Medical School Loan Access

Effective Date: July 1, 2026

Estimated Federal Savings: $44 billion 

Background 

Historically, medical students could take out a federal graduate PLUS loan up to the cost of their graduate program. From July 2025 to July 2026, the interest rate for a graduate PLUS loan is 8.94%.

The OBBBA ends the graduate PLUS loan program altogether. Students who take out a loan before July 1, 2026, can continue to borrow from the program through the remainder of their schooling (must be enrolled to continue borrowing). After July 1, 2026, the only federal student loan that medical students will have access to is the direct unsubsidized federal loan, which will have an annual cap of $50,000 and an aggregate lifetime cap of $200,000 for professional students (including medical students).

Impact in Minnesota

Low- to mid-income medical students in Minnesota may have trouble financing their tuition. In 2024, the national average total cost of medical school was $235,827. According to the Association of American Medical Colleges (AAMC), approximately 71 percent of medical students graduate with a mean of more than $212,000 in educational debt. The AAMC reported that Minnesota medical school graduates had an average debt of $144,000 (Mayo Clinic Alix School of Medicine) and $187,000 (University of Minnesota Medical School). New federal limits risk deterring qualified applicants, particularly those from historically underrepresented backgrounds and from low-income families, from entering the medical profession and will exacerbate the physician shortage. As students turn to private lenders for help, they grow more vulnerable to predatory lending practices. 

Effective Date: July 1, 2026

Estimated Federal Savings: Changes in loan repayment are estimated to save $271 billion over a decade. Additional cost savings are estimated at roughly $800 million over 10 years.

Background 

Under the OBBBA, new federal student loans may only be repaid in one of two ways:

1. The Standard Plan, which has fixed monthly minimum payments and terms ranging from 10 years to 25 years (depending on the amount borrowed), or
2. The Income-Based Repayment Assistance Program (RAP), which has variable monthly minimum payments based on the borrower’s household income. Payments range from $10 per month (if household income is $10,000 or less) to 10% of the borrower’s adjusted gross income, prorated across each month (if household income is $100,000 or more). If the borrower is married and filing taxes separately, their spouse’s AGI is not included in household income calculation.

Impact in Minnesota

This OBBBA provision limits repayment options for future medical school graduates in Minnesota and across the country.