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FIRST for Medical Education

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FIRST helps medical school borrowers expand their financial literacy, make smart decisions about student loans, and manage their student debt wisely.

National Health Service Corps (NHSC)

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The National Health Service Corps (NHSC) provides scholarships and loan repayment awards to physicians and other health practitioners in exchange for primary care service in a federally designated Health Professions Shortage Area (HPSA). The NHSC also matches state funding for participating NHSC State Loan Repayment Programs. Read about the AAMC's proposed changes to the NHSC in the zero-cost Medical Education Debt bill. 

President Obama Feb. 13 submitted his FY 2013 budget to Congress. The president’s budget proposes to eliminate the annual appropriations for the NHSC as in the Consolidated Appropriations Act, 2012 (P.L. 112-74). Likewise, the president includes the full $300 million for FY 2013 provided by the mandatory NHSC Fund established under the ACA. The NHSC Fund will expire in FY 2016.

The HRSA budget justification indicates that the NHSC is “reviewing the disciplines that the Loan Repayment Program and the State Loan Repayment Program support” and specifically mentions pharmacists and chiropractors. The NHSC also plans to decrease awards for service in low-need Health Professions Shortage Areas (HPSAs) to encourage service in areas of “high-need.”

The Affordable Care Act

On March 23, President Obama signed the Affordable Care Act (ACA, P.L. 111-148), with a number of changes to the National Health Service Corps (NHSC). The law creates a mandatory NHSC Fund at the discretion of the Secretary of Health and Human Services (HHS). With this new mandatory fund, the Secretary may provide up to $1.5 billion to the NHSC over 5 years ($290 million for FY2011, $295 million for FY2012, $300 million for FY2013, $305 million for FY2014, and $310 million for FY2015).

The NHSC has established the Students to Service (S2S) Loan Repayment Program (LRP) due in part to this increased funding. The S2S LRP pilot awards $120,000 to 4th year medical students entering their 1st year of residency (over 4 years) in exchange for 3 years of NHSC service.

Additionally, ACA authorizes NHSC to expand the benefits of the scholarship and loan repayment programs. The law allows the Secretary to waive the requirement that NHSC service be provided in full-time clinical practice so that the service obligation could be fulfilled on a half-time basis (i.e., a minimum of 20 hours per week in clinical practice).

Individuals fulfilling their service obligation in this manner would have to agree to double the period of obligated service that would otherwise be required, or, if receiving loan repayment, accept a minimum of two years of obligated service and 50 percent of the amount that would otherwise be provided.

ACA increases the maximum annual NHSC loan repayment amount from $35,000 to $50,000, adjusted annually for inflation beginning in FY2012. The law permits the Secretary to treat teaching as clinical practice for up to 20 percent of the period of obligated NHSC service. However, for NHSC clinicians participating in the new Teaching Health Centers GME program, up to 50 percent of time spent teaching may be counted towards the NHSC service obligation.

ACA incrementally increases the annual congressional funding authorization for the NHSC to $1.15 billion in FY 2015. The law also provides a formula for increased authorizations in future years proportionate to increases in the cost of health professions education and increases in the population that resides in health professional shortage areas.


Matthew Shick, J.D.
Senior Legislative Analyst, Government Relations
Telephone: (202) 828-0525