MEDICAL SCHOOL LOAN ACCESS
The following provisions describe how the OBBBA modifies access to federal student loans.
Effective Date: July 1, 2026
Estimated Federal Savings: $44 billion over 10 years
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 aggregate lifetime cap of $200,000 for professional programs (including medical students), and an aggregate lifetime cap of $257,500 for undergraduate and professional programs combined. Therefore, if a medical student took out $60,000 in direct unsubsidized federal loans for undergraduate studies, they could only take out another $197,500 for medical school.
Impact in Minnesota
Low- to mid-income medical students in Minnesota may have trouble financing their tuition. In 2026, the estimated total cost of attendance at the University of Minnesota Medical School is $276,506 for Minnesota residents and $344,579 for non-residents. At the Mayo Clinic Alix School of Medicine, the estimate is $271,600.
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. 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 disbursed on or after July 1 2026, may only be repaid in one of two ways:
- The Tiered Standard Plan, which has fixed monthly payments and four terms (i.e., 10, 15, 20 or 25 years) depending on the amount borrowed (e.g., balances over 100,000 are required for the 25-year term), or
- The Repayment Assistance Program (RAP), which has variable monthly payments based on the borrower’s adjusted gross income (AGI). Payments range from a flat $10 per month (if AGI is $10,000 or less) to 10% of the borrower’s AGI (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 the household income calculation.
Impact in Minnesota
This OBBBA provision limits repayment options for future medical school graduates in Minnesota and across the country.