| 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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