Medical and Dental Students Need to Be Prepared for New Loan Limits
Anyone who's ever had a potential medical/dental school student in their life knows the journey can be a bit soul sucking. The youngsters going down this road are already our best students. They have worked hard, and likely sacrificed pursuing other opportunities. In my experience, most suffer some level of self-doubt along the way as pursuing these professions is neither easy nor affordable.
Then comes the admissions process, which is lengthy, complicated and often involves disappointment, wait lists and compromise. As an outside observer, the whole process seems unnecessarily opaque and stressful.
Even for great students, admission to a medical or dental school is far from guaranteed, and a lot of life can distract along the way. Which is a primary reason why most of the families I have worked with in my practice, and even those on a personal level in my own family, are not entirely financially prepared when the med/dental school acceptance letter arrives, and particularly when the cost of attendance letter arrives soon after.
Understanding the True Cost of Attendance
In case anyone reading doesn't know it, medical or dental school can be absurdly expensive. According to the Educational Data Initiative, annual tuition costs can range from $42,000 to $100,000, and these numbers don't include housing, transportation and eating. Even for the best-prepared families, this level of cost is difficult to endure. Student loans have traditionally filled the gap, and as the total cost of this level of education can range from $230,000 to $500,000, it is not unusual for new doctors and dentists to graduate with hundreds of thousands in student loans, taking decades to repay. It's a tough road, and it just got tougher.
What's Changing Under the OBBBA
Starting in just a few months on July 1st, as a result of provisions in the OBBBA (One Big Beautiful Bill Act), the federal government will begin greatly reducing the annual lending and aggregate sum of federal student loans made available to medical and dental students. While the headline lending amount of subsidized student loans for medical students is actually increasing from roughly $40,000 to now $50,000, the OBBBA eliminates a loan product called the Graduate Plus Loan, which many medical/dental students have traditionally used to fund tuition and living expenses. It is highly likely the elimination of the Graduate Plus Loan Program will leave annual funding gaps ranging from $20,000 to $50,000 for students.
In addition, while the new rules specifically allocate a $200,000 lending cap for medical/dental students, the OBBBA also aggregates all student loan debt (undergraduate and postgraduate) into a $257,000 lifetime lending limit. Complicated, I know, and many families have been caught off guard.
The Logic and the Unintended Consequences
I understand the logic behind these rule changes. Like healthcare costs, college education costs and the price of toilet seats on aircraft carriers, any time government money enters an equation, it tends to skew market forces and pricing, and as result, inflation rates in these cost categories far exceed the general inflation rate. So, if the government's intention is to "slow the roll" at these schools when it comes to tuition cost increases, restricting student loans as a funding source might just work over time.
My issue as a financial planner, however, is the unintended consequences of implementing these major rule changes so rapidly over the short term. The OBBBA was only signed into law in July 2025, and to have these new rules become effective only a year later is catching the students and families in my life feeling unprepared and, in many cases, a little scared.
Strategies for New Students
To be clear, the rule changes should not affect students already in med/dental school, as they should be grandfathered into a legacy provision in the law. For new admissions starting in the fall, however, many need a new strategy as market forces are unlikely to prevail in time. Here are a few tips.
Assuming the new med/dental school student has an acceptance in hand, consider using the legacy provision in the OBBBA to take out a Graduate Plus loan now before the program ends on July 1st. Having an existing Graduate Plus loan "on the books" before July grandfathers the student into the existing lifetime borrowing limits, which treats existing undergraduate loans more favorably. The student will need to be enrolled and attending classes to use this loophole, so contact the school as soon as possible to explore options. Summer classes are probably in your future.
Explore service-based scholarships. Perhaps the smartest plan I've seen came from my nephew, who pursued an officer commission in the U.S. Army through the Health Professions Scholarship Program. Not only will he finish his service commitment in his early 30s, but he will also enjoy practicing afterwards with no student debt, and he even received a stipend for living expenses while in med school. Similar programs are offered by the National Health Service Corps (NHSC) Scholarship and the Indian Health Service (IHS) Scholarship.
Explore private loan programs, but please do so carefully. The amount of funding to be potentially borrowed means any private loan program will have to be well understood. If financial topics are not in the student's wheelhouse, then please get help. Consult a trusted banker, financial planner or accountant. We are all here to help.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. No investment strategy can guarantee a profit or preserve against loss. Past performance is not a guarantee of future results. This material may contain forward looking statements; there are no guarantees that these outcomes will come to pass.
Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.
