---
kind: "section"
citation: "42 U.S.C. § 254q–1"
title: "42"
title_heading: "The Public Health and Welfare"
number: "254q–1"
heading: "Grants to States for loan repayment programs"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/42/254q-1"
units:
  - "Chapter 6A — Public Health Service"
  - "Subchapter II — General Powers and Duties"
  - "Part D — Primary Health Care"
  - "Subpart iii — scholarship program and loan repayment program"
---

# §254q–1. Grants to States for loan repayment programs

- (a) **In general—**
  - (1) **Authority for grants—** The [Secretary](/usc/42/201.md?p=c), acting through the [Administrator](/usc/42/4005.md?p=1) of the Health Resources and [Services](/usc/42/201.md?p=a) Administration, may make grants to [States](/usc/42/201.md?p=f) for the purpose of assisting the [States](/usc/42/201.md?p=f) in operating [programs](/usc/42/274l–1.md?p=4) described in [paragraph (2)](#a-2) in order to provide for the increased availability of primary health [care services](/usc/42/300z–1.md?p=a-7) in health professional shortage areas. The National [Advisory Council](/usc/42/274l–1.md?p=1) established under [section 254j of this title](/usc/42/254j.md) shall advise the [Administrator](/usc/42/4005.md?p=1) regarding the [program](/usc/42/274l–1.md?p=4) under this section.
  - (2) **Loan repayment programs—** The [programs](/usc/42/274l–1.md?p=4) referred to in [paragraph (1)](#a-1) are, subject to [subsection (c)](#c), [programs](/usc/42/274l–1.md?p=4) of entering into contracts under which the [State](/usc/42/201.md?p=f) involved agrees to pay all or part of the principal, interest, and related expenses of the educational loans of health professionals in consideration of the professionals agreeing to provide primary health [services](/usc/42/201.md?p=a) in health professional shortage areas.
  - (3) **Direct administration by State agency—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [paragraph (1)](#a-1) unless the [State](/usc/42/201.md?p=f) involved agrees that the [program](/usc/42/274l–1.md?p=4) operated with the grant will be administered directly by a [State agency](/usc/42/300s–3.md?p=12).
- (b) **Requirement of matching funds—**
  - (1) **In general—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) agrees that, with respect to the costs of making payments on behalf of individuals under contracts made pursuant to [paragraph (2)](#b-2) of such subsection, the [State](/usc/42/201.md?p=f) will make available (directly or through donations from public or private entities) non-Federal contributions in cash toward such costs in an amount equal to not less than $1 for each $1 of Federal funds provided in the grant.
  - (2) **Determination of amount of non-Federal contribution—** In determining the amount of non-Federal contributions in cash that a [State](/usc/42/201.md?p=f) has provided pursuant to [paragraph (1)](#b-1), the [Secretary](/usc/42/201.md?p=c) may not include any amounts provided to the [State](/usc/42/201.md?p=f) by the Federal Government.
- (c) **Coordination with Federal program—**
  - (1) **Assignments for health professional shortage areas under Federal program—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) involved agrees that, in carrying out the [program](/usc/42/274l–1.md?p=4) operated with the grant, the [State](/usc/42/201.md?p=f) will assign health professionals participating in the [program](/usc/42/274l–1.md?p=4) only to public and [nonprofit](/usc/42/300s–3.md?p=3) private entities located in and providing health [services](/usc/42/201.md?p=a) in health professional shortage areas.
  - (2) **Remedies for breach of contracts—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) involved agrees that the contracts provided by the [State](/usc/42/201.md?p=f) pursuant to [paragraph (2)](#c-2) of such subsection will provide remedies for any breach of the contracts by the health professionals involved.
  - (3) **Limitation regarding contract inducements—**
    - (A) Except as provided in [subparagraph (B)](#c-3-B), the [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) involved agrees that the contracts provided by the [State](/usc/42/201.md?p=f) pursuant to [paragraph (2)](#c-2) of such subsection will not be provided on terms that are more favorable to health professionals than the most favorable terms that the [Secretary](/usc/42/201.md?p=c) is authorized to provide for contracts under the Loan Repayment [Program](/usc/42/274l–1.md?p=4) under [section 254l–1](/usc/42/254l–1.md) of this title, including terms regarding—
