000, or 20 percent of his $50,000 NIH salary. Thus, he qualifies for participation in the Clinical Research LRP for Individuals from Disadvantaged Backgrounds, since he has total debt exceeding his threshold amount.

Dr. Jackson qualifies to receive $90,000 in repayments. For the initial two-year contract, the Clinical Research LRP for Individuals from Disadvantaged Backgrounds agrees to repay one-fourth of the repayable debt for each year of qualified service, or $22,500 per year for a total of $45,000 in his initial 2-year contract. He will have to apply for a renewal contract to receive additional payments toward the remaining repayable debt. If a renewal contract is awarded, Dr. Jackson would receive payments at the rate of one-half of the remaining repayable debt for the renewal period or $22,500.

In addition, Dr. Jackson will receive tax reimbursements, equal to 39 percent of the loan repayments made to his lenders, to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are deposited with the Federal Reserve Bank for credit to his IRS tax account.

Example No. 3

Dr. Levi has $170,000 of outstanding, qualified educational loans (principal and current interest) for which she has applied for repayment in the General Research LRP. She is selected to participate in the General Research LRP and is to be employed as a Research Fellow by the NCI. Her annual NIH salary at the date of program eligibility is expected to be $75,000.

Dr. Levi's debt threshold is $15,000, or 20 percent of her $75,000 NIH salary. Thus, she qualifies for participation in the General Research LRP, since she has total debt exceeding her threshold amount.

Dr. Levi qualifies to receive $162,500 in repayments. For the initial three-year contract, the General Research LRP agrees to repay one-fourth of the repayable debt for each year of qualified service, up to a maximum of $35,000 per year, or a total of $105,000 during her 3-year contract. She will have to apply for a renewal contract to receive additional payments toward the remaining repayable debt. If a renewal contract is awarded, Dr. Levi would receive payments at the rate of one-half of the remaining repayable debt for the renewal period or $28,750.

In addition, Dr. Levi will receive tax reimbursements, equal to 39 percent of the loan repayments made to her lenders, to partially offset the increased Federal tax liability associated with loan repayments. These reimbursements are deposited with the Federal Reserve Bank for credit to her IRS tax account.



Date Last Updated: June 18, 2014


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