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Your Health Career Starts Here - IHS Scholarship Program

Recipient Responsibilities: Breach of Contract and Default

Failure to Complete Academic Training

You will be liable to the US government for repayment of all Health Professions scholarship financial aid paid to you and to your school on your behalf if you are dismissed from school for academic or disciplinary reasons or voluntarily terminate academic training before graduation from the health professions program for which your scholarship was awarded. Payment must be made within three years from the date of breach or such longer period as specified by the Secretary, HHS.

Failure to Begin or Complete the Service Obligation or Meet the Terms and Conditions of Deferment

You will be found in breach of your contract and placed in default by failing to begin or complete your service obligation for any reason other than failure to complete academic training, or by failing to comply with the terms and conditions of your deferment. In these cases, you are liable to repay three times the amount of all scholarship funding and benefits paid to you and to your school on your behalf, plus interest, as determined by the formula A=3Z(t-s/t), in which:

  • "A" is the amount the United States is entitled to recover
  • "z" is the sum of the amounts paid to or on behalf of the applicant and the interest on such amounts that would be payable, if at the time the amounts were paid, they were loans bearing interest at the maximum legal prevailing rate as determined by the Treasurer of the United States
  • "t" is the total number of months in the applicant's period of obligated service
  • "s" is the number of months of the period of obligated service served by the participant

The amount the United States is entitled to recover shall be paid within one year of the date on which the applicant failed to begin or complete the period of obligated service, or failed to meet the terms and conditions of deferment or a longer period beginning on a date specified by the Secretary, HHS.

Liability — Sample Calculation

A scholarship recipient received four years of support for medical school with tuition, fees and books at $30,000 per year and a stipend of $18,000 per year. The recipient completed a four-year Internal Medicine residency, but failed to begin fulfilling his service obligation.

  • A = 3Z(t-s/t)
  • Z = (4 x 48,000); t = 48; s = 0
  • A = 3(4 x 48,000)(48-0/48)
  • A = 3(192,000)(1)
  • Amount Owed = $576,000 (plus 10% interest per year*)

* Interest rate used is the maximum prevailing interest rate as determined by the US Treasurer. This example uses 10%. Interest is compounded based on federal regulations.

Download the IHS Scholarship Program Student Handbook [PDF - 4,090KB] for more detailed information on IHS Scholarship Program policies and procedures regarding breach of contract and default.