Grad PLUS Eliminated: What Med Students Need 2026

Congress killed the Grad PLUS loan program. Signed into law in 2025 by the One Big Beautiful Bill Act (OBBBA), starting July 1, 2026 this change means that loans will no longer be unlimited for costs of medical school. Starting medical school in fall of 2026 or later means you cannot borrow unlimited federal loans anymore. New rules have come into force. What Was Grad PLUS? Grad PLUS loans allowed graduate and professional students including medical, dental, law and MBA students to borrow full cost of attendance directly from the government. You could use this after tapping into unsubsidized loans; there were no caps on total borrowing each year. Medical students at schools costing $75, 000 yearly could borrow this full amount from the federal government. Before PLUS loans were eliminated, medical students typically borrowed federal money like this: Unsubsidized loans: $20, 500 per year (this was capped) Grad PLUS: up to cost of attendance minus other aid (typically $40, 000 to $55, 000 per year) Total federal: was about $60, 000 to $75, 000 per year. What Changed: Federal Loan Cap Now $20,500/Year Federal loans for graduate and professional students will be capped at $20, 500 per year starting July 1, 2026. That limit is the same that existed before Grad PLUS loans were introduced. Imagine a student who costs $65, 000 annually at school. They receive: Federal: $20, 500 each year Remaining: Roughly $44, 500 each year. This has to come from private sources. For four years of medical school that adds up to $178, 000 in private loans alongside $82, 000 in federal loans. Who Is Affected? You are affected if you borrow for the first time after July 1, 2026: Starting from fall 2026 and later. Students who drop out and then return after July 1, 2026. Students who begin graduate/professional studies starting July 1, 2026 and later. You are not affected if: You already received PLUS loans before July 1, 2026. You're currently an M2, M3, or M4 with existing PLUS loan balances. These loans keep the old terms. You're currently in repayment. If you received PLUS loans in 2026 as an M2 and there were loans from your prior M1 year, those loans are fine. But any M2 disbursements after July 1, 2026 will fall under new rules. How Medical Schools Are Responding Schools are revising their financial aid packages for next year 2026–2027. Most say something like this: Grants and scholarships from the institution first, ask the financial aid office. Federal loans that are not subsidized: $20, 500 per year, fixed rate 6. 54 percent (this is the rate for 2026–2027). Then private loans to cover shortfall. Some high endowment schools are offering more grants to compensate for Grad PLUS shortfall. Check if your school has funds for emergencies or bridging programs as well. AAMC is watching how schools react. By September 2026 most schools expect students to receive each year private loans to cover cost of attendance about $35, 000 to $55, 000. Private Loans: The New Reality Variations in interest rates: for private loans are greater than with federal loans: Rates typically start around 5 to 7 percent (as of September 2026). These rates can change throughout your four years of study. Fixed rates: are offered by most lenders at 6 to 9 percent. Creditworthiness of students is an important factor in determining rate level. Most students need cosigners: who have better credit who are likely to get better rates and approval. Private loans have no income based repayment plan. No eligibility for programs like Income Based Repayment or Public Service Loan Forgiveness. You cannot consolidate private loans into Federal Direct Loans either. One key difference from federal loans: is that they start charging interest immediately and often require you to pay only interest while in school. during school. Unsubsidized federal loans accrue interest but defer all payments until after graduation. Top lenders offering medical student private loans as of 2026: Sallie Mae — widely available, no cosigner release programs for some products Earnest — competitive for borrowers with established credit College Ave — flexible repayment terms Discover — no fees, competitive rates for qualified borrowers Juno — negotiates group rates for medical students; worth checking as it aggregates lenders PSLF Implications of Private Loans This is critical: private loans do not qualify for PSLF. Period. If you're planning on PSLF — a common and powerful strategy for physicians at nonprofit hospitals — the private loan portion of your debt is a problem. Private loans: Don't qualify for any IDR plan (IBR, PAYE, ICR, RAP) Don't count toward PSLF's 120 qualifying payments Require standard repayment starting