Tax bill would cut availability of med school loans amid doctor shortage

What they're saying: "We've got a tsunami of challenges already to deal with," said David Bergman, a senior vice president at the American Association of Colleges of Osteopathic Medicine (AACOM). "It just will be exacerbated by a lack of access to reasonably priced student loans."

State of play: The GOP-led reconciliation bill moving through Congress would eliminate a federal loan program for graduate students called Grad PLUS. Loans would become unavailable for new borrowers starting in the 2026-2027 school year and for existing borrowers in the 2029-2030 term.

• The program allows graduate students — including those in medical and other health professions — to cover their full tuition and living expenses through the federal government. It helps make up costs after students exhaust the direct loans available to them.
• More than 80% of DO graduates who borrowed money for school relied on Grad PLUS loans, according to 2023 data from AACOM.
• The bill would also stop loan repayments during medical residencies from counting toward a loan forgiveness program; cap professional school federal loans at $150,000; and require universities to pay a portion of unpaid student loans back to the federal government.

Zoom out: Many aspiring doctors rely on loans to finance their educations. More than 70% of medical students in the class of 2024 at MD-granting schools had education debt, with students borrowing an average of $212,341, per the Association of American Medical Colleges (AAMC).

• Private loans are available to medical students, but federal loans are often more attractive because they typically come with better terms and conditions.
• Federal student loan programs can be particularly important for students from lower-income backgrounds, who might be less willing to apply to medical school if have to take large, high-interest loans, Bergman said.

The legislative changes are aimed at pushing medical schools to lower tuition, said Sara Robertson, press secretary for Republicans on the House Committee on Education and the Workforce.

• The changes will "reduce the need for students to borrow in the first place and nothing in the bill prevents colleges from providing additional financial aid to low-income students pursuing medical school," Robertson said in an email to Axios.
• Robertson pointed to a working paper published in 2023 by the National Bureau of Economic Research that found that Grad PLUS has not increased graduate school access, and also suggested the program has led to higher tuition costs.

• Eliminating Grad PLUS loans and changing loan limits would free up an estimated $34.7 billion between 2025 and 2034 to pay for the tax cut bill.

The other side: Medical schools dispute the suggestion that these policy changes will drive down tuition and the overall cost of attending medical school.

• Median medical school tuition for an in-state student at an MD-granting state school is $50,218 this year. That's higher than last year's median tuition of $48,290, but lower than the $53,582 for 2020, per inflation-adjusted data from AAMC.
• Meanwhile, median living expenses for medical students have increased from $19,825 in 2020 to $21,950, according to the organization.
• While some studies do point to a relationship between increased availability of federal student loans and increased tuition costs, the broader literature is inconclusive.

Between the lines: The changes moving through Congress could also affect access to graduate programs for other health care professions, like physician assistants.

The bottom line: "If we don't have physicians who are able to practice, who are able to do their residencies and go to medical school and deliver that care all across all across the country ... that ultimately will affect patients and care," said Danielle Turnipseed, AAMC's chief public policy officer.