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Is Loan Repayment an Effective Recruitment and Retention Strategy for Healthcare Professionals?


Loan repayment programs (LRPs) are offered to help employers recruit and retain healthcare professionals, which increases healthcare access and improves the health of residents in those areas.



There are many different types of providers that are targeted for loan repayment programs. The most common types are primary care medical, dental and mental/behavioral healthcare providers.


All government-funded healthcare LRPs require participants to work in a high-need, underserved area or facility (Health Professional Shortage Area) in exchange for loan repayment. Most service obligations are two to three years in length. The typical amount of loan repayment that participants receive is $50,000 for a two-year service obligation. For some LRPs, participants can receive up to $300,000 in loan repayment by completing 10 years of service, but they must reapply for year-long service contracts every year after their initial two-year obligations have been completed.


Loan repayment programs can be funded with federal dollars, state dollars, and employer contributions. The National Health Service Corps Loan Repayment Program (NHSC LRP) is fully-funded by federal dollars. An individual state’s program, for example, the Michigan State Loan Repayment Program (MSLRP), funds loan repayment agreements through a combination of federal dollars from the Health Resources and Services Administration (HRSA), state dollars and employer contributions. Some employers offer loan repayment programs directly through their organizations in an attempt to recruit providers.



There are benefits to expanding loan repayment programs. First, the expansion of loan repayment programs helps to more equally distribute healthcare providers in rural areas. According to the 2020 Michigan Primary Care Needs Assessment (PCNA), over 2.8 million rural residents were underserved in primary care, over 1.4 million rural residents were underserved in dental healthcare, and over 4.2 million rural residents were underserved in mental healthcare (MDHHS Policy and Planning Administration, 2022). Tom Morris, the Associate Administrator for Rural Health at HRSA noted the importance of loan repayment as a recruitment and retention tool, expressing that it “has been a lifeline, I think, for rural communities over the years” (Rural Health Information Hub, 2022). This is particularly true for the MSLRP. Between FY 2020 - FY 2022, an average of 72% of participants worked at rural practice sites (MDHHS, 2023).

The expansion of loan repayment programs does not only help rural areas. According to HRSA, a HPSA “is a geographic area, population group, or health care facility that has been designated by the Health Resources and Services Administration (HRSA) as having a shortage of health professionals”. Loan repayment programs are significantly beneficial for increasing the number of healthcare providers in low-income, non-rural areas. Detroit and other parts of Wayne County, Pontiac and Saginaw have double-digit HPSA scores in at least one of the following: primary care, dental health and mental health. For instance, HRSA estimates that the Northwest Detroit Service Area would need at least 44 full-time primary care practitioners to achieve the population to practitioner target ratio (HRSA, n.d). Although a majority of the MSLRP participants served at rural practice sites over the last 3 fiscal years, a majority of the healthcare providers participating in the federal NHSC LRP served in non-rural areas in Michigan during the same period of time (HRSA, 2022).


There is evidence that loan repayment programs are effective at retaining participants in the long-term. According to HRSA, 86% of National Health Service Corps participants who completed their service commitments between 2012 and 2020 “are either still in a HPSA or have remained in the same community where they served even if it no longer qualifies as a HPSA” (HRSA, 2021, p. 14). Furthermore, according to a retention study conducted by MDHHS in November 2022, a majority of providers that participated in the Michigan State Loan Repayment Program during FY 2018 and FY 2019 and completed their service obligations were still working at their MSLRP-approved practice sites (2020-2022 Report).



There is a question if loan repayment programs are effective in recruiting healthcare professionals to practice in high-need, underserved communities. Do loan repayment programs really recruit new people who might not have otherwise wanted to work in a rural or underserved community? Or, are they simply supporting people who were planning on working in those areas anyway?

An article called “An Evaluation of the Michigan State Loan Repayment Program” surveyed a group of MSLRP participants between 2014 and 2016 during their service commitments. Participants indicated that their main reasons for being involved in the MSLRP were for the financial assistance (95.2%) and, close behind, their desire to provide care to underserved populations (90.5%). Furthermore, a majority of the participants responded “that they would have worked in the same practice (61.9%) if they had not participated in MSLRP” (Tsilimingras et al., 2020).

