Introduction to the Issue
Twenty-eight-year-old Michaela Bonner has been working 12-hour shifts as an emergency medical technician in Norfolk, Virginia, for the past four years, while attending and paying for college to finish her prerequisites for medical school. But now that President Donald Trump’s signature tax and spending law bars students from borrowing more than $50,000 annually in unsubsidized federal loans for medical school, Bonner is worried her dream of becoming a doctor is financially out of reach.
The New Tax and Spending Law
The tax and spending law includes provisions that significantly alter the student loan process for higher education. The law halts current student loan repayment plans for loans that are granted on or after July 1, 2026. On that date, the law also terminates Grad PLUS loans, which have helped people pay for their higher education degrees and total cost of attendance. Current borrowers will be grandfathered in. The federal law gives current borrowers enrolled in loan repayment plans for students based on income — such as those plans known as SAVE or IBR — until July 1, 2028, to switch to a new plan. Interest collection will resume Aug. 1 for students enrolled in the Biden-era SAVE plan.
Impact on Medical Students
At the same time, medical or law school students hoping to get unsubsidized federal loans — in which the borrower is responsible for paying the interest at all times rather than the government — will only be able to borrow $50,000 per year, with a $200,000 lifetime cap. Those seeking advanced degrees in areas such as history or philosophy have a $100,000 lifetime cap. The average yearly cost of medical school for the 2024-25 academic year ranged from around $42,000 to $72,000, depending on whether the school was private or public and whether the student was a resident or nonresident, according to the Association of American Medical Colleges.
Criticisms of the Legislation
Some congressional Republicans say that students need to be working harder to pay for higher education, like medical school, on their own. Others say the caps put the onus back on colleges and universities to rein in the rising cost of tuition. But critics of this legislation say the loan caps are only going to harm students, especially from lower-income backgrounds, and will exacerbate physician shortages.
In recent years states have tried to ease physician shortages by implementing various policy solutions. Since 2023, at least nine states have made it easier for doctors trained in other countries to get medical licenses. States have also participated in interstate licensing compacts, allowing nurses and physician assistants to travel across state lines to work, so long as they are licensed in one state within the compact.
State-Level Solutions
For student loan relief, more than 20 states have enacted legislation to address student loan forgiveness, according to the National Conference of State Legislatures, a group that tracks state policies. Georgia passed a measure that will expand a cancelable loan program for physicians working in rural and underserved areas. Idaho also created the Rural Nursing Loan Repayment Program, offering nurses $25,000 in forgivable loans after three years of service in a rural area.
Projected Physician Shortage
McKenzie Richards, a health care policy fellow at the conservative think tank Cicero Institute who has been studying the pace of physician shortages, told Stateline that the national physician shortage could potentially exceed 100,000 by 2034. At the end of 2024 that projected number was closer to 64,000 physicians. Richards said states will be looking toward more policy solutions should the student loan changes exacerbate physician shortages.
Impact on Students
Other students will be in the same boat, said Lesley Turner, an associate professor of public policy at the University of Chicago and an economist. “This is going to hit some students worse than others,” Turner told Stateline. “Those [students] in more expensive programs tend to borrow more, and so for those students they will need to return to private student loans or other ways of financing their graduate education.” Many students were already questioning their capacity to go to medical school before the student loan caps, said Shannon Jimenez, dean of the Arkansas College of Osteopathic Medicine.
Effects on Primary Care
“I expect that this bill, this cap, is going to push people out of primary care and into specialties to help pay off those higher interest rate loans,” Jimenez told Stateline. She added that caps will likely deter students from lower socioeconomic statuses from going into primary care — important in places like Arkansas, where she says there is a “maldistribution of physicians.” “Many schools like us try to attract those students, because they’re more likely to go into primary care and serve in underserved areas. So it’s going to tie our hands in a lot of ways.”
Conclusion
The new student loan caps could have far-reaching consequences for the medical field, exacerbating the existing physician shortage. With the average cost of medical school ranging from $42,000 to $72,000 per year, the $50,000 annual cap on unsubsidized federal loans may not be enough to cover the costs of attendance, let alone living expenses. As a result, students from lower-income backgrounds may be deterred from pursuing a career in medicine, leading to a shortage of primary care physicians in underserved areas.
FAQs
Q: What is the new annual cap on unsubsidized federal loans for medical students?
A: The new annual cap is $50,000, with a $200,000 lifetime cap.
Q: How will the new law affect current borrowers?
A: Current borrowers will be grandfathered in, but those enrolled in loan repayment plans based on income will need to switch to a new plan by July 1, 2028.
Q: What is the projected national physician shortage by 2034?
A: The projected shortage is potentially over 100,000 physicians.
Q: How will the loan caps affect students from lower-income backgrounds?
A: The caps may deter students from lower socioeconomic statuses from pursuing a career in medicine, particularly in primary care.
Q: What solutions are states implementing to address physician shortages?
A: States are making it easier for doctors trained in other countries to get medical licenses, participating in interstate licensing compacts, and enacting legislation to address student loan forgiveness.
