Scholarships, Loans, and Loan Repayment for Rural Health Professions

Rural areas face a documented shortage of essential healthcare professionals, especially in primary care fields. The demand for healthcare professionals is only expected to grow due to the aging populace, population growth, and the rise of newly-insured individuals as a result of the Affordable Care Act, according to a 2013 federal report. The rising costs of education directly impact the ability of students to pursue a healthcare degree and compound the rural health workforce shortage. To help address this, many federal and state programs assist new healthcare professionals and students with the burden of cost.

Types of Health Education Financial Aid

Scholarships, loans, and loan forgiveness programs are all potential options for health professions students to finance their education. While scholarships offer money outright and loans supply funding that students will repay after completion of a degree program, loan forgiveness programs are a hybrid of the two.

Loan forgiveness programs provide loans to health professions students for education-related expenses. In exchange for forgiveness of the debts, students sign a service contract to practice at a facility located in a rural or underserved area upon completion of a degree.

Loan repayment programs are offered to healthcare professionals who have already completed their education. In exchange for money to reduce or eliminate educational debt, healthcare professionals must meet the conditions of the program, which typically include working in a facility located in a rural or underserved area.

Operating Successful Rural Health Education Financial Aid Programs:

Health education financial aid programs should be operated with the intent of attracting and supporting the kind of person who will thrive and remain in a rural community. Students with rural backgrounds and students who have experienced training in rural areas during their education are much more likely to seek out and practice in rural areas upon graduation, according to the American Academy of Family Physician’s 2002 position paper, Rural Practice, Keeping Physicians In.

This guide describes programs available for healthcare students who are from, or intend to practice in, rural areas of the United States. It also provides information and successful models for the development of scholarship, loan repayment, and loan forgiveness programs designed to attract health professionals to rural areas.

Frequently Asked Questions

Where can I find financial aid or loan repayment programs for rural health professionals?

RAC’s Funding and Opportunities section lists available financial aid and loan repayment programs for health professionals who want to work in rural areas. Each financial aid program found in the database includes a brief overview, a program contact, eligibility information, and application instructions.

What funding sources are available to establish or operate financial aid and loan repayment programs?

Funds to establish and operate financial aid and loan repayment programs come from a variety of different sources, with federal and state government agencies offering the most support.

The Health Resources and Services Administration (HRSA) Bureau of Health Workforce administers the State Loan Repayment Program (SLRP), which provides funds to states to operate loan repayment programs, and the National Health Service Corps, which provides both loan repayment and scholarships.

The HRSA Bureau of Health Workforce also offers funding programs to educational institutions that train healthcare students to enter rural areas. Many of these programs include stipends and financial aid components. See the RAC Funding and Opportunities section for a list of funding programs supported by the Bureau of Health Workforce.

Many states allocate funding within the state budget to support loan repayment, forgiveness, or scholarship programs. In some states, public and private foundations create strong partnerships with state governments and assist with the cost. Foundations also fund financial aid programs offered via nonprofit organizations, membership organizations, or educational institutions.

Do all states have loan repayment programs that will assist rural health professionals?

Most states offer some variation of a loan repayment, forgiveness, or other assistance program; however, some programs have been suspended due to budget constraints or other factors. Although some states have experienced cuts in this area, a findings brief from the North Carolina Rural Health Research & Policy Analysis Center shows that the number of loan repayment programs have increased each year, with 10 additional programs added between 2007 and 2010.

As of December 2014, 14 states did not have active grants for the HRSA State Loan Repayment program: Alabama, Arkansas, Connecticut, Florida, Indiana, Mississippi, New Hampshire, New Mexico, Oklahoma, Pennsylvania, South Carolina, South Dakota, Texas, and Utah. However, some of these states did offer loan repayment programs supported entirely through state funds, rather than federal funds.

Due to budget fluctuations, states can vary over time in their support of loan repayment and forgiveness programs. Programs can also be referred to as “incentive” or “scholarship” programs, yet be functioning as loan repayment or forgiveness. While loan repayment and forgiveness programs are administered by different agencies and entities within states, your state Primary Care Office can direct you to information about programs in your state.

What is the National Health Service Corps (NHSC) and how does it affect rural healthcare?

NHSC Partner Web BadgeThe National Health Service Corps (NHSC) is a federal program that helps to bring healthcare to those who need it most. Since 1972, the NHSC has worked to connect primary care providers to healthcare facilities located in Health Professional Shortage Areas (HPSAs) of the United States.

The NHSC offers primary care providers financial support in the form of loan repayment assistance and scholarships. More than 47,000 primary care medical, dental, mental, and behavioral health professionals have served in the National Health Service Corps since its inception. Today, there over 9,200 active participants in the NHSC, providing culturally competent care to 9.7 million patients at 4,900 urban and rural facilities located in the U.S. and its territories. Additionally, 44% of NHSC providers are practicing at rural facilities.

NHSC in Rural Areas Map

According to the 2006 Robert Graham Center study, Access, Health, and Wealth: The Impact of the National Health Service Corps in Rural America, 1970-2000, which examined the NHSC’s impact on rural populations in its first 30 years, the NHSC placed 13,915 health professionals in 1,911 rural counties.

NHSC providers have an effect on rural health status, mortality rates, and the overall economic stability of rural communities. The same 2006 report found that people residing in rural HPSA counties staffed with NHSC physicians reported better health status and slightly lower mortality rates, when compared with rural populations living in counties without NHSC physicians. The study also indicated that each NHSC healthcare professional produced additional office jobs, non-healthcare jobs, and generated tax revenue, contributing to a healthier economy.

