Last updated: July 2026.
From Biden’s Student Loan Forgiveness to the 2026 OBBB Caps: What Medical Students Need to Know
If you found this page searching for Biden’s student loan forgiveness plan, here is the most important thing to know first: that plan no longer exists. The Supreme Court struck it down on June 30, 2023, before a single dollar was discharged under it. No application is open, no $10,000 or $20,000 cancellation is coming, and no replacement mass forgiveness program has been announced.
But the student loan landscape for medical students has not stood still. In fact, the changes that took effect on July 1, 2026, under the One Big Beautiful Bill Act (OBBBA) are arguably more significant for anyone borrowing for medical school than Biden’s original proposal ever was. This article explains what happened, what replaced it, and what it all means if you are a current or future medical student carrying federal loan debt. If you want to understand how the new student loan cap for medical school works, or how the big beautiful bill affects medical school loans, this is the right place to start.
What Happened to Biden’s Student Loan Forgiveness
In August 2022, the Biden-Harris administration announced a plan to cancel up to $10,000 in federal student loan debt for borrowers earning under $125,000 individually (or $250,000 for married couples). Pell Grant recipients were eligible for up to $20,000 in cancellation. Tens of millions of borrowers applied through a brief application window at StudentAid.gov.
On June 30, 2023, the U.S. Supreme Court ruled 6-3 in Biden v. Nebraska that the administration had overstepped its authority. The plan, estimated at up to $400 billion in total cancellation, was permanently blocked. The application portal was shut down, and no loans were forgiven under it.
After that ruling, the Biden administration pursued a secondary strategy through the SAVE repayment plan, which would have reduced payments for many borrowers and offered faster forgiveness timelines. That plan was also challenged in court and was formally vacated on March 10, 2026. The Department of Education began notifying all 7.5 million enrolled borrowers on March 27, 2026, that SAVE was finished.
What the Biden administration did accomplish was $188.8 billion in cumulative forgiveness for 5.3 million borrowers through existing, long-standing programs: Public Service Loan Forgiveness (PSLF), income-driven repayment (IDR) plan forgiveness, borrower defense to repayment, and total and permanent disability discharges. Those are separate from the headline plan that was blocked.
The One Big Beautiful Bill Act: What Changed on July 1, 2026
The One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, restructured the federal student loan system in ways that directly affect every medical student borrowing after July 1, 2026. Three changes matter most.
Grad PLUS Loans Are Gone for New Borrowers
Before July 1, 2026, nearly half of medical students used Grad PLUS loans to cover costs that exceeded their Direct Unsubsidized Loan limits. Grad PLUS loans had no fixed borrowing cap, which meant students could borrow up to the full cost of attendance. That program no longer exists for new borrowers.
If you had Grad PLUS loans disbursed before July 1, 2026, and you remain enrolled in the same program, you can continue borrowing under the old rules for up to three additional years or until your expected degree completion date, whichever comes first. But if you are a new borrower starting medical school in fall 2026 or later, Grad PLUS is not available to you.
New Federal Loan Caps for Medical and Professional Students
The OBBBA introduced hard borrowing limits for graduate and professional students. For medical school and other professional programs, the new caps are:
- Up to $50,000 per year in Direct Unsubsidized Loans
- A lifetime limit of $200,000 for professional programs (including medical school)
- An aggregate borrowing limit of $257,500, which includes any loans from undergraduate education
This is where the student loan cap for medical school creates a real problem. The median four-year cost of attendance for the class of 2026 is $297,745 at public medical schools and $408,150 at private medical schools, according to the AAMC. A $200,000 lifetime cap on federal professional loans leaves a gap of roughly $100,000 to $200,000 that students will need to fill through other means: savings, scholarships, institutional aid, or private loans.
Private loans are not eligible for PSLF or any federal income-driven repayment plan. For students who were counting on PSLF to manage their debt during residency and early practice, this shift is serious. To understand how different repayment scenarios might play out with your specific debt load, try the Student Loan Repayment Calculator on our site.
New Repayment Assistance Plan (RAP) Replaces Most IDR Plans
The OBBBA also phased out the SAVE, PAYE, and ICR repayment plans. SAVE and PAYE are closed to new enrollments immediately; ICR will be phased out entirely by July 1, 2028. Income-Based Repayment (IBR) remains available to borrowers with loans disbursed before July 1, 2026.
In their place, the law created the Repayment Assistance Plan (RAP), available starting July 1, 2026. RAP sets monthly payments at 1% to 10% of adjusted gross income, or a flat $10 per month if your income is below $10,000 per year. Remaining balances are forgiven after 30 years of repayment, which is longer than the 20- or 25-year timelines under previous IDR plans.
