Minnesota Health Care Loan Forgiveness Programs
Minnesota Urban Mental Health Professional Loan Forgiveness Guidelines

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 care services.

The Minnesota 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.

The program is offered to licensed mental health professionals as defined in Minnesota statute, 245.462, subdivision 18, which includes Independent Clinic Social Workers, Psychologists, Marriage and Family Therapists, Licensed Professional Clinical Counselors, and Licensed Alcohol and Drug Counselors. A prospective participant must submit an application to the ORHPC during the open application cycle.

The Urban Mental Health Professional Loan Forgiveness Program provides funds for repayment of Qualified Educational Loans. Qualified Educational Loans include government, commercial, and foundation loans for actual costs paid for tuition, reasonable education and living expenses related to the past graduate or undergraduate education of the Mental Health Professional. Credit card debt or loans from family members do not qualify. Parent PLUS loans do not qualify.

Loans in current or active default are NOT eligible for forgiveness in this program, even if considered in good standing with the collections agency. Previously defaulted loans that have since been completely rehabilitated and are not currently in active default status are eligible.

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. Preference will be given to applicants who document diverse cultural competencies. The number of applicants ORHPC may select for participation varies annually and is contingent upon state 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 an underserved urban community. An underserved urban community is defined by Minnesota statute 144.1501 as a health professional shortage area (HPSA), medically underserved area (MUA), or with medically underserved populations (MUP). Use the website from the federal Health Resources and Services Administration (HRSA) to verify that a clinic or facility is in one of these designations. 

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.

Participants must begin their service obligation under this program no later than March 31 following selection. Participants must complete their licensure as originally stated in their application. Participants must work and live in Minnesota.

Participants are eligible to participate for up to four years in the program as a mental health professional in an underserved urban community. ORHPC will make an annual payment to the participant in the amount of up to (1) $29,000, not to exceed $116,000 for Psychologists and (2) $11,000, not to exceed $44,000 for Independent Clinical Social Workers, Marriage and Family Therapists, Licensed Professional Clinical Counselors, and Licensed Alcohol and Drug Counselors 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.

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.

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.

If a participant does not fulfill the minimum obligation of three years of practice in an underserved urban community 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.