Stiffing the system.

• Author: Wright, Barbara
• Position: Going after bad health education loans

A successful Denver area dentist who owes the government $150,000 for his education has gone out of his way to avoid repaying his loans. He put his dental practice in his wife's name, according to court papers, and paid himself a salary of only $500 a month, which left him no money to repay his loan. Income tax returns for his practice from the past four years, however, show more than half a million dollars in receipts.

Stories of deadbeat docs driving around in their Lexuses are perhaps exaggerated, but the problem still exists: Taxpayers foot the bill for 8,000 health professionals who have defaulted on their federally guaranteed Health Education Assistance Loans (HEAL). Over the past four years, Congress has had to appropriate approximately $300 million to cover HEAL loans in default.

"It's outrageous that health professionals, who are among the highest earning professionals, do not honor their financial obligations, says Michael Heningburg of the U.S. Department of Health and Human Services. "I have yet to meet a citizen who says, 'I feel really good about having to pay for Dr. Jones' loan.'"

The HEAL program was created in 1979 as a loan of last resort for students studying medicine and other health professions including chiropractic, dentistry, optometry, osteopathy, pharmacy, podiatry, public health, veterinary medicine, health administration and clinical psychology. Since that time, more than 145,000 students have borrowed $3.7 billion to help pay for their education. The vast majority -- 95 percent -- have made good on the loans, but the 5 percent who are in default have left the taxpayer to foot a hefty bill.

Approximately half of all people who have defaulted on their loans live in six states: California, Florida, Georgia, Illinois, New York and Texas. Chiropractors, who make up 14 percent of HEAL borrowers, are responsible for 37 percent of all defaults, owing more than $135 million. Physicians, who make up S@ percent of the borrowers, account for $98 million, or 53 percent of the defaults, followed by dentists, who owe $95 million and account for 20 percent of the defaults.

The HEAL program, run by the U.S. Department of Health and Human Services, is not the only federal loan program suffering from the high costs of defaults. The National Health Service Corps (NHSC), which has placed more than 20,000 health professionals in underserved communities across the nation since its inception in 1970, has also been plagued by defaults.

The NHSC offers scholarships to medical students entering a primary care specialty, students in dental school or programs for nurse practitioners, nurse midwives and physician assistants. The individual must serve a year in a health professional shortage area, for each year of support with a minimum two-year obligation. Another NHSC program pays a set amount of education loan debt for the professional who has already completed his education and is willing to work in a designated shortage area for a minimum of two years. In both cases, the professional is paid a competitive wage in addition to the educational support.

In the past five years, 206 people have defaulted on their NHSC scholarship obligation. In the same five-year period, another 34 people in the loan repayment program failed to begin or complete their service and owed to the United States more than $1.3 million.

To curb the default rate, the NHSC imposes stiff penalties on scholarship recipients who do not fulfill their obligations, either because they enter an unapproved, non-primary care residency program, or fail to begin or complete their service obligations. In these...