One critical tax change: IDR forgiveness is now taxable at the federal level. The American Rescue Plan Act’s provision that made forgiven student debt tax-free expired on December 31, 2025. If your loans are forgiven through RAP or IBR after 2025, you will owe income tax on the forgiven amount unless you qualify for the IRS insolvency exclusion. PSLF forgiveness, by contrast, remains permanently tax-free. Death and disability discharges are also permanently tax-free under the OBBBA.
PSLF Remains the Most Important Forgiveness Pathway for Physicians
Public Service Loan Forgiveness is still active and still accepting applications in 2026. As of January 2026, a cumulative 1,220,500 borrowers have had their balances forgiven through PSLF and related programs, totaling $90.6 billion in discharged debt, according to federal data compiled by Credible.
Among the 65.1% of 2025 medical graduates who intend to pursue student loan forgiveness, 88.5% plan to use PSLF. This makes sense. Residency programs at nonprofit hospitals and academic medical centers qualify as PSLF-eligible employment. If you remain in qualifying public service or nonprofit employment for 10 years and make 120 qualifying payments, your remaining federal loan balance is forgiven, tax-free.
However, the elimination of Grad PLUS loans complicates the PSLF calculus for future borrowers. Any portion of your medical school costs funded through private loans will not be eligible for PSLF. If you are planning your finances around a PSLF strategy, the new federal loan caps mean you will need to think carefully about how much of your total borrowing is federal versus private. Students early in their pre-med planning should factor these borrowing limits into their school selection and financial strategy from the start.
There was a brief concern that new PSLF rules effective July 1, 2026, would deny forgiveness to borrowers whose employers engage in activities with a “substantial illegal purpose.” Multiple lawsuits challenged this rule, and courts blocked it before it took effect.
How Much Medical School Actually Costs in 2026
The numbers are higher than many students expect. According to the AAMC, the median four-year cost of attendance for the class of 2026 is $297,745 at public medical schools and $408,150 at private medical schools. These figures include tuition, fees, and living expenses.
For the 2025-26 academic year specifically, median first-year tuition and fees are $42,648 at public medical schools (for in-state students) and $74,661 at private medical schools. Both figures increased from the prior year.
Including undergraduate education, the average total education cost for a new medical school graduate is approximately $476,678, according to compiled AAMC data. This helps explain why approximately 70% of medical school graduates in 2025 carry student loan debt, with an average balance of $223,130. The median debt figure reported by the AAMC is $215,000.
Among medical student borrowers, the distribution of debt is striking: 84% owe $100,000 or more, 56% owe $200,000 or more, and 23% owe $300,000 or more, according to data compiled from AAMC reporting.
About $28,000 of the average medical graduate’s loan balance comes from undergraduate borrowing, a number that has remained relatively stable over the past six years. The rest comes from medical school itself.
If you are comparing medical schools and want to understand how your academic profile fits with different programs, the IMA Pathfinder admissions calculator can help you evaluate your competitiveness at schools with different cost structures.
What This Means During Residency
The average PGY-1 resident salary in 2025 was $68,166, according to the AAMC. Residents earn enough to live on, but not enough to make aggressive payments on six-figure debt. This is why income-driven repayment plans and PSLF are so commonly used during residency. Your payments stay manageable relative to your income, and your years of residency count toward the 120 qualifying PSLF payments if you are at a qualifying employer.
With the new RAP plan, a resident earning $68,000 would have monthly payments calculated at between 1% and 10% of their adjusted gross income. The exact percentage depends on your income level relative to the federal poverty line. During residency, these payments will typically be far less than what a standard 10-year repayment plan would require.
For a detailed look at what residency involves beyond the financial picture, including training structure, fellowship options, and what to expect at each stage, see our guide to residency and fellowship.
What This Means Once You Are Practicing
Average physician compensation in 2025 was $386,000, with primary care physicians averaging $298,000 and specialists averaging $417,000, according to Medscape’s 2025 compensation survey. Most practicing physicians earn well above the income thresholds that were part of the original Biden forgiveness plan.
That does not mean debt is irrelevant after residency. A quarter of 2025 medical school graduates reported that their education debt had a strong-to-moderate influence on their choice of specialty. High debt loads can push graduates toward higher-paying specialties and away from primary care, rural medicine, or other areas of need. This is one reason why the structure of federal lending matters so much for the healthcare system as a whole, not just for individual borrowers.
For students still deciding whether medicine is the right path, and weighing the financial commitment involved, it helps to think honestly about why you want to be a doctor before the financial pressure makes that question harder to answer clearly.
How the Big Beautiful Bill Affects Medical School Loans Going Forward
The big beautiful bill’s medical school loan provisions create a fundamentally different borrowing environment than what existed even one year ago. Here is a summary of what has changed and what remains.
