Guidelines for the Minnesota Rural Physician Loan Forgiveness Program
The purpose of Minnesota’s Loan Forgiveness program is to recruit and retain health care professionals to needed areas and facilities in Minnesota. Loan forgiveness is an important benefit for health care professionals as well as health care facilities and communities experiencing a shortage of access to primary health care services.
Program Administration and Funding
The Office of Rural Health and Primary Care (ORHPC), Minnesota Department of Health administers this program. It is funded by the State of Minnesota. Program eligibility requirements and benefits are established by Minnesota statute 144.1501, authorizing the health professional loan forgiveness program.
This program is offered to primary care professions, which includes Family Practice, Obstetrics and Gynecology, Pediatrics, Internal Medicine and Psychiatry who plan to practice/are practicing in a designated rural area. A prospective participant must submit an application to ORHPC during the open application cycle, as a practicing physician or while completing their final year of medical residency training.
The Rural Physician Loan Forgiveness Program provides funds for repayment of qualified educational loans for primary care physicians. Applicants are responsible for securing their own educational loans. Credit card or loans from family members do not qualify. Qualified loans include government, commercial and foundation loans for actual costs paid for tuition, reasonable education and living expenses related to the graduate or undergraduate education of a health care professional.
This is a competitive selection process. Selections are made based on suitability for practice as indicated by personal and professional experience and training noted on an application, as well as preference given to those closest to completing their training. The number of applicants ORHPC may select for participation varies annually and is contingent upon state funding.
Service Obligation and Funding
Participants are required to practice for at least 30 hours per week, for at least 45 weeks per year, for a minimum of three years in a designated rural area. A designated rural area is defined by Minnesota statute 144.1501 as a statutory and home rule charter city or township that is (1) outside the seven-county metropolitan area, as defined in section 473.121, subdivision 2 excluding the cities of Duluth, Mankato, Moorhead, Rochester and St. Cloud.
Selected participants shall provide direct patient care hours/client–centered services. Hours cannot be fulfilled meeting with providers, process improvement, policy development, supervising, or administering programs.
For practicing physicians, participants must begin their service immediately. For final year residents, participants must begin their service obligation under this program no later than March 31 following completion of their residency program. Participants must complete their residency program as originally stated in their application.Participants are eligible to participate for up to four years in the program as a physician in a designated rural area. ORHPC will make an annual payment to the participant in the amount of up to $25,000, not to exceed $100,000 total for the maximum four-year period or the balance of the designated loan(s), whichever is less subject to the availability of funds appropriated by the Minnesota State Legislature for the loan forgiveness program.
Annually, ORHPC requires participants to verify their continued employment and submit documentation that they have applied the loan forgiveness funds to their designated educational loan(s). This information will be verified prior to each annual disbursement. It is at the discretion of the participant to pay their loan servicer(s) with an annual lump sum payment, or make monthly payments that total the annual disbursement from ORHPC.
Income Tax Reporting
Loan forgiveness payments made to participants under the loan forgiveness program are considered exempt from federal and state income taxes. The State of Minnesota will not issue a 1099 form.
Temporary Suspension of Service
Service obligations may be suspended as a result of an illness, disability or temporary job transfer lasting less than a total of 12 months during a three- or four-year commitment. All requests for temporary suspension of service must be in writing in advance (if known) and substantiated by documentation deemed acceptable and approved by the state on a case-by-case basis. The agreement end date will be extended by the amount of time a participant is in suspension status. Suspensions cannot exceed 12 months.
Penalty for Non-fulfillment
If a participant does not fulfill the minimum obligation of three years of practice in a designated rural area in Minnesota, or if the participant cannot verify that program funds were spent towards approved student loans, the participant will be required to repay the total amount ORHPC paid plus interest, at a rate established according to Minnesota Statutes 270C.40.