California Business and Professions Code
For the purposes of this article: (a) "Division" means the Division of Licensing.
(b) "The practice of medicine" means all activities authorized by a physician's and surgeon's certificate, except activities performed in the course of employment as a public health officer, as a medical school faculty member where teaching time is more than 25 percent of the working day, or as a resident or first-year postgraduate trainee.
(c) "Area deficient in physician services" means:
(1) Any county in the state in which the number of physicians, not employed by the federal government, engaged in the practice of medicine is found by the division to be in a ratio of less than 100 for every 100,000 county residents, and which the division finds to be in need of physician services.
(2) Any city or area within a county or city in the state which the division finds to be lacking in adequate physician services.
The interest to be paid shall be two percentage points less than the authorized interest rate on California Water Bonds at the time of the loan.
The loan shall be repayable to the Contingent Fund of the Medical Board of California in equal or graduated periodic installments, according to a schedule agreed upon by the division and the borrower, over a 10-year period which shall begin three years after the student ceases to pursue a full-time course of professional instruction, excluding from such 10-year period all periods, up to three years, of (a) active duty performed by the borrower as a member of the United States armed forces, or (b) nonmilitary public services performed by the borrower which the division finds to be in the public interest.
Where any borrower who has obtained one or more loans under this article engages in the practice of medicine in an area deficient in physician services, 25 percent of the total of such loans plus accrued interest on such amount which are unpaid as of the date that such practice begins shall be cancelled thereafter for each year of such practice.
The liability to repay the unpaid balance of the loan and accrued interest thereon shall be cancelled upon the death of the borrower, or if the division determines that he or she has become permanently disabled and is unable to engage in substantial gainful activity.
The division may assess a charge with respect to a loan made under this article for failure of the borrower to pay all or part of an installment when due and, in the case of a borrower who is entitled to a deferment under Section 2163 or cancellation of part or all of the loan under Section 2164 or 2166, for any failure to file timely and satisfactory evidence of such entitlement. The amount of any such charge may not exceed two dollars ($2) for each month by which such installment or evidence is late, except that there shall be no charge for the first month.