Latest news with #GradPLUS
CNBC
2 days ago
- Business
- CNBC
New federal student loan limits are a 'punch in the face' for aspiring doctors: American Medical Association president
A measure in President Donald Trump's "big beautiful bill" that caps federal student loans could make it harder for medical students to finance their education or force them to abandon their medical school plans, experts say. Starting next year, the legislation caps the amount of federal loans students can borrow for graduate school at $100,000 over a lifetime — and sets a lifetime loan limit of $200,000 for professional programs, such as medical, dental or law school. Grad PLUS loans will also be eliminated entirely. Those changes go into effect for new borrowers on July 1, 2026. Some experts say the new loan limits will provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades, outpacing inflation and other household expenses. Higher costs have made college and graduate school seem out of reach for some while saddling others with crippling student loan debt. More from Personal Finance:These college majors have the best job prospectsFamilies feel confident about paying for college, until tuition bills arriveStudent loan borrowers — how will the end of the SAVE plan impact you? Tell us Families, too, support having additional guardrails. Roughly two-thirds, or 67%, of parents said there should be limits on how much federal student loan debt students can take on, according to Sallie Mae's annual How America Pays for College report. However, for aspiring doctors, the limits may mean drastic changes. The average cost of medical school already exceeds $200,000. At private institutions, the average cost is more than $300,000, according to 2024 data from the Association of American Medical Colleges. "This is now a generation that has a big-time punch in the face," said Bobby Mukkamala, president of the American Medical Association. "People view medical students as future rich people and that's not the case at all," said Kylie Ruprecht, a third-year student at the University of Wisconsin School of Medicine. "You go into crazy, crazy debt to go into medicine," said Ruprecht, 24, "and then repay those loans over decades." Ruprecht relies on a combination of unsubsidized student loans and Grad PLUS loans to cover her costs. Once she graduates, she will begin a four-year residency to become an anesthesiologist. It will be years before she is on solid financial footing, she said. Ruprecht declined to say how much she will owe, in total, when she graduates. Although Ruprecht is grandfathered into the old borrowing limits, her current debt load, with Grad Plus loans, would surpass the new loan caps, she said. In fact, about 27.5% of medical school students and 60% of those in dentistry programs graduated with more debt in 2020 than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz. "Medical school is the 'hair on fire' situation because the numbers are big, period, and the gaps between the federal loan limits and the program costs are sizeable," said Ken Ruggiero, co-founder and CEO of private education lender Ascent Funding. Nearly every year, students and their families are borrowing more to make up the difference. Now, around 44 million Americans owe a combined $1.7 trillion for their education. Roughly 40% of that outstanding federal student loan debt is taken on for master's and PhD programs. The new legislation "doesn't affect everyone equally," Mukkamala said — it's students from underserved communities who will be less likely to go into the medical field as the new loan limits fall short of the total cost of attendance, which is over $200,000. "If someone like that gets through college and looks at that number, they are going to say, 'no way,'" he said. According to 2024 projections by the Association of American Medical Colleges, the U.S. was already on track to have a shortage of up to 86,000 physicians by 2036. "The new annual and aggregate loan limits could create challenges for some medical students to finance their education, resulting in an additional financial barrier to attending medical school and ultimately worsening the current and projected physician shortage," said Kristen Earle, program leader for student financial aid services at the Association of American Medical Colleges. "We are concerned that this added barrier could deter qualified candidates, particularly low-income students, from pursuing a medical career altogether," Earle said. It's likely the new limits on federal student loans will spur borrowers to find other lenders to bridge the gap, Earle said. "The changing landscape does present an opportunity for private lenders." Private student loans often come into play once students have reached the federal loan limits and still need additional education financing. "The new loan limits for Parent PLUS loans and graduate/professional school loans will shift some borrowing from federal loans to private student loans," Kantrowitz also recently told CNBC. "This will particularly impact low-income students, who are less likely to qualify for private student loans." Unlike federal loans, private loans are not guaranteed. Private student loan lenders rely on a borrower's credit score to determine eligibility and interest rate. "We want to lend to people who can afford to pay us back, that's how the model works," said Ascent's Ruggiero. Private loans also come with fewer safety nets and less flexible repayment options compared with federal loans. "The idea behind [the loan limits] is great, but it's not putting the burden on the universities. It's putting the burden on students," said Ruprecht, the aspiring anesthesiologist. "It's students who will have to scramble."
