VSAC warns nursing and mental-health forgivable-loan programs face shortfalls after governor omits funding

Scott Giles, president and chief executive officer of the Vermont Student Assistance Corporation, told the House Health Care committee that VSAC administers the state need-based grant program, the 529 college-savings plan and a suite of forgivable-loan scholarship programs aimed at growing Vermont’s health care workforce.

"We administer the state grant program…[and] we support those activities through three federal grants," Giles said, describing VSAC's role in outreach and in operating scholarships that convert to loans if recipients do not meet service obligations.

Patrick LaDuke, VSAC's chief operating officer, walked lawmakers through a portfolio of health-care forgivable-loan programs the agency oversees for the Agency of Human Services. He said the Vermont Nursing Forgivable Loan program consumed about $3,200,000 in the most recent award cycle and funded 176 nursing students while 322 additional applicants went unfunded. LaDuke said a prior version of the program produced about an 86% success rate — defined as participants working in Vermont after graduation so the loan is forgiven — and that roughly 70% of current recipients remain in education or are in their first year of employment verification.

LaDuke said the Vermont Mental Health Professional Forgivable Loan program, legislated in 2022 and initially supported with ARPA dollars, had no funding in the most recent year; last year VSAC funded 54 students there and expended roughly $752,000 of the original appropriation while about 370 applicants went unfunded. VSAC asked the governor’s office to consider restoring funding for the mental-health forgivable loan in its budget submission.

Committee members pressed VSAC about the mechanics and timing of awards. LaDuke clarified that these awards are made in advance and disbursed to schools as scholarships that will convert to loans only if service obligations are not met. Recipients reapply each academic year; multi-year funding implies a matching multi-year service obligation. VSAC leaders warned that awards being offered now assume the legislature will appropriate the requested funding this session.

Lawmakers raised questions about whether rural health transformation grant dollars — an initiative AHS is pursuing — could replace the forgivable-loan funding. VSAC officials said they are in discussions with AHS about the program design and cautioned that some rural-transformation funds cannot be used for loan forgiveness and that federal waiver and waiver-renegotiation timing (including "global commitment" considerations) affect long-term stability.

Giles told the committee his budget proposal to the administration included an additional $2 million for the nursing program and a request to reinstate the mental-health forgivable loan. He asked the committee to allow VSAC to meet with AHS on rural health transformation and report back promptly with numbers; the committee requested those figures before its upcoming appropriations deliberations.

The testimony left several unanswered questions for lawmakers: whether appropriations in FY27 will cover awards being offered now, how rural health-transformation funds might be structured to preserve ongoing cohorts, and whether returning students who relied on prior-year awards will be protected if state support changes. VSAC offered to provide county-level residency and funding breakdowns and pledged to follow up after AHS discussions.

Next steps: VSAC will meet with AHS on the rural health transformation design and provide updated numbers to the House Health Care committee; lawmakers said they expect to consider appropriations recommendations in committee next week.