after a grace period If you borrow $44,500/year privately for 4 years ($178,000 total), that $178,000 sits completely outside the PSLF ecosystem. You'll owe it in full regardless of your employment. Strategies to protect your PSLF eligibility: Maximize federal unsubsidized loans ($20,500/year) — these are IBR/PSLF-eligible Seek institutional/school loans — many are federal or have income-sensitive repayment Minimize private borrowing to only what's necessary Plan private loan repayment separately from your PSLF strategy The Aggregate Federal Loan Cap Federal law also caps total lifetime unsubsidized borrowing for graduate/professional students at $138,500 (including undergrad debt). At $20,500/year × 4 years = $82,000 for medical school alone. If you have undergrad federal loans, those count toward the $138,500 cap. Most medical students won't hit this cap in medical school, but it's worth knowing. A student with $30,000 in undergrad federal debt and 4 years of medical school borrowing at $20,500 = $82,000 new + $30,000 existing = $112,000 total — still under the cap. What This Means for Residency and Repayment Federal loans (IBR during training): The $82,000 in federal loans can be managed on IBR during residency, same as before. Payments are income-based, modest, and count toward PSLF if you're at a qualifying employer. Private loans (harder during training): Private loan servicers generally require some payment after your grace period (typically 6 months post-graduation). Many offer: Interest-only payments during residency (if offered by the lender) Deferment (interest still accrues) Graduated repayment But none of these options reduce the principal or count toward any forgiveness. The private balance will grow during training if you're making only interest-only payments. Budget $500–$1,500/month for private loan minimum payments during residency, depending on your balance and lender terms. This is a real cash flow constraint on a $65,000–$75,000 resident salary. How to Structure Your Medical School Funding Post-Grad PLUS Year 1 decision framework: Calculate your actual COA (cost of attendance from your financial aid office) Subtract grants, scholarships, family contributions Take the full $20,500 in federal unsubsidized loans Take any institutional/school loans offered (compare terms carefully) For the remaining gap, get quotes from 3–4 private lenders Choose the lender with the best rate for your situation — fixed rate preferred for predictability Minimize borrowing where possible: Live with roommates in a cheaper apartment Avoid the cost of a new car (your school's COA budget often includes a car allowance you don't have to spend) Use medical school's meal plan or cook at home The difference between borrowing at your COA max vs. 80% of COA is $10,000–$15,000/year = $40,000–$60,000 less debt at graduation FAQ: Grad PLUS Elimination Does Grad PLUS elimination affect current medical students? It affects new disbursements after July 1, 2026. If you're an M2 or M3 with existing Grad PLUS loans, those are unaffected. But any new borrowing after July 1, 2026 is capped at $20,500/year federal. Can I consolidate private loans into federal loans later? No. Federal loan consolidation (Direct Consolidation) only combines federal loans. Private loans cannot be converted to federal loans. What if I can't cover my COA? Talk to your financial aid office immediately. Options include: appealing for more institutional aid, taking a part-time job (allowed at many schools during MS1-MS2), applying for emergency grants, or evaluating whether to defer enrollment while building savings. Will Grad PLUS come back? Politically uncertain. The OBBBA passed on a party-line vote. A future Congress could reinstate Grad PLUS. But medical students entering in 2026 should plan for the current rules, not hypothetical future changes. Do I still need to file FAFSA? Yes. Federal unsubsidized loans still require FAFSA. Filing also makes you eligible for work-study programs and institutional aid that uses FAFSA data. Model Your Repayment Now Even as an M1, running your numbers matters. Use the MedDebt Calculator to model what your federal + private loan combination will look like at graduation — and what repayment looks like across PSLF, IBR, and aggressive payoff strategies. Understanding the landscape early lets you make borrowing decisions that align with your career goals, not just your immediate cash needs.

This article is for informational purposes only and does not constitute financial, legal, or tax advice. Every borrower's situation is unique — consult a certified student loan advisor or fee-only financial planner before making repayment decisions.

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