Becoming a doctor will likely become even more difficult under the new tax bill Congress approved after lawmakers slashed the amount of money medical school students can borrow in federal loans.
The extra burden may mean fewer students choose careers in medicine, particularly low-income students. Patients, in turn, may see fewer doctors practicing family medicine.
The new rules, part of the sweeping Republican-backed “big, beautiful bill” that President Donald Trump signed into law July 4, cap federal debt for professional degree students at $50,000 annually and $257,000 for the life of a student’s college journey, including undergraduate debt.
Previously graduate students could borrow up to the cost of their programs to afford their degrees with so-called Grad PLUS loans. Starting next year, those loans will disappear. While all graduate programs are affected by the new law, medical school lasts four years and regularly requires more than $300,000 for tuition, housing, food and other expenses for a degree.
Without public loans, many students will have to borrow from private lenders, which provide far fewer protections for loan repayment and, unlike federal plans, don’t offer loan forgiveness.
Public service loan forgiveness, which can occur after 10 years of employment in nonprofit settings, is a particular draw for medical school graduates who choose to work in government or nonprofit hospitals and care facilities that pay less but have a mission of treating the poor.
Private lenders may also deny some students loans or charge higher interest rates based on their financial history. Private loans typically require cosigners, which not all borrowers are able to arrange.
Martha Santana-Chin, chief executive of the insurer L.A. Care Health Plan, said the cost of college, medical school and loan repayment already presents “financial barrier after financial barrier” that prevents many from pursuing medicine. Reliance on private loans will make it even harder for low-income students in particular to become doctors, she said.
“If you don't have access to loans, if you don't have access to preferred loan terms, it's going to be that much more difficult for you,” Santana-Chin said.
The rules kick in for new students July 1, 2026. A student who has Grad PLUS before that date can continue to use it for their remaining program term, up to a maximum of three years.
The lower borrowing limits are a key way Congress tried to record savings in the tax bill. By capping how much graduate students can borrow, limiting how much loan debt is forgiven and increasing in many cases how much borrowers of all degrees pay monthly, taxpayers cover less of the tab. But the Republican bill includes huge tax and revenue cuts that, even with other budget savings, add more than $3 trillion to the national debt in the next decade. The higher-ed savings were about $300 billion.
”Straightforward economic logic would suggest (the new rules) are going to make it less likely for some of those students to be able to pursue graduate degrees than they are now,” said Jordan Matsudaira, a professor at American University. He was also chief economist at the U.S. Department of Education during the Biden administration.
“I don't think we've ever been in a position where we've sent students to the private loan market looking for loans on this scale to be able to finance their education,” he added.
California medical school debt levels
U.S. Department of Education data from the Biden administration that Matsudaira shared with CalMatters show California’s largest producer of doctors, the University of California, regularly graduates students with debt in excess of $200,000, the most the new law says a graduate student in a professional program may borrow from the government.
- At UC Irvine’s school of medicine, the median debt from federal loans for med students was $195,000 for the years 2019-20 to 2022-23. That means that half of the students borrowed more and likely almost all of the new students in those situations would need private loans. Twenty-five percent of students there borrowed at least $254,000 and 10% borrowed at least $284,000.
- Every UC medical school had at least 10% of graduates with debt above $200,000. For UC Riverside, it was $270,000. At UCLA and UC San Diego, 10% of graduates borrowed more than $255,000.
- Many new graduates in similar situations would need $55,000 to $70,000 or more in private debt to finance their education.
- Four of the six UC medical schools had at least 10% of students borrowing more than $73,000 in a single year; new students in similar situations would need to find at least $23,000 in financing from private loans or some other support.
- At the private University of Southern California, 50% of graduates borrowed more than $260,000, and 25% borrowed in excess of $328,000, so a large chunk of new students would need to borrow at least $128,000 in private loans or find other ways of paying. A spokesperson for the school said no one was available to answer CalMatters’ questions.
There were 1,334 students graduating with medical degrees and 361 with similar doctor of osteopathic medicine degrees in 2023, a UC San Francisco report found. The UCs accounted for nearly 800 medical degree graduates.
The University of California perspective
Calvin Yang, a rising senior at UC Berkeley, said attending medical school has been his dream since he was a child. The new caps on federal borrowing won’t deter him from becoming a doctor, but they’ll slow him down and may force him to attend cheaper schools.
He plans to take at least one gap year after he graduates next spring and work to save as much as he can to avoid private loans.
“It's frustrating to see restrictions on our ability to simply want to pursue an education in order to help the world, right?” he asked. “Long COVID persists. Mental health remains a major issue, diabetes, obesity — those all require medical professionals.”
