New Tax Bill Would Cut Availability of Medical School Loans

[WildWing]

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Not sure people are tracking that Grad PLUS Loans could go away with the latest tax bill:

Tax bill would cut availability of med school loans amid doctor shortage

Loans would become unavailable for new borrowers starting in the 2026-2027 school year.

www.axios.com

 

[yesIamSam]

This is pretty shocking. Reading the article, it seems that those matriculating and getting the loans for the 2025-2026 school year should be able to keep it until they graduate in 2029, correct?

This really makes it so that it is harder for med students to come from poorer families. Not all incoming students will have the luxury of getting favorable private student loans to pay for living expenses (credit situations might not be good, etc.), and even if they secure a loan, the interest rate might be horrible.

 

[yesIamSam]

Additionally, does anyone know if the "cap professional school federal loans at $150,000" part means that the bill caps federal loans *per year* at 150k, or for the whole four years?

My school is 40k a year tution. Will it go over the cap?

 

[SigmaFS]

Additionally, does anyone know if the "cap professional school federal loans at $150,000" part means that the bill caps federal loans *per year* at 150k, or for the whole four years?

My school is 40k a year tution. Will it go over the cap?

$150k is aggregate, but for first-time borrowers on or after July 1, 2026 (if the legislation goes through). Current borrowers will need remain Grad PLUS eligible, but not beyond the length of your current academic program.

 

[SigmaFS]

Here's an early discussion with surprisingly few comments: Republicans plan to overhaul the federal student loan system. Here's what to know.

 

[yesIamSam]

$150k is aggregate, but for first-time borrowers on or after July 1, 2026 (if the legislation goes through). Current borrowers will need remain Grad PLUS eligible, but not beyond the length of your current academic program.

I see, so students matriculating in 2025 (or those who started in previous years) should still be able to borrow both unsubsidized and Grad PLUS loans, since they'll graduate by 2029 or earlier.

As for students starting in 2026, IDK what will happen. A $150k aggregate cap isn’t nearly enough to cover the *tuition* of many medical schools, especially private ones. If this bill passes, it could drastically change things, students might be forced to rely on private loans unless schools significantly reduce their tuition (which would be pretty unlikely bc of the competition to attend, lol).

 

[WildWing]

I see the rationale that offering government loans has encouraged medical, dental, and other health profesional schools to increase their tuition sigificantly. But this does not seem like a great approach to reduce tuition amounts.

This article indicates that the $150K cap is lifetime:

https://finance.yahoo.com/news/trumps-tax-bill-makes-big-changes-to-student-loans-and-financial-aid-161335389.html

 

[medbuddha]

I see, so students matriculating in 2025 (or those who started in previous years) should still be able to borrow both unsubsidized and Grad PLUS loans, since they'll graduate by 2029 or earlier.

As for students starting in 2026, IDK what will happen. A $150k aggregate cap isn’t nearly enough to cover the *tuition* of many medical schools, especially private ones. If this bill passes, it could drastically change things, students might be forced to rely on private loans unless schools significantly reduce their tuition (which would be pretty unlikely bc of the competition to attend, lol).

I’ll add that private student loans are not easy to get without cosigners, and their terms are atrocious like 16% variable interest rates and crazy rules in the fine print like putting you in automatic default if (God forbid) your cosigner dies or files bankruptcy. Imagine worrying about that while still in school. Also, would private lenders even give loans to students with previous loan debt from undergrad? The private market is not a solution for many people.

I’m so scared that the rug is being pulled out from under us after all the years of preparing for med school. It’s not fair. At least the young undergrads starting out will have fair warning if/when this bill is passed. What about the rest of us? And let me say I’m surprised at the lack of news about what med schools are doing to advocate for students. The passive statement by AAMC was abysmal. I’m secretly hoping lots of advocacy is happening and just not being reported. Fml!

 

[medbuddha]

I see the rationale that offering government loans has encouraged medical, dental, and other health profesional schools to increase their tuition sigificantly. But this does not seem like a great approach to reduce tuition amounts.

This article indicates that the $150K cap is lifetime:

https://finance.yahoo.com/news/trumps-tax-bill-makes-big-changes-to-student-loans-and-financial-aid-161335389.html

This approach will not lower costs. Also, Congress can legislate costs if they really wanted to, at least for public schools. This method is like burning the house down because the roof is leaky, and not helping with necessary temporary shelter prior to destroying the house. They don’t seem to care, nor do they care about physician shortages in the next decade which are alarming. Praying for sanity in the Senate now. 🤦🏻‍♀️

The National Physician Shortage: Disconcerting HRSA and AAMC Reports - PubMed

Recent years have seen a rise in concerns regarding the future sufficiency of the national physician workforce. Recent studies have highlighted this anticipated shortage of physicians. The first, by the Health Resources and Services Administration (HRSA), projects a total shortage of 124,180...

pubmed.ncbi.nlm.nih.gov

 

[medbuddha]

Welp, so much for praying for sanity in the Senate. Their version of the reconciliation bill is just as bad as the House’s version with respect to student loans (both eliminate Grad PLUS, etc.). Seriously, what are med schools going to do when enrollment drops because many students can’t afford to go? Private loans are not easy to get for the large amounts that Grad PLUS covered. I’m not hearing a peep from most universities about this.

Congress Might Cap Federal Student Loan Limits, With Consequences | Bankrate

Lowering caps on federal loan borrowing — and removing two loan types from the financial aid menu — could harm lower-income students most of all.

www.bankrate.com

 

[GCU_Grey_Area]

Seriously, what are med schools going to do when enrollment drops because many students can’t afford to go?

I doubt enrollment is going to drop at all.

There are many more applicants than there are matriculants. According to the AAMC's data, for the 2024-2025 academic year, there were 51,946 applicants and 23,156 matriculants. Even in the extremely unrealistic scenario of the number of applicants being halved by the loan changes, there would still be more applicants than matriculants.

Matriculants also tend to have higher SES. Per the AAMC, at least as of 2017, 'roughly three-quarters of medical school matriculants come from the top two household-income quintiles, and this distribution hasn't changed in three decades.' According to Table 2 of their data, for any given year from 2007-2017, more than half of matriculants came from the highest quintile of household income. Assuming that the decision not to attend medical school as a result of the loan changes occurs on average below some household-income threshold, it's fair to assume that the majority of matriculants are well above this threshold and would still attend.

 

[Mr.Smile12]

I doubt enrollment is going to drop at all.

There are many more applicants than there are matriculants. According to the AAMC's data, for the 2024-2025 academic year, there were 51,946 applicants and 23,156 matriculants. Even in the extremely unrealistic scenario of the number of applicants being halved by the loan changes, there would still be more applicants than matriculants.

Matriculants also tend to have higher SES. Per the AAMC, at least as of 2017, 'roughly three-quarters of medical school matriculants come from the top two household-income quintiles, and this distribution hasn't changed in three decades.' According to Table 2 of their data, for any given year from 2007-2017, more than half of matriculants came from the highest quintile of household income. Assuming that the decision not to attend medical school as a result of the loan changes occurs on average below some household-income threshold, it's fair to assume that the majority of matriculants are well above this threshold and would still attend.

We have quite a lively discussion in the predental forums where application growth is more flat and tuition is going over 80k/year at privates (maybe 50k for in-state)... these are my ballpark estimates that can be corrected with real data from ADEA. 🙂 I agree that the changes will drive high-income-raised students to pursue graduate/professional education.