What Still Exists
- Direct Unsubsidized Loans (with new caps)
- Public Service Loan Forgiveness (tax-free, 10-year/120-payment requirement)
- Income-Based Repayment (for loans disbursed before July 1, 2026)
- Repayment Assistance Plan (RAP), the new IDR option for loans disbursed on or after July 1, 2026
- Borrower defense to repayment
- Total and permanent disability discharge (now permanently tax-free)
What Is Gone or Being Phased Out
- Grad PLUS loans (eliminated for new borrowers as of July 1, 2026)
- SAVE plan (vacated by court, March 2026)
- PAYE plan (closed to new enrollment)
- ICR plan (being phased out; fully eliminated by July 1, 2028)
- Tax-free IDR forgiveness (expired December 31, 2025; IDR forgiveness is now taxable)
What to Watch
Parent PLUS loans remain available but are now capped at $20,000 per year per dependent child, with an aggregate cap of $65,000 per dependent. Parent PLUS loans issued on or after July 1, 2026, will not be eligible for RAP and currently have no pathway to PSLF.
Federal student loan interest rates for 2025-26 are 7.94% for Direct Unsubsidized graduate loans and 8.94% for Direct PLUS loans (for those still eligible under legacy provisions). These rates are set annually and may change for the 2026-27 disbursement year.
Total outstanding student loan debt in the United States reached $1.866 trillion as of March 2026, according to Federal Reserve data. Of that, $1.693 trillion is federal student loan debt held by 42.8 million borrowers.
Practical Steps for Medical Students and Pre-Med Students in 2026
Given how much has changed, here is what is actually useful to do right now.
If you already have federal student loans: Check your loan servicer account to confirm your loan types, balances, and repayment plan. If you are on a plan that is being phased out (SAVE, PAYE, ICR), contact your servicer about transitioning to IBR or RAP. If you are pursuing PSLF, verify that your employer qualifies and that your payments are being counted. Use the Student Loan Repayment Calculator to model your repayment timeline under different scenarios.
If you are starting medical school in 2026 or later: Understand that your federal borrowing is now capped at $50,000 per year and $200,000 for your professional program. Calculate the gap between your school’s cost of attendance and your federal borrowing limit. Explore institutional scholarships, state programs, military service options (HPSP, NHSC), and private loans, keeping in mind that private loans are not eligible for PSLF or any federal forgiveness program.
If you are in the pre-med stage: The financial landscape makes school selection, scholarship applications, and early financial planning more important than ever. Minimizing undergraduate debt leaves more room within the aggregate $257,500 federal borrowing limit. Building a strong application through meaningful clinical exposure, strong academics, and demonstrated core competencies can open doors to merit-based aid.
If you are a parent: Be aware that Parent PLUS borrowing is now capped and that new Parent PLUS loans are not eligible for income-driven repayment or PSLF. Family financial planning conversations should happen early and should account for these new limits.
Beware of Scams
With so much confusion around student loan policy changes, scammers remain active. No government program requires you to pay a fee to apply for forgiveness. You do not need to provide your FSA ID or Social Security number to any third party to access PSLF or RAP. If anyone contacts you urgently claiming you need to act now to secure forgiveness, report them to the Federal Trade Commission.
Frequently Asked Questions
Is Biden’s $10,000 or $20,000 student loan forgiveness still available?
No. The Supreme Court struck down Biden’s one-time mass cancellation plan on June 30, 2023, before any loans were discharged under it. The application portal is permanently closed. Other forgiveness programs, including Public Service Loan Forgiveness and income-driven repayment forgiveness, remain available through separate processes with their own eligibility requirements.
How does the student loan cap in the big beautiful bill affect medical school loans?
Starting July 1, 2026, new medical school borrowers can take out a maximum of $50,000 per year in federal Direct Unsubsidized Loans, with a $200,000 lifetime cap for professional programs. Since median medical school costs range from roughly $298,000 to $408,000 over four years, most students will face a significant funding gap that federal loans alone cannot cover.
Can medical students still qualify for Public Service Loan Forgiveness?
Yes. PSLF remains active in 2026. After making 120 qualifying payments while working for an eligible nonprofit or government employer, your remaining federal loan balance is forgiven tax-free. Residency at nonprofit hospitals typically qualifies. However, only federal loans are eligible; private loans used to fill the new funding gap will not count toward PSLF.
What is the Repayment Assistance Plan (RAP)?
RAP is the new income-driven repayment plan created by the OBBBA, available for loans disbursed on or after July 1, 2026. Monthly payments range from 1% to 10% of adjusted gross income, with forgiveness of any remaining balance after 30 years. Unlike PSLF forgiveness, RAP forgiveness is taxable at the federal level.
What is the average medical school debt in 2026?
The average medical school graduate in the class of 2025 carried $223,130 in education debt, with a median of $215,000, according to the AAMC. Approximately 70% of medical graduates carry student loan debt. About $28,000 of the average balance comes from undergraduate borrowing, with the remainder from medical school itself.