The NHSC offers three financial aid programs, all of which seek applicants who have an interest in providing healthcare to rural and underserved populations:

  • National Health Service Corps Scholarship Program: Offers scholarships to primary care health professions students who commit to serving in a rural or urban HPSA upon completion of a degree. Medical, dental, nurse practitioner, certified nurse midwife, and physician assistant students are eligible.
  • Students to Service Loan Repayment Program: Through this program, students in their final year of medical school can receive financial assistance to pay back their student loans. Students must commit to providing primary care services in selected rural or urban HPSAs for three years.
  • National Health Service Corps Loan Repayment Program: This program provides financial assistance to licensed providers in certain primary care professions who already serve or are applying for work in approved NHSC sites. Medical, dental, and mental/behavioral health providers are eligible.

What are some of the major loan repayment programs that can be used by rural healthcare professionals?

There are several loan repayment programs that could be useful to rural health professionals, many of which are offered by state or federal agencies. Besides the National Health Service Corps (see What is the National Health Service Corps and how does it affect rural healthcare?), other programs include:

  • State Loan Repayment Programs (SLRP): These programs are funded in part by the Health Resources and Services Administration via the National Health Service Corps and also require participating states to match federal funds. Through these programs, states can receive federal grants that assist them in developing and maintaining loan repayment assistance for primary care providers who work in Health Professional Shortage Areas (HPSAs) in their state. States are required to match the funds provided by the federal government. Healthcare providers interested in participating should contact their state program to apply. HRSA provides a list of the state SLRP contacts for currently active SLRP grants.
  • NURSE Corps Loan Repayment Program: This program is administered by HRSA and provides loan repayment assistance for nurses and nurse faculty to be used for repaying student loan obligations. Nurses who apply must commit to serving in a Critical Shortage Facility located in a primary care or mental health HPSA and nurse faculty must commit to work full-time at an accredited school of nursing.
  • Indian Health Service Loan Repayment Program: This program provides loan repayment for a wide range of health professionals. Healthcare providers who are offered loan repayment through this program sign a two-year contractual agreement to serve for two years, full-time at an Indian Health Service Facility or approved Indian Health Program.

For a listing of other loan repayment programs, see RAC’s Funding and Opportunities by Type: Loan Repayment Programs.

What are some of the major scholarship programs that can be used by rural healthcare professionals?

Scholarships and loan forgiveness programs can both be used by students who are currently working their way toward a health professions degree. Besides the National Health Service Corps (see What is the National Health Service Corps and how does it affect rural healthcare?), other scholarship/loan forgiveness programs include:

  • Nurse CORPS Scholarship Program: This program is administered by HRSA and provides scholarships to students accepted or enrolled in a diploma, associate, baccalaureate, or graduate nursing program. Scholarship recipients must sign a two-year contractual agreement to serve in a Health Professional Shortage Area upon graduation.
  • Foundation for Rural Service College Scholarship Program: This program offers scholarships to students from rural America to aid with the cost of their first year of college.
  • Indian Health Service Scholarships: These scholarships are offered to American Indian and Alaska Native (AI/AN) students. For each year of scholarship awarded, recipients must agree to practice for one year in a medically underserved area.

For a listing of other scholarship programs see RAC’s Funding and Opportunities by Type: Scholarships.

What do we know about the effectiveness of financial aid and loan repayment programs in attracting and retaining healthcare professionals in rural areas?

According to a 2012 National Health Service Corps report, 82% of participating clinicians remained at their practice obligation site for up to one year after their obligation, and 55% remained for 10 or more years. Notably, the NHSC reports that long-term retention rates were higher in rural communities and that the program’s retention rates have improved since 2000.

National Health Service Corps Retention Rates
  2000 2012 Retention
Short term (up to 1 year) 64% 82% 28%
Long term (over 10 years) 52% 55% 6%
Long-term retention by profession
Physicians   60%  
Nurse practitioners   59%  
Physician Assistants   42%  
Oral health providers   48.1%  
Behavioral health providers   61.1%  

State governments have also examined the recruitment and retention rates of state-level loan repayment, forgiveness, and scholarship programs.

A 2013 report commissioned by the Delaware Division of Public Health examined the effectiveness of the National Health Service Corps Loan Repayment and Scholarship Program and the Delaware State Loan Repayment Program in recruiting and retaining healthcare professionals. The report found that the availability of financial assistance to pay off debt was cited as one of the most important factors to recruiting healthcare professionals to rural and underserved areas of the state. The report also examined the likelihood that healthcare professionals would remain at their current practice site upon completion of the service obligation. 81% reported that they were likely to remain for up to three years. That percentage gradually decreases over time, but 62% of healthcare professionals reported that they were likely to remain after the 10-year mark.

This trend in provider retention after the completion of a service obligation prevails throughout the United States. An update on the New Jersey Primary Care Practitioner Loan Redemption Program reported that 85% of participants continued to provide care at their service obligation site after they had completed their requirement. According to a report of loan repayment programs in Colorado, 64% of program participants remained in a rural community.

What funding programs are available to colleges and universities to assist rural healthcare professions students with educational costs?

The growing need for healthcare professionals in rural areas has prompted a number of funding opportunities to support educational institutions that will train students for specific healthcare careers in rural areas. Many of these funding programs include dollars that can be used to support student tuition, living expenses, books, and educational materials.

The following funding programs include components that allow for financial assistance to defray the cost of educational expenses:

Indian Health Service Programs

HRSA Bureau of Health Workforce Programs