Upcoming changes to the federal student loan system could soon have a major impact on how you pay for medical school. Starting on July 1, 2026, the Grad PLUS loan program will be eliminated, and Direct Unsubsidized Loans for graduate students will have new borrowing caps.
Enacted through the One Big Beautiful Bill Act (OBBBA), these changes could create significant funding gaps for future medical students, especially those attending high-cost programs. Here’s more on how the rules are shifting, along with alternative financing options you can explore to pay for medical school.
New federal limits for medical school loans
Medical school costs more in the U.S. than anywhere else in the world, which is why the majority of medical school students use student loans to pay for their education. Nearly half of students borrow Grad PLUS loans, which historically let you borrow up to your cost of attendance, minus any other financial aid you received.
Starting on July 1, 2026, the Grad PLUS loan program will be eliminated for new borrowers. Federal Direct Unsubsidized Loans are still available, but will have new borrowing caps:
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Up to $50,000 per year with a lifetime limit of $200,000 for professional programs, including medical school
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Up to $20,500 per year with a lifetime limit of $100,000 for traditional graduate programs
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Aggregate borrowing limit of $257,500, including any loans for your undergraduate education
The limit for post-OBBBA medical school loans will be higher than the current annual cap of $20,500 and lifetime cap of $138,500, but this increase may not be enough to offset the loss of the grad PLUS program.
According to the Association of American Medical Colleges (AAMC), 84% of medical student borrowers owe $100,000 or more in student loans, 56% owe $200,000 or more, and 23% owe $300,000 or more. For the Class of 2025, the median student debt amount was $215,000.
Read more: Grad PLUS is gone. What every grad student needs to know about new borrowing caps.
Legacy exceptions for current borrowers
These new rules apply to students who are borrowing for the first time on or after July 1, 2026. If you’ve already borrowed student loans for your medical degree, you won’t be subject to the new rules right away.
Current PLUS loan borrowers can continue to access Grad PLUS loans for three more years or until their program ends, whichever comes first. Similarly, students who have already taken out Direct Unsubsidized Loans can borrow under the old rules for the same time period.
You’ll need to remain enrolled in your program to keep your legacy borrower status. Taking a semester off without approval, transferring schools, or changing your degree program could mean you lose this protection and are subject to the new borrowing limits.
How much does medical school cost?
The cost of medical school varies widely by institution, but most programs have a high price tag. According to the AAMC, the median four-year cost of attendance for the Class of 2026 was $297,745 at public universities and $408,150 at private universities.
Based on these figures, here’s what your funding gap could look like with the new federal borrowing caps:
The funding gap could be even higher if you’re already carrying federal student loan debt from your undergraduate education, given the lifetime borrowing limit of $257,500. If you took out $80,000 as an undergraduate, for example, you’d be limited to a total of $177,500 in Direct Unsubsidized Loans for medical school.
How to fill a funding gap for your medical degree
With new restrictions on federal student loans, future medical students may face a shortfall when it comes to covering their cost of attendance. Here are some potential ways to fill a funding gap.
1. Institutional aid from schools
Institutional aid, such as school-based grants, scholarships, or loans, can help fill a funding gap. Some schools, like NYU’s Grossman School of Medicine and the Albert Einstein College of Medicine, offer tuition-free medical school for all their students. Others, like Harvard and Stanford, offer aid to students with financial need. Some schools also provide merit-based awards, though this is less common.
When comparing programs, focus on the net cost rather than the initial sticker price. The net cost is how much you’ll actually pay after you get financial aid, whether from the state, federal, or institutional level. A generous financial aid offer could bring an otherwise unaffordable program within reach.
Related: How to pay for college without taking out student loans
2. Service-based grants
You may also look into programs that can help you pay for school, whether by offering upfront assistance or by helping you pay off your student loans after you graduate. Here are some examples:
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Health Professions Scholarship Program: Offered by military branches including the Army, Navy, and Air Force, this program can cover 100% of your tuition and fees for up to four years in exchange for military service. You might also get a monthly stipend of $2,800 and a sign-up bonus of up to $20,000.
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National Health Service Corps: This program from the Department of Health and Human Services can cover your full tuition, fees, and other educational costs for up to four years, along with a monthly stipend to help with living expenses. In return, you’ll need to serve in a federally designated Health Professional Shortage Area for at least two years.
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Indian Health Service Loan Repayment Program: This federal program will repay up to $50,000 in eligible health profession student loans if you commit to working in American Indian or Alaska Native communities after you finish your training.
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State-based student loan repayment assistance programs: Several states offer loan repayment assistance of $100,000 or more to physicians who work in underserved communities for a specified period.
You can view other scholarships, loan repayment options, and similar programs using the AAMC’s database.
3. Private scholarships
Search for scholarships through private organizations and foundations. These awards can be competitive, but it’s worth applying if you can reduce your reliance on student loans.
Search for opportunities through your school’s financial aid office, scholarship search engines, or medical societies. Even small scholarship awards can add up and help you cover living expenses and supplies.
4. Private student loans
With the upcoming restrictions to federal student loans, many medical students may turn to private medical school loans to fill a funding gap. Private lenders often let you borrow up to your cost of attendance, minus your other financial aid.
You’ll generally need to meet credit and income requirements or apply with a creditworthy co-signer to qualify. Rates and terms can vary, so it’s always worth shopping around with multiple lenders to find your best offer.
Some private lenders design loans specifically for medical students. These medical school loans might offer flexible repayment terms and useful perks, such as long grace periods or full deferment during residency.
Keep in mind that private student loans don’t qualify for federal repayment plans, like income-driven repayment, or forgiveness programs like Public Service Loan Forgiveness (PSLF).
Read more: Best private student loans for 2026
Planning for medical school under the new loan limits
The new loan limits could create financial stress for medical students. With the median cost of medical school ranging from $297,745 to $408,150, your cost of attendance could far exceed the $200,000 cap on Direct Unsubsidized Loans. Your individual borrowing limit may also be lower if you have already borrowed federal loans as an undergraduate.
That’s why it’s crucial to understand your costs and any potential funding gap before you enroll. It’s generally wise to exhaust scholarships and grants first, followed by federal student loans. If you still need additional funding, you might consider a private student loan to bridge the gap.
By maximizing gift aid and drawing from a variety of funding sources, you can cover the costs of medical school while limiting unnecessary student loan debt.