Many Fear Federal Loan Caps Will Deter Aspiring Doctors and Worsen MD Shortage

Medical educators and health professionals warn that new federal student loan caps in President Donald Trump’s tax cut law could make it more expensive for many people to become a doctor and exacerbate the nationwide doctor shortage.

And, they warn, the economic burden will steer many medical students toward lucrative specialties in wealthier urban areas rather than lower-paying primary care jobs in rural and underserved communities, where doctors are scarcest.

“Increasing financial barriers may deter some people from pursuing a career in medicine, particularly those from low-income backgrounds,” said Deena McRae, a psychiatrist and associate vice president for academic health sciences at the University of California.

The new federal loan limits, written into Republican legislation signed by Trump on July 4, cap the amount professional graduate students can borrow at $50,000 a year, up to a maximum of $200,000, well below the average cost of a four-year medical school education.

For students graduating from a four-year U.S. medical school this year, the median cost of tuition was $318,825, according to Kristen Earle, director of student financial services at the Association of American Medical Colleges. And for those who entered a U.S. medical school in the 2024-2025 academic year, the median first-year cost was $83,700.

Health care experts and politicians on both sides agree that medical schools need to find ways to reduce costs, but critics of loan caps say limiting federal loans is not the solution. Congressional Republicans, who voted in favor of the caps, say they are aimed at stemming the sharp rise in federal student loans over the past two decades, which has driven up the cost of college.

“Uncapped loan limits provided no incentive for schools to cut costs, knowing that taxpayers, students or students’ families would end up footing the bill,” said Sara Robertson, a spokeswoman for the Republican-controlled House Education and Workforce Committee. “Our reforms and loan limits will put downward pressure on costs to deliver better outcomes and reduced debt for all students. »

The budget law reinstates caps on graduate and professional education that Congress removed in 2006. Since then, students have been able to obtain federal loans that cover the full cost of their degree programs. The reimposition of the caps, along with other changes to federal student loans, is expected to save the federal government $349 billion over 10 years, according to the Congressional Budget Office.

It remains to be seen whether the new federal loan policy will lower tuition costs.

Robertson pointed to a 2023 National Bureau of Economic Research study showing that more generous federal loan policy since 2006 has led to “significantly higher program prices” in higher education. The study also found that additional federal support failed to increase enrollment in graduate programs, including for underrepresented students.

However, data provided by the Association of American Medical Colleges shows that it is the rising cost of living, not tuition, that has driven up medical school expenses in recent years.

Students already in medical school who took out federal loans before the new rules took effect July 1 will be exempt from the cap. But students whose loans are capped under the new law will have to make up the difference, in many cases by taking out private-sector loans, which generally have less flexible repayment terms and require a good credit score — a heavy burden for students from low-income communities.

Robertson cited a 2017 analysis showing that nearly 60% of graduating students could have obtained a private loan at a lower interest rate than any available federal loan. However, federal loans have advantages that private loans do not offer. For example, federal loans can include monthly payments geared to income, and they offer two paths to debt forgiveness, including the Public Service Loan Forgiveness Program, which wipes out the balance for those who work in a government or nonprofit organization and make their monthly payments for 10 years.

Critics and supporters agree on at least one thing: Now is the time for medical schools to think creatively about reducing costs for students. This could include reduced tuition, more chances for debt forgiveness and accelerated programs that allow students to graduate in three years instead of four, reducing costs by 25% and allowing them to move into paying jobs more quickly.

“I hope that as a result of this, medical schools and others will find a way to rise to the occasion and help us find a way to reduce the total cost of medical schools,” said Martha Santana-Chin, CEO of LA Care. “Maybe this is an opportunity for us to rethink how the system works.”

About one-fifth of medical schools offering an MD degree have accelerated programs, including the University of California-Davis, according to the Consortium of Accelerated Medical Pathway Programs.

An analysis of data from eight medical schools run by the NYU Grossman School of Medicine, with three-year core medical programs, shows that students enrolled in three-year programs experience a lifetime financial gain totaling more than $240,000 due to savings from reduced time spent in medical school, unpaid interest on the corresponding amount not borrowed, and faster progression toward a salaried position.

In addition to reducing costs, accelerated medical programs aim to address healthcare workforce shortages by training doctors more quickly. And with new loan limits poised to make it harder for many students to finance their medical education, these programs suddenly take on new relevance.

Students who spend three years in medical school instead of four have less debt and get a higher salary sooner, said Caroline Roberts, a family physician and director of rural education at the University of North Carolina School of Medicine. UNC offers a three-year course of study for students who want to become primary care physicians and work in rural areas of the state, where the shortage of doctors is a major problem.

Zoe Priddy, who is in her second year of UNC’s three-year program, said that if federal loan limits had been in effect when she was considering attending medical school, she would have needed a better-paying job than the research lab where she worked after earning her undergraduate degree.

“I would have had to change course if I still wanted to pursue medicine, and I don’t know if that would have been possible for me,” Priddy said. However, the debt reduction associated with the three-year course “made my decision easier” to pursue pediatrics, a lower-paying specialty, she said.

KFF Health News is a national newsroom that produces in-depth journalism on health issues and is one of KFF’s primary operating programs, an independent source of health policy research, polling and journalism. Learn more about KFF.

USE OUR CONTENT

This story can be republished for free (details).