Medical Student Loan Resources

We recommend that individuals contact their school financial aid office (if they are still in school) or their loan officer if they are in repayment to discuss their specific situations. For detailed information regarding how student loans changed after the passage of HR1 on July 4, 2025, view this AAMC video.

Recent Changes to Student Loans

On July 4, 2025, Congress enacted P.L. 11921, which significantly changes federal student loan borrowing limits, repayment plan options, and certain deferment/forbearance rules. Some provisions take effect July 1, 2026; others phase in through 2027–2028. These changes matter especially for medical students, residents, and early career physicians.

Key Changes You Should Know

• New statutory borrower protections and repayment architecture: for loans first disbursed on or after July 1, 2026, borrowers will generally have only two repayment options — a restructured Standard Repayment plan and a new income based Repayment Assistance Plan (RAP). RAP is scheduled to be available by July 1, 2026.
• RAP basics: RAP will set payments based on adjusted gross income (sliding scale roughly 1–10% of Annual Gross Income (AGI) with a $10 minimum), include an interest waiver for unpaid interest, and provide a principal “match” (up to $50) to ensure balances decline; remaining balances are paid off or eligible for forgiveness after 30 years. RAP payments will count toward Public Service Loan Forgiveness (PSLF) when other PSLF criteria are met. There is no penalty for paying off the loan amount early.
• Graduate/professional borrowing limits and Grad PLUS: the law phases out Grad PLUS loans for future borrowing and sets new annual and lifetime caps for graduate and professional students; institutions and students should plan around much tighter federal borrowing capacity for medical school after July 1, 2026.
• Phaseout and grandfathering: borrowers with loans disbursed or consolidated before July 1, 2026, generally retain access to legacy repayment options for a transitional period (through June 30, 2028, for many plans). Taking new loans or consolidating after the cutoff can change which plans you may use. The Department of Education has warned borrowers to act early if they want to preserve access to certain legacy plans.
• Deferment/forbearance and tax issues: the law eliminates certain deferments (e.g., unemployment/economic hardship deferments) for loans made on or after July 1, 2027, and shortens some forbearance allowances; also note the temporary federal tax exclusion for income driven repayment forgiveness applied through 2025 under prior law, so plan tax strategy around possible taxability of future forgiven balances. Consult a tax advisor before your forgiveness year.

What To Do if You Already Have Loans (Residents, Fellows, Attending Physicians)

• Know your loan types and servicer. Make a checklist: Direct Subsidized/Unsubsidized, Grad PLUS, Parent PLUS, Direct Consolidation, private.
• If you rely on income driven benefits or PSA/PSLF timelines, certify your employment annually and track qualifying payments with the PSLF Help Tool on StudentAid.gov. RAP payments will count toward PSLF when all other rules are met.
• If you are on Saving on a Valuable Education (SAVE), Pay as you Earn (PAYE) or Income Contingent Repayment (ICR): consider your options now. The Department has recommended borrowers evaluate the Income Based Repayment (IBR) option and prepare for transitions; legacy plans will be phased out for many borrowers by July 1, 2028.
• If you must consolidate to access a particular plan or PSLF benefit, act before the Department deadlines (consolidation disbursement timing matters; check with your servicer).
• If you expect forgiveness, consult a tax professional about potential tax exposure for forgiven balances after 2025.

What To Do if You’re Considering Medical School

• The FY2025 reconciliation law phases out Grad PLUS borrowing for future students and replaces open-ended graduate/professional borrowing with fixed annual and aggregate caps for loans first disbursed on or after July 1, 2026. Borrowers with loans disbursed before that date are generally “grandfathered” into legacy rules for a transition period, but consolidating or taking new loans after the cutoff can change eligibility.
• Be aware of new borrowing limits:
  • • New aggregate limit for professional level borrowing is $200,000 (in addition to any undergraduate borrowing).
    • New overall lifetime cap: $257,500 total federal borrowing across all levels (undergrad + graduate/professional), excluding Parent PLUS borrowing.
• Run realistic cost scenarios based on the new federal caps (ask your school’s financial aid office for modeled budgets under the July 1, 2026, rules).
• Maximize non loan aid first (institutional scholarships, service programs, National Health Service Core (NHSC)/state loan repayment opportunities, VA/NHSC incentives for rural work, military health profession scholarship program).
• If you expect to need federal loans across multiple years, ask your school whether you will be “grandfathered” under the old rules for your expected time to credential (students enrolled/borrowing before June 30, 2026, may be treated differently). Get written confirmation.
• Use private loans only as a last resort; private lenders offer fewer protections and no PSLF eligibility. Compare rates, cosigner requirements, and repayment options.