Workforce Contingent Financial Aid


To date, AIR has written the only report detailing the scope of loan forgiveness and loan repayment financial aid initiatives at the state level. These programs either provide students with loans that can be “forgiven” or repay existing loans if recipients work in designated employment areas upon graduation. These forms of financial aid, which we have termed “workforce contingent financial aid,” are popular with state and federal legislators because they appear to address two significant problems at once: high college tuition and workforce shortages. The report, Workforce Contingent Financial Aid: How States Link Financial Aid to Employment, details the number of programs supported in each state, the employment sectors that these programs support, and the forgiveness/repayment conditions placed upon recipients. Key findings were:

  • States had about three times more loan forgiveness programs than loan repayment programs in 2001-2002.
  • Programs supporting teachers were the most common type of program, followed by medical fields and nursing.
  • States had done little to no research to determine whether these programs were an effective use of financial aid dollars.   
While these programs continue to proliferate at the state and federal levels, little is known about their effectiveness. For example, do workforce contingent financial aid programs attract individuals who otherwise may not have entered that occupation? Are these programs attracting the “best and brightest” to these fields? Is this the best use of limited financial aid dollars? AIR hopes to address these important questions in future work and update the current study with data from state and federal programs.