He thinks some students will “reconsider the medical school pathway.” The loan caps are a concern among his friends with medical school ambitions.
“We do think that the private market will meet a lot of the needs of those students,” said Shawn Brick, associate vice provost of student financial support for the UC Office of the President. “Approval rates are fairly high for medical students.”
Still, “we do share the concern … about the student who may not have credit that would give them access to loans in the private market.”
Brick said the UC has time to work with private lenders on financial products that “would be more accessible to students who maybe don't have the best credit.”
The median loan size UC med students have had to borrow has declined by about $50,000 over the past four years, adjusted for inflation, UC data show. At the same time, UC grant aid for med students has grown by about 50%.
Nearly 3,000 UC med students receive an average of $32,000 in UC grants to support their education. The UC also issues its own loans, but in small numbers.
Doctors and advocates weigh in
Even before these changes, Dr. Julián Restrepo said medical school leaves doctors with so much debt that he knows people who are paying off loans decades after graduating, surgeons who work multiple jobs and resident physicians who pick up extra shifts to make ends meet.
“It is a huge burden for us, and it very well determines where we live, where we work, how we work and how we manage our practices,” Restrepo said.
Restrepo graduated from Texas A&M University’s medical school in 2012 and did his residency at Los Angeles County Medical Center. He now works as a primary care physician at a federally qualified health center in Los Angeles and said public service loan forgiveness is an effective way to recruit high quality physicians and specialists to underserved areas.
With interest, Restrepo’s loan of about $230,000 grew to more than $300,000. He made payments on the loan as part of the public service loan forgiveness program for about seven years until a Biden-era loan forbearance program temporarily kicked in.
An L.A. Care program aimed at recruiting physicians to underserved areas will pay off the remainder of his loans, and Restrepo said he’s extremely fortunate. At many points in his career he was forced to defer his loan payments because he couldn’t afford it.
The Association of American Medical Colleges also thinks the impending reliance on private loans may lead to fewer future doctors. “We are concerned that this added barrier could deter qualified candidates from pursuing a medical degree altogether, which could ultimately worsen the existing and expected physician workforce shortage,” said Kristen Earle, director of student financial services at the association, which oversees the medical school entrance exam. The association projects a national shortage of 86,000 physicians by 2036. California, like much of the country, has a shortage of primary care physicians, with the Central Coast, Central Valley and Southern Border regions projected to have the most severe shortages.
More pressure on medical residents
And while medical degrees eventually lead to relatively high salaries that are typically $220,000 a year to more than $400,000 depending on the specialization, early career doctors earn much less in residency, a training period of three to sometimes seven or more years. As residents, doctors work 60 to 80 hours a week for salaries of about $70,000 to $100,000, depending on the region and whether residents are unionized.
Private lenders offer a wide range of interest rates for medical school, from about 3% to more than 14%. Federal rates fall in the middle of that range, are less variable and pegged to inflation. Some private lenders indicate online that they don’t require borrowers to pay while they’re in residency for a few years, while others require only a small payment. In either case, the unpaid interest grows the overall debt a borrower will have to pay off.
Earle said she hopes that private lenders keep interest rates fairly low for medical school students because they're a good bet to pay off their debt given the higher earnings potential.
Mahima Iyengar is in her final year of residency at the massive Los Angeles General Medical Center to become a primary care physician.
She said she borrowed $250,000 in federal loans to attend medical school — $50,000 above next year’s maximum — and has no idea how someone like her would have avoided private loans. She wanted to study at the public University of Maryland, a less expensive option in her home state, but wasn’t admitted. Instead she attended the University of Rochester, another highly competitive but pricier private medical school hundreds of miles from home.
“I could have tried to live cheaper in med school, but I don't think it would have been much more possible than how I was living with three, four roommates,” said the 31-year-old, who’s also a leader in her union.
Like a majority of medical school students, Iyengar knew she’d use public service loan forgiveness.
Now that option will be gone for professional school debt above $200,000.
“We want a diverse group of people taking care of patients, because we know that patients have better outcomes from providers that understand where they've come from,” she said. But that diversity might ebb if lower-income students, who are more likely to be students of color, feel priced out of med school.
UC agrees. “We don't know for sure, but we are concerned about this slowing the efforts to build the physician workforce across the country, and especially in California, where we've got significant needs in primary care in rural areas,” said Heather Harper, spokesperson for UC’s medical operations.
L.A. Care has invested $255 million since 2018 in scholarships for medical students and loan repayment for physicians to try and recruit doctors, but Santana-Chin said it’s not enough money to meet the need. She hopes that medical schools see the federal changes as a “call to action” to make education more affordable, she said.
