New Federal Student Loan Caps Could Block Aspiring Doctors From Medical School and Worsen the Physician Shortage

A sweeping federal tax and spending law passed under the Trump administration will introduce strict new caps on federal student loans starting July 1, 2026. The new rules will significantly reshape how students finance graduate and professional education—especially in fields like medicine, dentistry, and law.

Under the changes:

• Graduate students will be limited to $20,500 per year, with a $100,000 lifetime cap.
  
• Students in professional programs, such as medical or law school, will have a $50,000 annual cap and a $200,000 lifetime limit.
  
• Grad PLUS loans will be eliminated entirely, removing access to loans that previously covered the full cost of attendance beyond standard federal aid.
  
• Parent PLUS loans will also be capped at $20,000 per year with a $65,000 lifetime limit.

These limits mark a significant departure from the current system, where federal loans could be taken out up to the full cost of attendance. Students and families will soon be navigating a dramatically different financial aid environment.

Medical School Costs Already Exceed Federal Limits

The average cost of medical school already exceeds $200,000, according to 2024 data from the Association of American Medical Colleges (AAMC). At private institutions, costs are closer to $300,000—well beyond the new federal borrowing limits.

These changes are especially concerning for aspiring doctors entering medical school, who often rely on a combination of unsubsidized federal loans and Grad PLUS loans to finance their education. Once those options are limited or removed, many students may face unmanageable financial gaps.

Data from 2020 shows that:

• 27.5% of medical students graduated with debt loads higher than $200,000, the new lifetime limit.
  
• 60% of dental students exceeded that same threshold.

These figures suggest that a significant portion of future students may be unable to fund their education solely through federal aid.

A Growing Medical Students Loan Crisis

The elimination of Grad PLUS loans is likely to contribute to a medical students loan crisis, particularly affecting those from low-income backgrounds who are less likely to have access to creditworthy co-signers or favorable private loan terms.

Unlike federal loans, private student loans are not guaranteed. Lenders evaluate borrower credit scores, and repayment plans offer fewer protections—such as forbearance options, income-driven repayment (IDR), or Public Service Loan Forgiveness (PSLF). Many private loans also have higher interest rates and more rigid terms.

As the gap between federal loan limits and the actual cost of medical education widens, students may be forced to make difficult choices: delay enrollment, seek private financing, or abandon the pursuit of a medical career altogether.

Federal Loan Limits 2026: Public Health Implications

The 2026 federal loan limits have broader implications for healthcare access in the United States.

According to projections published by the AAMC, the U.S. could face a shortage of up to 86,000 physicians by 2036. The projected gap is driven by:

• An aging population, with Americans aged 65+ expected to grow by 34.1%, and those 75+ by 54.7% by 2036.
  
• A wave of physician retirements, with 42% of the current workforce already aged 55 or older.
  
• Increasing demand for specialists and chronic disease care across rural and underserved communities.

If financial barriers discourage students from entering the medical field, the physician pipeline will shrink—intensifying the physician shortage and creating access issues for patients across the country.

Additionally, if underserved communities were able to access healthcare at the same rate as better-served populations, the nation would have needed 202,800 more physicians as of 2021.

Medical Careers and Student Debt: A Difficult Tradeoff

Pursuing medical careers with student debt already involves long-term financial sacrifice. After completing four years of medical school, many students must complete multi-year residencies that offer limited income before achieving full earning potential.

The new borrowing caps could extend debt repayment timelines even further. With the elimination of key federal loan programs, students entering medical professions may face:

• Delayed homeownership
• Limited retirement savings
• Increased reliance on family support or risky private loans

These long-term pressures may dissuade capable, committed students from pursuing or completing a medical degree, especially those who lack generational wealth or financial backing.

Changes to Grad PLUS Loans in 2026

The removal of Grad PLUS loans in 2026 is among the most impactful changes for graduate and professional students. Previously, these loans allowed students to borrow up to their school’s full cost of attendance, minus other aid.

Without this option, students will be left to cover tuition, fees, and living expenses with only unsubsidized federal loans and, if needed, private loans. Institutions with higher tuition may struggle to attract a diverse applicant pool if students cannot access the funding required to attend.

A New Standard Repayment Plan With Longer Terms

The legislation also introduces a revised Standard Repayment Plan, replacing the 10-year fixed model with scaled repayment terms based on debt levels:

• Up to $24,999 → 10 years
• $25,000–$49,999 → 15 years
• $50,000–$99,999 → 20 years
• $100,000 and above → 25 years

For borrowers with higher balances, this could extend debt into retirement and significantly increase total interest paid. For example, a $100,000 loan at a 5% interest rate would result in over $175,000 in total repayment over 25 years, compared to $125,000 over 10 years under the old plan.

The Future of Student Loan Repayment

Borrowers who take out federal loans after July 1, 2026 will only have two repayment options:

1. The new Standard Plan with scaled terms
   
2. The Repayment Assistance Plan (RAP), an income-driven option based on adjusted gross income (AGI) with deductions for dependents

The RAP may benefit very low-income borrowers but may result in higher required payments for joint filers or middle-income professionals.

Borrowers with federal loans issued before July 1, 2026 can still access existing repayment and forgiveness plans, unless they take out new loans under the revised system.

Balancing Debt Reform and Public Need

While the intent of these reforms may be to curb overborrowing and rein in tuition inflation, their impact on access to medical education is significant. Without additional investment in scholarships, graduate medical education, or institutional reforms, the burden may shift to students—especially those who cannot turn to private lenders.

The U.S. is already on track to experience a severe doctor shortage, and federal loan changes could accelerate this trend. Medical schools have expanded enrollment in response to projected demand, but the next critical step is ensuring students can afford to attend.

Citations

1. Sallie Mae. How America Pays for College 2025. https://www.salliemae.com/content/dam/slm/writtencontent/Research/HAP_2025.pdf
   
2. Association of American Medical Colleges (AAMC). New AAMC Report Shows Continuing Projected Physician Shortage. https://www.aamc.org/news/press-releases/new-aamc-report-shows-continuing-projected-physician-shortage
   
3. Federal Student Aid. PLUS Loans for Graduate or Professional Students. https://studentaid.gov/understand-aid/types/loans/plus/grad
   
4. Nova, Annie. Trump’s ‘Big Beautiful Bill’ Sets Student Loan Caps for Medical School. CNBC, August 7, 2025. https://www.cnbc.com/2025/08/07/trumps-big-beautiful-bill-sets-student-loan-caps-for-medical-school.html
   
5. AAMC. Tuition and Student Fees Reports: 2024-2025. https://students-residents.aamc.org/media/12846/download