Business Wire
3 days ago
- Business
- Business Wire
Adtalem Global Education and Sallie Mae Sign Letter of Intent to Explore New Student Financing Model
CHICAGO & NEWARK, Del.--(BUSINESS WIRE)--Adtalem Global Education Inc. (NYSE: ATGE) and Sallie Mae (Nasdaq: SLM), formally SLM Corporation, today announced they have signed a Letter of Intent to explore alternative financing solutions for healthcare students as the federal Grad PLUS loan program phases out beginning July 1, 2026. The planned initiative intends to establish an alternative financing framework to help students across Adtalem's five institutions—representing one of the largest concentrations of future healthcare professionals—access funding to pursue their career goals. According to U.S. Bureau of Labor Statistics projections, healthcare occupations are expected to grow much faster than the average for all occupations from 2023-2033, with healthcare workers benefiting from recession-resistant career stability within the $4.3 trillion U.S. healthcare sector. In addition, the U.S. faces healthcare workforce shortages, with more than 7,000 areas currently designated as Health Professional Shortage Areas by the Health Resources and Services Administration. Moreover, the Association of American Medical Colleges projects a physician shortage of up to 124,000 by 2034, highlighting the urgent need for healthcare workforce expansion. "Sallie Mae is an exceptional leader in student financing, and an ally in our mission to scale healthcare education nationwide," said Steve Beard, chairman and chief executive officer, Adtalem Global Education. "Our institutions support over 90,000 students in their career aspirations, many of whom form the backbone of the U.S. healthcare system. This anticipated program will deepen our relationship with Sallie Mae and is expected to expand financing access for our students to complete their education and work in communities across the country. Together, we're creating innovative solutions that drive student success while addressing critical healthcare workforce needs—it's a win-win." 'As the market leader for private student lending, we are well-positioned to create innovative and scalable solutions that meet the evolving needs of our school partners and help as many students as possible access and responsibly fund their higher education,' said Jon Witter, chief executive officer, Sallie Mae. "This proposed initiative with Adtalem will not only assist their students pursuing critical, in-demand healthcare professions but also could serve as a model for other institutions seeking alternative financing solutions as they navigate changes to the federal student loan program.' The planned program will seek to establish a framework for developing tailored financing solutions specifically designed for healthcare education, which is expected to include deferred repayment options and degree-specific terms. The companies expect to finalize a definitive agreement and announce financing products in the coming months, subject to regulatory processes and final agreements. About Sallie Mae Sallie Mae (Nasdaq: SLM) believes education and life-long learning, in all forms, help people achieve great things. As the leader in private student lending, we provide financing and know-how to support access to college and offer products and resources to help customers make new goals and experiences, beyond college, happen. Learn more at Commonly known as Sallie Mae, SLM Corporation and its subsidiaries are not sponsored by or agencies of the United States of America. About Adtalem Global Education Adtalem Global Education is the leading provider of healthcare education in the U.S., shaping the future of healthcare by preparing a workforce with high-quality academic programs. We innovate education pathways, align with industry needs and empower individuals to reach their full potential. Our commitment to excellence and access is reflected in our expansive network of institutions, serving over 90,000 students and supported by a strong community of approximately 365,000 alumni and nearly 10,000 dedicated employees. Visit for more information, and follow us on LinkedIn, Instagram and Facebook.
Business Insider
3 days ago
- Business
- Business Insider
A major private student-loan company is prepping for a 'significant expansion' due to Trump's repayment changes. Here's what it means for borrowers.