      - (i) the annual amount of payments provided on behalf of the professionals regarding educational loans; and
      - (ii) the availability of remedies for any breach of the contracts by the health professionals involved.
    - (B) With respect to the limitation established in [subparagraph (A)](#c-3-A) regarding the annual amount of payments that may be provided to a health professional under a contract provided by a [State](/usc/42/201.md?p=f) pursuant to [subsection (a)(2)](#a-2), such limitation shall not apply with respect to a contract if—
      - (i) the excess of such annual payments above the maximum amount authorized in [section 254l–1(g)(2)(A)](/usc/42/254l–1.md?p=g-2-A) of this title for annual payments regarding contracts is paid solely from non-Federal contributions under [subsection (b)](#b); and
      - (ii) the contract provides that the health professional involved will satisfy the requirement of obligated [service](/usc/42/201.md?p=a) under the contract solely through the provision of primary health [services](/usc/42/201.md?p=a) in a health professional shortage area that is receiving priority for purposes of [section 254f–1(a)(1) of this title](/usc/42/254f–1.md?p=a-1) and that is authorized to receive assignments under [section 254f of this title](/usc/42/254f.md) of individuals who are participating in the Scholarship [Program](/usc/42/274l–1.md?p=4) under [section 254l](/usc/42/254l.md) of this title.
- (d) **Restrictions on use of funds—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) involved agrees that the grant will not be expended—
  - (1) to conduct activities for which Federal funds are expended—
    - (A) within the [State](/usc/42/201.md?p=f) to provide technical or other nonfinancial assistance under [subsection (f)](/usc/42/254c.md?p=f) of section 254c[^1] of this title;
    - (B) under a memorandum of agreement entered into with the [State](/usc/42/201.md?p=f) under [subsection (h)](#h) of such section; or
    - (C) under a grant under [section 254r of this title](/usc/42/254r.md); or
  - (2) for any purpose other than making payments on behalf of health professionals under contracts entered into pursuant to [subsection (a)(2)](#a-2).
- (e) **Reports—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless the [State](/usc/42/201.md?p=f) involved agrees—
  - (1) to submit to the [Secretary](/usc/42/201.md?p=c) such reports regarding the [States](/usc/42/201.md?p=f) loan repayment [program](/usc/42/274l–1.md?p=4), as are determined to be appropriate by the [Secretary](/usc/42/201.md?p=c); and
  - (2) to submit such a report not later than January 10 of each fiscal year immediately following any fiscal year for which the [State](/usc/42/201.md?p=f) has received such a grant.
- (f) **Requirement of application—** The [Secretary](/usc/42/201.md?p=c) may not make a grant under [subsection (a)](#a) unless an application for the grant is submitted to the [Secretary](/usc/42/201.md?p=c) and the application is in such form, is made in such manner, and contains such agreements, assurances, and information as the [Secretary](/usc/42/201.md?p=c) determines to be necessary to carry out such subsection.
- (g) **Noncompliance—**
  - (1) **In general—** The [Secretary](/usc/42/201.md?p=c) may not make payments under [subsection (a)](#a) to a [State](/usc/42/201.md?p=f) for any fiscal year subsequent to the first fiscal year of such payments unless the [Secretary](/usc/42/201.md?p=c) determines that, for the immediately preceding fiscal year, the [State](/usc/42/201.md?p=f) has complied with each of the agreements made by the [State](/usc/42/201.md?p=f) under this section.
  - (2) **Reduction in grant relative to number of breached contracts—**
    - (A) Before making a grant under [subsection (a)](#a) to a [State](/usc/42/201.md?p=f) for a fiscal year, the [Secretary](/usc/42/201.md?p=c) shall determine the number of contracts provided by the [State](/usc/42/201.md?p=f) under [paragraph (2)](#g-2) of such subsection with respect to which there has been an initial breach by the health professionals involved during the fiscal year preceding the fiscal year for which the [State](/usc/42/201.md?p=f) is applying to receive the grant.
