Financial Obligations

Your loan repayment awards are made in two annual installments deposited directly into your bank account. You will receive your first payment within 120 days from the date of your contract or your first day of full-time clinical practice. If 120 days have passed and you have not received payment, you will need to contact the LRP branch office.

Your second installment will be deposited when you begin the second year of your contract. However, this payment will not be processed until you submit verification of employment documentation showing that you are still engaged in full-time clinical practice in the health profession discipline and Indian health facility identified on your contract.

Please complete a Direct Deposit Sign-Up Form (Standard Form 1199A) and submit it to the LRP branch office for processing if you have not provided your bank account information or if you have changed banks since you signed your LRP contract.

Proof of Payment

It is your responsibility to submit an annual payment history from your lender to the LRP branch office as documentation that you are using all of your LRP funding to pay your approved loans.

Loans Prior to Service

Participants are responsible for making any required loan payments prior to receiving an LRP award. For example, if you are awarded an LRP contract in April but you do not begin full-time clinical practice until August, you must continue to make your regular loan payments until August.

Tax Liability

LRP payments are taxable income and are reported to the Internal Revenue Service. Participants are responsible for paying the balance of their federal tax liability (the LRP pays 24 percent), as well as any applicable state and local taxes. IHS will send you a Form W-2 Wage and Tax Statement each year reflecting the total amount of loan repayment funding you received and the amount of federal income and FICA tax the LRP withholds.

Delinquency on the Payment of any Federal Debt

Applicants who are delinquent on any federal debt must prove, through lender documentation, that they have negotiated a repayment schedule or that the debt has been paid in full.

Examples of federal debt include:

• Delinquent federal income taxes.
• Audit allowances.
• Federally guaranteed (or insured) loans.
• Federal-direct loans.
• Other miscellaneous federal administrative debts.