President Donald Trump's student-loan policies are good for business, a major private lender said. Trump's "One Big Beautiful Bill" spending legislation, signed into law in July, included sweeping changes to student-loan repayment, including the elimination of a key affordable repayment plan and new caps on graduate borrowing. The changes signal a complicated — and likely more expensive — road ahead for millions of borrowers, and a potential surge of federal borrowers into private lending. That's because if borrowers are unable to get their tuition covered under the new federal borrowing caps, private student loans might be their only option for aid. David Yowan, CEO of the private student loan company Navient, said during an earnings call last week that he expects to see more borrowers turn to Navient following Trump's federal repayment changes. "Grad PLUS elimination is a substantial and significant expansion of opportunities that we have with graduate students," Yowan said. The Grad PLUS program, which Trump's spending bill eliminated, allowed graduate and professional students to borrow up to the full cost of attendance for their programs. The bill also capped federal borrowing for graduate students at $100,000 over a lifetime, along with a $200,000 lifetime cap for professional students, like those in medical or law school. Yowan added that the August 1 restart of interest charges for borrowers currently on the SAVE plan has led to more federal borrowers seeking to refinance. The SAVE plan, which would have allowed for cheaper monthly payments and a shorter timeline to debt relief, was eliminated in Trump's bill. Borrowers enrolled in the plan can either switch to a different repayment plan or remain on the plan, with growing interest, until it's phased out in 2028. Other private lenders also saw Trump's policies as opportunities; Anthony Noto, CEO of SoFi, said during the company's earnings call that the elimination of the Grad and Parent PLUS programs could lead to "further opportunities for in school lending and student loan refinance." Here's what a shift to the private student-loan market could mean for borrowers. What switching from federal to private student loans means Private student loans are favorable for some borrowers because they would cover what federal loans might not. For example, the new federal cap on graduate and professional borrowing falls under the average tuition costs for both medical and law school, so if students cannot pay the remaining costs for their programs, turning to private student loans would help. However, switching from federal to private borrowing comes with risks. Interest rates on federal student loans are fixed, meaning that the rate that is set when a borrower takes out the loan remains at that rate for the loan's lifetime. Private student loan interest rates, meanwhile, are often variable, meaning the rate can increase or decrease over the loan's lifetime, and lenders set the rates. It could leave some borrowers paying interest in the double digits, making it difficult to handle growing balances. Borrowers with private loans also cannot access federal programs, like debt relief through Public Service Loan Forgiveness or federal income-driven repayment plans. Sen. Elizabeth Warren led some of her Democratic colleagues on Monday in sending a letter to the CEOs of major private lenders requesting information on how they're preparing for a potential influx of federal borrowers. She has previously scrutinized private lenders over accusations of predatory behavior, like denying borrowers debt relief. "Student debt places a tremendous burden on borrowers, their families, their communities, and the U.S. economy, driving employment, spending, and housing decisions that have long-lasting negative impacts on borrowers' financial health," the lawmakers wrote. "Placing a greater share of student loans into the hands of private lenders threatens to make these problems much worse."