    - (B) Subject to [paragraph (3)](#g-3), in the case of a [State](/usc/42/201.md?p=f) with 1 or more initial breaches for purposes of [subparagraph (A)](#g-2-A), the [Secretary](/usc/42/201.md?p=c) shall reduce the amount of a grant under [subsection (a)](#a) to the [State](/usc/42/201.md?p=f) for the fiscal year involved by an amount equal to the sum of the expenditures of Federal funds made regarding the contracts involved and an amount representing interest on the amount of such expenditures, determined with respect to each contract on the basis of the maximum legal rate prevailing for loans made during the time amounts were paid under the contract, as determined by the Treasurer of the United States.
  - (3) **Waiver regarding reduction in grant—** The [Secretary](/usc/42/201.md?p=c) may waive the requirement established in [paragraph (2)(B)](#g-2-B) with respect to the initial breach of a contract if the [Secretary](/usc/42/201.md?p=c) determines that such breach by the health professional involved was attributable solely to the professional having a serious illness.
- (h) **“State” defined—** For purposes of this section, the term “[State](/usc/42/201.md?p=f)” means each of the 50 [States](/usc/42/201.md?p=f), the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, Palau, the Marshall Islands, and the Commonwealth of the Northern Mariana Islands.
- (i) **Authorization of appropriations—**
  - (1) **In general—** For the purpose of making grants under [subsection (a)](#a), there are authorized to be appropriated $12,000,000 for fiscal year 2008, and such sums as may be necessary for each of fiscal years 2009 through 2012.
  - (2) **Availability—** Amounts appropriated under [paragraph (1)](#i-1) shall remain available until expended.
- (j) **Public health loan repayment—**
  - (1) **In general—** The [Secretary](/usc/42/201.md?p=c) may award grants to [States](/usc/42/201.md?p=f) for the purpose of assisting such [States](/usc/42/201.md?p=f) in operating loan repayment [programs](/usc/42/274l–1.md?p=4) under which such [States](/usc/42/201.md?p=f) enter into contracts to repay all or part of the eligible loans borrowed by, or on behalf of, individuals who agree to serve in [State](/usc/42/201.md?p=f), local, or tribal health departments that serve health professional shortage areas or other areas at risk of a public health emergency, as designated by the [Secretary](/usc/42/201.md?p=c).
  - (2) **Loans eligible for repayment—** To be eligible for repayment under this subsection, a loan shall be a loan made, insured, or guaranteed by the Federal Government that is borrowed by, or on behalf of, an individual to pay the cost of attendance for a [program](/usc/42/274l–1.md?p=4) of education leading to a degree appropriate for serving in a [State](/usc/42/201.md?p=f), local, or tribal health department as determined by the [Secretary](/usc/42/201.md?p=c) and the chief executive officer of the [State](/usc/42/201.md?p=f) in which the grant is administered, at an [institution of higher education](/usc/42/11851.md?p=7) (as defined in [section 1002 of title 20](/usc/20/1002.md)), including principal, interest, and related expenses on such loan.
  - (3) **Applicability of existing requirements—** With respect to awards made under [paragraph (1)](#j-1)—
    - (A) the requirements of subsections [(b)](#b), [(f)](#f), and [(g)](#g) shall apply to such awards; and
    - (B) the requirements of [subsection (c)](#c) shall apply to such awards except that with respect to [paragraph (1)](#j-1) of such subsection, the [State](/usc/42/201.md?p=f) involved may assign an individual only to public and [nonprofit](/usc/42/300s–3.md?p=3) private entities that serve health professional shortage areas or areas at risk of a public health emergency, as determined by the [Secretary](/usc/42/201.md?p=c).
  - (4) **Authorization of appropriations—** There are authorized to be appropriated to carry out this subsection, such sums as may be necessary for each of fiscal years 2007 through 2010.

