SEC. 2212. PRIMARY CARE STUDENT LOAN FUNDS.

[a] Loan Provisions- Section- 722 [42 U.S.C. 292r] is amended by striking subsection [e] and inserting the following:

'[e] Rate of Interest- Such loans shall bear interest, on the unpaid balance of the loan, computed only for periods for which the loan is repayable, at the rate of 2 percentage points less than the applicable rate of interest described in section 427A[l][1] of the Higher Education Act of 1965 per year.'.

[b] Medical Schools and Primary Health Care- Subsection [a] of section 723 [42 U.S.C. 292s] is amended--

[1] in paragraph [1], by striking subparagraph [B] and inserting the following:

'[B] to practice in such care for 10 years [including residency training in primary health care] or through the date on which the loan is repaid in full, whichever occurs first.'; and

[2] by striking paragraph [3] and inserting the following:

'[3] NONCOMPLIANCE BY STUDENT- If an individual fails to comply with an agreement entered into pursuant to paragraph [1], such agreement shall provide that the total interest to be paid on the loan, over the course of the loan period, shall equal the total amount of interest that would have been incurred by the individual if, from the outset of the loan, the loan was repayable at the rate of interest described in section 427A[l][1] of the Higher Education Act of 1965 per year instead of the rate of interest described in section 722[e].'.

[c] Student Loan Guidelines-

[1] IN GENERAL- Section- 735 [42 U.S.C. 292y] is amended--

[A] by redesignating subsection [f] as subsection [g]; and

[B] by inserting after subsection [e] the following:

'[f] Determination of Financial Need- The Secretary--

'[1] may require, or authorize a school or other entity to require, the submission of financial information to determine the financial resources available to any individual seeking assistance under this subpart; and

'[2] shall take into account the extent to which such individual is financially independent in determining whether to require or authorize the submission of such information regarding such individual's family members.'.

[2] REVISED GUIDELINES- The Secretary of Health and Human Services shall--

[A] strike the second sentence of section 57.206[b] of title 42, Code of Federal Regulations; and

[B] make such other revisions to guidelines and regulations in effect as of the date of the enactment of this Act as may be necessary for consistency with the amendments made by paragraph [1].