Starting July 1, 2026, new caps on federal student loans will limit borrowing for medical students to $50,000 per year – a change academic physicians fear could potentially inflate medical students’ debt and have downstream workforce effects.
Congress’ 2025 budget bill, known as the One Big Beautiful Bill Act (OBBBA), will cap student borrowing starting July 1, 2026 for medical school at $50,000 annually, with a total cap for professional loans at $200,000. In addition, medical students will need to be aware of a new lifetime federal loan cap of $257,500, inclusive of all levels of higher education after high school.
Additionally, the bill eliminates the Grad PLUS loan program for new borrowers, including medical students. The program was designed to help students in advanced degree programs, such as medicine, to cover educational expenses not met by other types of financial aid.
The Grad PLUS program allowed students to borrow their school’s total cost of attendance, including living expenses, with no annual or aggregate borrowing limits. But as of July 1, 2026, medical students will no longer have access to the Grad PLUS program’s supplementary aid.
Medical students who borrowed federal loans before July 1, 2026, can continue to borrow under the existing loan limits for three additional years or until their expected degree completion date, whichever comes first. The new caps apply to borrowers who begin borrowing on or after July 1, 2026.
Similarly, if you receive a Grad PLUS loan before July 1, 2026, you will retain eligibility under the existing terms of the program and can continue borrowing under the Grad PLUS program for three additional years or until your expected degree completion date, whichever comes first.
For medical students with debt, the average amount is over $200,000, according to an October 2024 report from the Association of American Medical Colleges.
As a result of the new borrowing cap, many medical students may now need to seek additional private loans – often with stringent credit requirements and less flexible repayment terms compared to federal loans – to cover their educational costs, increasing the financial burden, says Blake Barker, MD, the associate dean for student affairs at UT Southwestern Medical School.
“Most medical schools in Texas offer lower tuition rates relative to other schools nationally. However … these changes will make it more difficult for students from lower-income backgrounds to afford medical school, especially if they have financed their undergraduate education with federal loans limiting their borrowing ability in medical school due to the lifetime cap,” the Dallas internist said in e-mail correspondence with Texas Medicine Today.
Thomas J. Mohr, DO, dean of the Sam Houston State University College of Osteopathic Medicine and professor of internal medicine, adds that in order to pay off student debt, medical students may be incentivized to pursue their specialty based heavily on expected compensation, passing over specialties like primary care and pediatrics.
“There could be a negative impact on our graduates’ decision to pursue primary care in rural and underserved areas due to the new loan caps,” Dr. Mohr told Texas Medicine Today. “The shortage of primary care physicians in rural and underserved areas is a national concern. If we do see a large shift away from these areas of practice, access to physician-led health care will be dramatically reduced and patients will suffer.”
Concern about medical education-related debt due to loans has the potential for diverting qualified applicants to other health professions that have shorter education and training time requirements. This could reduce the medical school applicant pool, particularly among economically disadvantaged students.
There is one bright note, however. While earlier OBBBA drafts excluded time in medical residency or internships from federal Public Service Loan Forgiveness (PSLF) program eligibility, the final bill made no change to that critical eligibility provision for physicians, and it remains intact.
In 2023, TMA fought for the ability for physicians who trained at private, nonprofit hospitals to utilize the PSLF program in order to receive higher education loan forgiveness by committing to community service for 10 years by working in public or nonprofit organizations.
TMA continues to monitor the broad scope of OBBBA’s potential impact on patients and physicians. Continue to read Texas Medicine Today for coverage of how these and other federal policies might impact health care in Texas and learn more about TMA’s federal advocacy efforts.
Need help with student loans? TMA offers several types. For more information visit TMA’s Student Loan Refinancing Resource Center.
NOTICE: This publication is intended for general informational purposes only. The information provided in this publication does not constitute legal, financial, business, investment, medical, accounting, or tax advice. You should not rely on the information in this publication when dealing with personal financial, business, or investment decisions; rather, advice from an appropriate professional should be sought.
The Texas Medical Association (TMA) provide this information with the express understanding that 1) no attorney-client relationship exists, 2) neither TMA nor their attorneys are engaged in providing legal advice, financial advice, business advice, or investment advice, and 3) the information is of a general character. This is not a substitute for the advice of an attorney. Although TMA has attempted to present information that is accurate and useful, some material may be outdated and TMA shall not be liable to anyone for any inaccuracy, error, or omission, regardless of cause, or for any damages resulting therefrom. Any reliance you place on such information is strictly at your own risk. We disclaim all liability and responsibility arising from any reliance placed on such information. You should not rely on this information when dealing with personal legal matters; rather, legal advice from retained legal counsel should be sought.
Certain links provided with this information connect to websites maintained by third parties. TMA has no control over these websites, or the information, goods or services provided by third parties. TMA shall have no liability for any use or reliance by a user on these third-party websites or information provided by third parties.
References in this publication to any product, service, model, program, or entity does not constitute an endorsement or implied endorsement by TMA.