According to survey data from NHSC on clinicians who had completed their service obligations between 2015 and 2016, the same motivations for participation in the MSLRP were observed. About 80% of clinicians self-reported that they participated in the NHSC LRP for the loan repayment assistance and a similar percentage said they wanted to help the underserved, but most indicated both reasons (Pathman et al., 2019).

It is possible that loan repayment programs make it possible for clinicians to practice in an underserved area earlier in their careers if a large portion of their educational loans are paid off. But, it is unclear if loan repayment encourages people to work in HPSAs if they don’t already have at least some interest in serving in those areas and facilities.


Although the NHSC LRP and the MSLRP both offer loan repayment of up to $300,000, there are some healthcare providers, typically physicians and dentists, who have educational debt that exceeds $300,000. For instance, Michigan Department of Health and Human Services reported that in FY 2022, the average educational debt for primary providers receiving awards “was $281,533 with a range of $58,690 to $700,098” (MDHHS, 2023, p. 11). As the average educational debt for participating physicians and dentists continues to rise each year (MDHHS, 2023), it is possible that more providers will apply for loan repayment, such that receiving initial and continuation contracts would become more competitive, resulting in a lower percentage of applicants accepted.

Further, even if they receive the full $300,000 in loan repayment, their remaining medical education debt may be too high for them to continue working at HPSAs after their service obligation is complete. They may decide to go into private practice, where they can receive higher pay. In addition, “students with higher levels of debt are more likely to enter private practice” (Toretsky et al., 2019, p. 10) at the outset.


The use of loan repayment programs is an important component of the broader recruitment and retention strategy of healthcare providers in rural and/or underserved areas but it should be used in addition to other recruitment and retention tools. Recruitment activities need to be implemented throughout healthcare students’ educational journey, beginning prior to college and during their training. Concerted efforts must be made to expose healthcare students to working in rural and/or underserved areas before they earn their degrees and have decided where they want to practice. Furthermore, efforts should be made to help individuals reduce their educational costs so their debt isn’t too high for them to consider working with underserved patients.


Health Resources and Services Administration. (n.d.) HPSA Find [Interactive Map]. Retrieved August 11, 2023, from

Health Resources and Services Administration. (2021). Report to Congress: National Health Services Corps for the year 2021.

Health Resources and Services Administration. (2022, September 30). BHW Annual Field Strength Explorer [Interactive Dashboard].

Michigan Department of Health and Human Services. (2023, July 1). Michigan Essential Health Provider Recruitment Strategy: FY 2020 - 2022 Report.

Pathman, D. E., Konrad, T. R., Sewell, R. G., Fannell, J., & Rauner, T. (2019). Satisfaction of the primary care, mental health, and dental health clinicians of the National Health Service Corps Loan Repayment Program. Journal of Health Care for the Poor and Underserved, 30(3), 1197-1211.

Rural Health Information Hub. (2022, January 13). Expanded eligibility allows more rural clinicians to qualify for loan repayment [Webinar].

Schlak, A. E., Poghosyan, L., Liu, J., Kueakomoldej, S., Bilazarian, A., Rosa, W. E., & Martsolf, G. (2022). The association between Health Professional Shortage Area (HPSA) status, work environment, and nurse practitioner burnout and job satisfaction. Journal of Health Care for the Poor and Underserved, 33(2), 998-1016.

Toretsky, C., Mutha, S., & Coffman, J. (2019). Reducing educational debt among underrepresented physicians and dentists. Healthforce Center at UC San Francisco.

Tsilimingras, D., Gibson-Scipio, W., Benkert, R., Hudson, L., Liu, X., Zhang, L., Reed, T., & Markova, T. (2020). An evaluation of the Michigan State Loan Repayment Program. Michigan Journal of Public Health, 10(1).



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