(a) Each recipient of a loan under this division shall enter into an agreement with the Board of Medical Scholarship Awards whereby the recipient agrees to practice in an area as defined in Section 16-47-126. In the event of a default or other breach of contract by the recipient of loans provided under this division, or other termination of contract prior to the completion of the period of medical education and training, the individual shall be liable for immediate repayment of the total principal loan amount plus interest at the rate of eight percent accruing from the date of default or termination and an additional penalty as specified:

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Terms Used In Alabama Code 16-47-127

  • Contract: A legal written agreement that becomes binding when signed.
  • Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • year: means a calendar year; but, whenever the word "year" is used in reference to any appropriations for the payment of money out of the treasury, it shall mean fiscal year. See Alabama Code 1-1-1
(1) For default or termination of a loan for one scholastic year, a penalty equal to 20 percent of the total principal amount of the loan.
(2) For default or termination of a loan for two scholastic years, a penalty equal to 30 percent of the total principal amount of the loan.
(3) For default or termination of a loan for three scholastic years, a penalty equal to 40 percent of the total principal amount of the loan.
(4) For default or termination of a loan for four scholastic years, a penalty equal to 50 percent of the total principal amount of the loan.
(5) If default or termination occurs after the fourth year but prior to the completion of a residency training program accredited by the Accreditation Council on Graduate Medical Education in a generalists specialty as determined by the board, a penalty equal to 100 percent of the total principal amount of the loan.
(6) If default or termination occurs after completion of a residency training program but prior to completion of the repayment obligation as set forth in Section 16-47-126, a penalty equal to 200 percent of the total principal amount of the loan.
(b) The Attorney General or any district attorney, upon request of the Board of Medical Scholarship Awards, shall institute proceedings in the name of the state for the purpose of recovering any amount due the state under this division. Any sums recovered under Section 16-47-125 or this section from loan recipients or paid by the recipients to the board shall be retained by the Board of Medical Scholarship Awards for funding of future scholarships.
(c) In the event of death of a recipient or upon the recipients’ becoming permanently disabled to an extent that he or she is no longer able to engage in the practice of medicine, repayment of the loan may be excused by the board.
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