## Footnotes

[^1]: See References in Text note below.

## Source credit

(July 1, 1944, ch. 373, title III, § 338I, formerly § 338H, as added Pub. L. 100–177, title II, § 203, Dec. 1, 1987, 101 Stat. 999; renumbered § 338I and amended Pub. L. 101–597, title II, § 204, title III, § 301, title IV, § 401(b)[(a)], Nov. 16, 1990, 104 Stat. 3027, 3029, 3035; Pub. L. 105–392, title IV, § 408, Nov. 13, 1998, 112 Stat. 3589; Pub. L. 107–251, title III, § 315, Oct. 26, 2002, 116 Stat. 1653; Pub. L. 109–417, title II, § 203(b), Dec. 19, 2006, 120 Stat. 2849; Pub. L. 110–355, § 3(e), Oct. 8, 2008, 122 Stat. 3994.)

## Notes

### Editorial Notes

### References in Text

Section 254c of this title, referred to in subsec. (d)(1)(A), was in the original a reference to section 330, meaning section 330 of act July 1, 1944, which was omitted in the general amendment of subpart I (§ 254b et seq.) of this part by Pub. L. 104–299, § 2, Oct. 11, 1996, 110 Stat. 3626. Sections 2 and 3(a) of Pub. L. 104–299 enacted new sections 330 and 330A of act July 1, 1944, which are classified, respectively, to sections 254b and 254c of this title.

### Prior Provisions

A prior section 338I of act July 1, 1944, was classified to section 254r of this title prior to repeal by Pub. L. 100–713, title I, § 104(b)(1), Nov. 23, 1988, 102 Stat. 4787.

### Amendments

2008—Subsec. (h). Pub. L. 110–355, § 3(e)(1), substituted “50 States, the District of Columbia, the Commonwealth of Puerto Rico, the United States Virgin Islands, Guam, American Samoa, Palau, the Marshall Islands, and the Commonwealth of the Northern Mariana Islands” for “several States”.

Subsec. (i)(1). Pub. L. 110–355, § 3(e)(2), substituted “2008, and such sums as may be necessary for each of fiscal years 2009 through 2012.” for “2002 and such sums as may be necessary for each of fiscal years 2003 through 2006.”

2006—Subsec. (j). Pub. L. 109–417 added subsec. (j).

2002—Subsec. (a)(1). Pub. L. 107–251, § 315(1), added par. (1) and struck out heading and text of former par. (1). Text read as follows: “The Secretary, acting through the Administrator of the Health Resources and Services Administration, may make grants to States for the purpose of assisting the States in operating programs described in paragraph (2) in order to provide for the increased availability of primary health services in health professional shortage areas.”

Subsec. (e)(1). Pub. L. 107–251, § 315(2), added par. (1) and struck out former par. (1) which read as follows: “to submit to the Secretary reports providing the same types of information regarding the program operated pursuant to such subsection as reports submitted pursuant to subsection (i) of section 254l–1 of this title provide regarding the Loan Repayment Program under such section; and”.

Subsec. (i)(1). Pub. L. 107–251, § 315(3), added par. (1) and struck out heading and text of former par. (1). Text read as follows: “For the purpose of making grants under subsection (a) of this section, there is authorized to be appropriated $10,000,000 for each of the fiscal years 1991 through 1995, and such sums as may be necessary for each of the fiscal years 1998 through 2002.”

1998—Subsec. (i)(1). Pub. L. 105–392 inserted “, and such sums as may be necessary for each of the fiscal years 1998 through 2002” before period at end.

1990—Pub. L. 101–597, § 401(b)[(a)], substituted reference to health professional shortage area for reference to health manpower shortage area wherever appearing in subsecs. (a)(1), (2) and (c)(1), (3)(B)(ii).

Pub. L. 101–597, § 301, amended section generally, substituting present provisions for provisions which related to: in subsec. (a), grants; in subsec. (b), applications; in subsec. (c), Federal share; and in subsec. (d), authorization of appropriations.