The One Big Beautiful Bill Act and Medical Education in These United States

On Independence Day of 2025 President Trump signed his One Big Beautiful Bill Act (OBBBA) into law.  Something that has not gotten much attention, so far, are the consequences OBBBA will have on students who must borrow money to attend college/university, graduate school, and/or professional school.  Should American students be forced to go into debt for their higher education?  No, our system is ridiculous.  But that is a topic for another time. [1]

Our subject for today is how abrupt change in the rules for student lending without a phase-in period has put many medical students at risk of not being able to finish what they started.  I will use my long experience in medical education as a guide.  I believe that it is relevant across the board for both public (e.g., UCLA) and private (e.g., Stanford) medical schools in which I have worked.

The typical medical student begins with some debt overhang from his or her undergraduate education.  Medical students of the Class of 2030 who will enter medical school in August 2026 will be subject to aggregate Federal Direct Student Loan limits of $200,000 (this limit also applies to other graduate and professional programs [2]).  This $200,000 might seem more than adequate, but it is not.  For example, the annual cost of attendance (COA) at Stanford Medical School is over $100,000 per year. [3]  Medical school in the US typically lasts four years after four years of undergraduate studies.  At my institution, the COA is much less, primarily because our tuition much lower than that at Stanford and we are not in the heart of Silicon Valley.  But our students will be affected, too. [4]

What are the likely consequences of the limits of the OBBBA?  This is outlined in a report released in February by United States Senators Warren, Schumer, Sanders, Blumenthal, Hirono, Merkley, Van Hollen, and Wyden entitled Costly Consequences: How the Trump Administration Unleashed Private Student Loan Lenders (pdf).  From the Executive Summary of Senators Warren et al.:

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act (OBBBA) into law.  Among its many provisions, this law set new caps on federal student loan borrowing, paving the way for a significant expansion of the private student loan market. (emphasis added)

This report—the first Congressional analysis of the impacts of OBBBA’s student loan provisions on the private lending market—is based on information provided by six significant private student loan lenders in response to Congressional oversight. Combined, these lenders—Navient, Sallie Mae, SoFi, Citizens, College Ave, and Nelnet—lent over $14.7 billion in private student loans in 2024. The information provided by these lenders reveals that:

• Major private lenders have been expanding their lending activity each year, despite persistent predatory behavior in the private student loan market.
• Private student loan lenders expect more students to turn to private loans due to OBBBA’s loan limits, and at least one lender is already making plans to expand its loan offerings in response to this policy change.
• Most of the private lenders surveyed offer minimal protections for borrowers who are defrauded by their schools or who face a sudden school closure.
• Half of the private lenders surveyed either have sold student loans to private equity firms or plan to do so in the future.
• Most of the private lenders surveyed expressed a willingness to expand customer service capacity if they face increased private loan demand due to OBBBA, but they have not yet made any concrete plans to do so.

So, while medical students can borrow up to $200,000, this is unlikely to cover the cost of medical school.  A key provision of the OBBBA is that it ended the Grad PLUS loan program, which allowed medical students to cover the entire cost of their degree, at ~7% with a 4% initiation fee (both low enough for the borrower and high enough for the lender).  And while current students are protected somewhat by legacy provisions, if their education is interrupted for any reason (e.g., illness, parenthood, minor academic setback) they will get thrown out of the program.  The net result is that off-cycle students will be required to enter the private loan market for the remainder of their medical education.  It should be noted here that medical school is more than a full-time project and that students who try to work part time while in medical school are taking a big risk of failure.  In the absence of scholarships or grants provided by their institution, they will be forced to enter the private lending market, if they can.

Some of the likely impacts of private loans include a required credit check, which many students will fail because they do not meet commercial standards (low or no outside income, limited credit history, which would have been my truth), requirement for a cosigner who meets the credit requirement (I would have lacked one), and predatory interest rates of up to 18%.  And unlike federal student loans, private loans are not eligible for public service loan forgiveness plans or repayment plans based on future income, such as for a physician who works for a non-profit primary care clinic in a rural or medically underserved area.  Note that essentially all rural areas in the United States are medically underserved.  Thus, students at medical schools whose mission is to prepare their students to become primary care physicians in rural areas are likely to be at a severe disadvantage.

