U.S Department of Health & Human Services
Health Resources & Services Administration

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Tax Relief for NHSC Scholarship Program Recipients

July 10, 2001 Contact: HRSA Press Office
Congress recently passed legislation easing the federal tax burden on students receiving funds from the National Health Service Corps Scholarship Program. Scholars will no longer be required to pay federal income tax on the largest portion of their award. The new tax exemption applies to scholarship payments for tuition, fees and other reasonable costs made after December 31, 2001.

Participants in the NHSC Scholarship Program agree to provide one year of primary health care service in a health professional shortage area in return for each year of scholarship support. There is a minimum 2-year service obligation. The program pays full tuition and fees for selected students in approved primary health care training programs, and a monthly stipend to cover living expenses.

Prior to this legislative change, the entire amount of the NHSC scholarship award was treated as taxable income. After federal tax was withheld from the monthly stipend, many scholars were left with little or no stipend payment. Under the new legislation, only the monthly stipend will be taxable income. Thus, less of the stipend will go toward paying income tax and more will be available for the scholars' living expenses.

To find out more about the NHSC Scholarship Program and the tax change, visit www.bphc.hrsa.gov/nhsc/Pages/toc.htm

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