Refer to state-funded loan forgiveness and conditional grant programs that are designed to alleviate student loan debt and address workforce shortages in high-need fields. Service-contingent programs incentivize college graduates to work in targeted occupations or underserved areas in exchange for debt relief.

According to the Midwestern Higher Education Compact (MHEC), these programs are effective in recruiting professionals to underserved areas and retaining them beyond the required service period. Conditional grants tend to have a greater impact potentially due to reduced debt aversion and the positive labeling effect associated with grants.

Policy options for developing and improving service-contingent programs include:

• aligning funding priorities to complement need-based financial aid
• setting award amounts to reflect education costs and projected wages
• simplifying and clearly communicating service criteria (e.g., eligibility obligations)
• strengthening program evaluation to guide improvement
• coordinating state and federal initiatives to maximize efficiency and reduce redundancy.