This is considered further in report from the Century Foundation (pdf) called Access Denied: How 40% of Americans Are Locked Out of the Private Student Loan Market.  From the Executive Summary:

Proponents of the new law argue that the private student loan market is better suited to support students and families in need of higher education financing and will fill funding gaps accordingly. Private lenders have long lobbied for stricter loan limits on federal lending, and now that Congress has done their bidding, they are eagerly preparing for a boom in new business. (emphasis added)

However, our structured analysis of 34 commercial private student loan lenders reveals that promises that the private market would fill the gap left by new lending limits on federal student loans are not only overstated, but empty. While private student loan lenders are likely to make windfall profits from the recent legislative changes, our analysis finds that approximately 40 percent of Americans would likely be denied traditional student loans from prime, private lenders and be forced to consider shady, predatory, subprime lenders or give up on higher education altogether. Among other key findings, we note:

• Over 40 percent of Americans would likely be denied the vast majority of private student loans from traditional, prime lenders based on credit and income underwriting requirements.
• Nearly 2 in 3 Pell Grant recipients (61.1 percent), who are disproportionately students of color, would be excluded from qualifying for the vast majority of private student loans from traditional, prime lenders based on minimum income requirements.
• Every significant lender in our analysis requires that the borrower or cosigner must be “creditworthy.” This requirement likely prevents over 1 in 4 Americans (25.7 percent) from qualifying for practically any private student loan from a prime, traditional lender.
• About 82 percent of non-profit lenders have significant state-based residency restrictions further limiting access to who could be eligible, in addition to stringent underwriting criteria.
• Between 61 percent to 100 percent of loans originated by the lenders in our sample have cosigners. This underscores the private loan market’s continued reliance upon household wealth and financial stability for underwriting borrowers’ loans, and how the private market continues to disadvantage low-income and underprivileged borrowers.
• In the few instances where lenders disclosed separate underwriting criteria for graduate loans, they generally required applicants to meet either the same or even higher minimum credit score and income requirements than for undergraduate loans. Therefore, our exclusion findings apply to and may be even higher for graduate (and professional) students seeking loans in the private market.

Importantly, our analysis only considers the number of Americans that could be excluded from private student loans due to income and credit score requirements. Other common underwriting criteria were not considered in this analysis, including debt-to-income ratio requirements, minimum employment lengths, stable residency requirements, state-based residency restrictions, cosigner requirements, and myriad other conditions set by lenders. Therefore, this analysis should be considered a conservative estimate of the share of Americans that could be excluded from financing their higher education with loans from prime, traditional, private education lenders.

Recent reporting suggests that schools recognize the obstacles that traditional underwriting may pose for many students’ access to credit and are quietly pursuing deals with lenders to create new, more expansive institutional lending schemes to loosen underwriting criteria. This presents its own risks to students and families, as schools choose to backstop lenders without providing an expanded safety net for students.

Elsewhere in consumer finance, the combination of loose underwriting, high interest rates, and high expected default rates are hallmarks of predatory lending. The private student loan market is no exception. (emphasis added)

When I contemplated medical school as an undergraduate, the best indicator of success was having one or both parents who were graduates of medical school or law school or the equivalent.  Since then this has changed, with federal student loans for medical education a large part of that solution.  But after the OBBBA?  The end result will be that aspiration and application will now matter much less than accidents of birth. [5]  This will unnecessarily complicate efforts across the nation to recruit medical students from disadvantaged and rural backgrounds (often one and the same) who will later return home to practice medicine where they are needed instead of in the city.  All this for no good reason, other than to enrich lenders in the private student loan market.

As one final point, we should return to the cost of medical education in the United States.  Like all of higher education, medical school has become ridiculously expensive as universities have become resort-like finishing schools instead of serious academic institutions.  In contrast to the present, a close colleague and near-contemporary attended a state-supported medical school.  His spouse was a pharmacist at the time, and her income plus family student housing allowed him to graduate from medical school with no debt.  He was like many others of our generation.  I eventually took a different path that included a long apprenticeship as a laboratory coordinator, but I graduated with my PhD with no debt.  My two children were fortunate to graduate from their universities in essentially the same position due primarily to the one lasting contribution of the late Georgia Governor Zell Miller and former United States Marine, before he completely lost the plot during the 2004 presidential election (image here).