Gulf Today
4 days ago
- Business
- Gulf Today
Student loan caps might worsen national doctor shortage
Shalina Chatlani, Tribune News Service Twenty-eight-year-old Michaela Bonner has been working 12-hour shifts as an emergency medical technician in Norfolk, Virginia, for the past four years, while attending and paying for college to finish her prerequisites for medical school. But now that President Donald Trump's signature tax and spending law bars students from borrowing more than $50,000 annually in unsubsidised federal loans for medical school, Bonner is worried her dream of becoming a doctor is financially out of reach. 'I get told, 'Well, we really need you. We have a physician shortage, and you've done all this work leading up to this point,' and that's true as well, and it's not that I want to quit,' Bonner said in a recent interview. 'But there are no systems in place that I can rely on to support me now that I can't take out the full cost of living through loans.' The tax and spending law includes provisions that significantly alter the student loan process for higher education. The law halts current student loan repayment plans for loans that are granted on or after July 1, 2026. On that date, the law also terminates Grad PLUS loans, which have helped people pay for their higher education degrees and total cost of attendance. Current borrowers will be grandfathered in. The federal law gives current borrowers enrolled in loan repayment plans for students based on income — such as those plans known as SAVE or IBR — until July 1, 2028, to switch to a new plan. Interest collection will resume Aug. 1 for students enrolled in the Biden-era SAVE plan. At the same time, medical or law school students hoping to get unsubsidised federal loans — in which the borrower is responsible for paying the interest at all times rather than the government — will only be able to borrow $50,000 per year, with a $200,000 lifetime cap. Those seeking advanced degrees in areas such as history or philosophy have a $100,000 lifetime cap. The average yearly cost of medical school for the 2024-25 academic year ranged from around $42,000 to $72,000, depending on whether the school was private or public and whether the student was a resident or nonresident, according to the Association of American Medical Colleges. Some congressional Republicans say that students need to be working harder to pay for higher education, like medical school, on their own. Others say the caps put the onus back on colleges and universities to rein in the rising cost of tuition. But critics of this legislation say the loan caps are only going to harm students, especially from lower-income backgrounds, and will exacerbate physician shortages. In recent years states have tried to ease physician shortages by implementing various policy solutions. Since 2023, at least nine states have made it easier for doctors trained in other countries to get medical licenses. States have also participated in interstate licensing compacts, allowing nurses and physician assistants to travel across state lines to work, so long as they are licensed in one state within the compact. For student loan relief, more than 20 states have enacted legislation to address student loan forgiveness, according to the National Conference of State Legislatures, a group that tracks state policies. Georgia passed a measure that will expand a cancelable loan programme for physicians working in rural and underserved areas. Idaho also created the Rural Nursing Loan Repayment Program, offering nurses $25,000 in forgivable loans after three years of service in a rural area. McKenzie Richards, a health care policy fellow at the conservative think tank Cicero Institute who has been studying the pace of physician shortages, told Stateline that the national physician shortage could potentially exceed 100,000 by 2034. At the end of 2024 that projected number was closer to 64,000 physicians. Richards said states will be looking toward more policy solutions should the student loan changes exacerbate physician shortages. 'We know what's going to be happening coming down the line in just five years, so I think policies that states can adopt to get out of this are really important to be looking at now,' she said. 'The hope is that by capping (federal loans), it will encourage schools to lower tuition prices,' Richards added. 'Then maybe they need to be admitting more students, which would have a great downstream effect for getting more doctors through.' Other students will be in the same boat, said Lesley Turner, an associate professor of public policy at the University of Chicago and an economist. 'This is going to hit some students worse than others,' Turner told Stateline. 'Those (students) in more expensive programs tend to borrow more, and so for those students they will need to return to private student loans or other ways of financing their graduate education.' Many students were already questioning their capacity to go to medical school before the student loan caps, said Shannon Jimenez, dean of the Arkansas College of Osteopathic Medicine. 'I expect that this bill, this cap, is going to push people out of primary care and into specialties to help pay off those higher interest rate loans,' Jimenez told Stateline. She added that caps will likely deter students from lower socioeconomic statuses from going into primary care — important in places like Arkansas, where she says there is a 'maldistribution of physicians.' 'Many schools like us try to attract those students, because they're more likely to go into primary care and serve in underserved areas. So it's going to tie our hands in a lot of ways.' Large states and more rural states will feel the gaps more deeply, said Richards, of the Cicero Institute. Louisiana, for example, is projected to be short almost 5,000 doctors from a variety of specialties by 2030, including close to 400 primary care doctors. Already more than a third of Louisiana physicians are close to retirement age — similar to the situation in neighboring Arkansas. As for whether schools will just be able to lower tuition, Jimenez said, 'it makes no sense.' 'We still function in a somewhat market-driven economy and have to compete with other schools around us, so our cost is based mostly on what we have to pay our faculty, and that's not going to go down,' she said. The annual cost of attendance at her school is between $80,000 and $85,000. Bonner, the EMT, holds a political communications degree from Regent University and now is studying biomedical sciences at Old Dominion University. She already has $20,000 in loans, she said, and for the rest of college tuition, she has paid out of pocket. Since she's supporting herself, she hasn't been able to save much. She'd planned to take the medical school entrance exam next spring, but now worries about how she'd pay for living expenses while attending. 'Medical school scheduling doesn't allow for working, so you have to take out loans for living expenses,' she said. 'A lot of people, I feel, would be panicked if you had worked for eight to 10 years of your life and found out that all the systems that you were banking on in a really academically challenging space are disappearing,' Bonner said. 'I don't see a path forward for certain, but I'm fighting to make one.'