While the following is no excuse for our system, it can be noted that current medical school debt can be repaid relatively quickly by those young physicians who do not lose their plot.  These doctors who do not do well have been described by a colleague who is the Chief Medical Officer of a nearby urban hospital.  They have worked hard for years and are therefore feel immediately entitled to a too-large house for their Range Rover and BMW (not Honda and Mazda) to fit in as soon as they can arrange the financing instead of establishing a foundation for a long and prosperous future.  The rest of their story is all too often sadly predictable.

But the rest of the story for those entering the pipeline or who recently began medical school is that the rules have changed on them unexpectedly, all because certain people who have never not had enough money to do as they wish, object to “lesser” students having to borrow money to become a doctor.  Strange.  And now these students might very well run out of support before finishing medical school.  Or they will be required to resort to predatory lenders to finish.  This will only add unnecessary stress to their lives and families.  But the lenders?  They will get rich in the process, as the Neoliberal Dispensation plays itself out, which is exactly what it is doing despite all that whistling surrounding the graveyard on all sides.  In any case, this is just one more feature of the system.  It is not a bug.

It is several exits past absurd that in the USA postsecondary, graduate, and professional education are beyond the means of so many, without going into serious debt.  But a strictly performative and ultimately ineffective stab at solving a longstanding problem by fiat will not work.  This was also tried using one of the president’s most beautiful words – tariffs, which as performance art instead of a real industrial policy, will not work (while also being illegal according to the Supreme Court).

Alas, this is something political leadership of the entire Uniparty, up to and including the DOGE Era, seems not to grasp.  Nor do their followers.

Notes

[1] By way of comparison with today, my first-year tuition (adjusted for inflation using the BLS Inflation Calculator) at my flagship state university was $3,968 instead of the current $11,800 (+197%).  Room and board were much less expensive then, too ($405 and $675 for three 11-week quarters including a week for final exams; I remember because I wrote the checks).  In my day tuition accounted for 10% of the university budget.  This has risen to more than 35% according to a recent University Fact Book.  As expected, this is not recognized as the tax increase it is.

[2] Fulltime academic graduate programs in traditional disciplines in the arts and sciences usually include tuition remission and research or teaching fellowships or stipends that cover much of the cost of graduate school.  This is not generally true of professional programs (e.g., medicine, nursing, law, and clinical/therapeutic specialties such as clinical psychology, social work, and family therapy).

[3] COA includes tuition, fees, books and supplies, housing, food, transportation, health insurance if needed, and a modest allowance for personal expenses.  The annual COA at Stanford Medical School is outlined here.

[4] As a general rule, it does not matter where a doctor in the United States went to medical school.  Good and bad doctors come from all over.  Every US medical school must meet strict standards mandated by the Liaison Committee on Medical Education (LCME) and all American medical students must pass their United States Medical Licensing Exams (USMLE) to progress through medical school and then obtain a license to practice medicine as an intern/resident.  Separate medical board certification (e.g., internal medicine, surgery, neurology, pediatrics) is required after residency, which lasts from three to eight years depending on specialty and advanced fellowship completion.

[5] I know this community is generally anti-golf (understandable when the example is the American version) but bear with me for a moment here.  One of the president’s justifications for destroying public golf in Washington DC while abrogating an agreement that included renovation of DC public courses by the golf versions of Titian, Rembrandt, and Caravaggio and replacing them with the equivalent of the Painter of Light, is that (he says) golf should be “aspirational.”  By this he means it should be only for the rich or near rich.  No.  Like the motorized golf cart, this notion is just another peculiar American perversion of the game.  I recently returned from a pleasant visit to the Home of Golf in the Kingdom of Fife plus a visit to Angus.  There I met many golfers who are just regular folks and pay £60-80 per month to play on the finest golf courses in the world, while walking as intended.  This is certainly not nothing but it is affordable for any number of people, such as the high school science teacher I met on one of the best golf courses in the world.  At Carnoustie, children get coaching for free and are allowed on the championship course as soon as they can play well enough to get around it, at no cost.  Students and residents of St. Andrews can purchase a yearly ticket for about £600-800 per year to play on any of the St. Andrews Trust links courses as much as they like.  The typical “finest” golf courses in the US cost at least ten $1,000 per month, not including a high “initiation fee.”  And children are frequently unwelcome.  Oh, and all but a very few British and Irish golf courses welcome guests, even if sometimes they require jumping through a few hoops.  As with golf, aspiration to become a physician should not depend on being rich or near rich.