The Herald Scotland
6 days ago
- Business
- The Herald Scotland
Why it just got harder to become a doctor or lawyer
For people like her, navigating that maze just became far more challenging. Major changes are coming to higher education in the United States after President Donald Trump signed his major domestic policy bill into law. Among them is an end to Grad PLUS loans, a program that helps people pay for medical school and law school. Since Congress created the loans, direct from the federal government, in 2006, they have covered the full cost of attending graduate and professional school for nearly 2 million students. Beginning July 1, 2026, that won't be an option anymore. Trump's tax and spending law will eliminate the Grad PLUS program for new borrowers (students who take out loans before that date will be grandfathered in for up to three years). The measure imposes new borrowing caps - $50,000 annually and $200,000 overall - on the amount of federal direct loans students can take out for degrees in law and medicine. And it limits their repayment options after they graduate. Read more: Trump just made it harder to close the Education Department All those technicalities mean that some students like Tran may have fewer options for law school or medical school - or could be steered down a different career path altogether. "There's no way I can graduate early enough to avoid the Grad PLUS change," she said. The reforms represent the culmination of years of conservative efforts to rein in student lending. However, there has been bipartisan consensus about the causes of the underlying problem Republicans are trying to solve. Left-leaning groups and policymakers have also been highly critical in recent years of the crippling debt that some graduate programs impose on students. Republican Sen. Bill Cassidy, a doctor from Louisiana and chairman of the Senate education committee, said the new legislation will put a stop to a vicious cycle that has kept college costs too high. "The increasing availability of federal loans has resulted in skyrocketing tuition prices, trapping students in a cycle of overwhelming debt that they can't pay back," he said in a statement to USA TODAY. "By capping inflationary graduate loan programs, we prevent students from overborrowing and put downward pressure on rising college costs." Read more: Is grad school worth the investment? Our exclusive data shows some surprising answers. In 2024, the average annual law school tuition at a private university was nearly $60,000, according to American Bar Association data analyzed by the Law School Admission Council. For in-state residents attending public institutions, it was roughly $32,000. It's hard to know exactly how the loan limits will impact law schools, said Austen Parrish, dean of the University of California, Irvine School of Law. It's likely, in his view, that higher-ranked, more expensive schools will enroll a greater number of wealthy students who won't be as reliant on loans. Other, less privileged students may have to trade prestige for cost, he said. "You're going to see students having to make difficult decisions," he said. Medical schools brace for shift Watching from north-central Montana as Congress passed Trump's spending bill, Julianna Lindquist was happy she started medical school when she did. The 23-year-old, originally from Connecticut, is in her second year at Touro College of Osteopathic Medicine in Montana. (Of the two types of medical schools, osteopathic programs are the less-common version; their coursework is similar to that of other medical schools, but instead emphasizes a more holistic approach to patient care.) This semester, Lindquist is taking out the full amount of Grad PLUS loans she's eligible for - roughly $24,000. "I would not be anywhere without student loans," she said. "There's financial aid, but it's not enough." About half of all medical students rely on the Grad PLUS program, borrowing more than $1 billion annually, according to the Association of American Medical Colleges. Graduates of osteopathic schools, the vast majority of which take on Grad PLUS loans, often go on to serve rural areas or become primary care providers. With federal support disappearing, it'll be up to the private lending market to make up the difference, said Jane Carreiro, dean of the College of Osteopathic Medicine at the University of New England in Portland, Maine. "How are students going to navigate that?" she said. "That's a question that we're all asking." Zachary Schermele is an education reporter for USA TODAY. You can reach him by email at zschermele@ Follow him on X at @ZachSchermele and Bluesky at @
