Federal Student Loans Are Being Overhauled. Here’s What Every Prospective Grad School Borrower Needs to Know.

You’ve been accepted to medical school. You’ve mapped out four years of tuition, housing, and living expenses. You’re counting on federal loans to cover what scholarships and savings won’t. But starting July 1, many students will find that federal loans cover only part of the bill. New federal borrowing caps are leaving aspiring doctors, lawyers, and other graduate students with a financing gap they’ll need to fill another way. Here’s what you need to know.

Justin Jaffe

Editorial Director, SoFi

Medical school costs $228,959 on average.¹ Law school, $217,480.² Under new federal loan limits taking effect July 1, the maximum a student pursuing a professional degree can borrow from the government is $50,000 per year, up to $200,000 over the life of the loan. For most other graduate programs, the annual cap is $20,500, with a lifetime limit of $100,000. The program that previously helped students fill that gap, Grad PLUS, is being eliminated.

According to calculations by higher ed expert Mark Kantrowitz, roughly 60% of dentistry students, 28% of medical students, and nearly 10% of law students graduated in 2020 with more debt than the new limits will allow.³ “The new loan limits will shift some borrowing from federal loans to private student loans,” Kantrowitz said.³ For students already planning their next few years around federal financing, this will require a significant recalculation.

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Repayment plans are getting a makeover, too

It’s not just borrowing limits that are shifting. Starting July 1, new borrowers will have just two federal repayment options. The updated “standard” plan offers fixed terms between 10 and 25 years, based on a borrower’s total outstanding loan balance. The alternative is a new income-driven program called the Repayment Assistance Plan (RAP), which calculates monthly payments at 1% to 10% of adjusted gross income depending on earnings.⁴ RAP waives unpaid interest and reduces monthly payments by $50 per dependent — but borrowers should note that it extends the path to loan forgiveness from 20 or 25 years to 30.⁴

For current borrowers, existing income-driven repayment plans like SAVE, PAYE, and ICR will be phased out by July 1, 2028. But income-based repayment plans will remain available for those who already have loans.⁴ Parent PLUS borrowers will have even fewer options: Those loans won’t be eligible for RAP, which will also affect the path to Public Service Loan Forgiveness.⁴

Five steps to take now

1. Know your numbers first. Research tuition, fees, living expenses, and income you’d be giving up as a student. Then complete the FAFSA so schools can assess your situation. Once you have your aid package, you’ll know exactly how much ground there’s left to cover.
2. Ask your employer. Tuition assistance is a valuable benefit. Some companies will cover part or all of a degree in exchange for a service commitment — check with your HR rep to see what’s available.
3. Explore service contracts. For students in healthcare or education, service-based funding programs like the National Health Service Corps and TEACH Grants can offset costs significantly in exchange for a commitment to work in a particular field after graduation.
4. Reconsider the degree itself. In some cases, getting a graduate certificate — which can be both shorter and cheaper than a full degree program – may help you achieve your career goals.
5. Consider private student loans. Federal loans offer certain protections, but they’re not always the lowest-cost option for borrowers with strong credit. Some lenders, including SoFi, offer graduate loans with competitive rates and no origination fee. Shop around and borrow only what you need.

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“It will be as important as ever to only borrow the amount you can reasonably repay,” said Erica Sandberg, debt expert at BadCredit.org.⁵ “The balance due will fall in your lap sooner than you think.”

For borrowers weighing their options, SoFi’s student loan calculator can help you model the numbers before you commit. And you can learn more about student loan repayment plan changes at SoFi.com.

Sources

1. Education Data Initiative, Average Cost of Medical School (2025).
2. Education Data Initiative, Average Cost of Law School (2025).
3. CNBC, Trump’s ‘big beautiful bill’ caps student loans. Here’s what it means for borrowers (July 16, 2025).
4. NerdWallet, What Is the New Repayment Assistance Plan (RAP) for Student Loans? (March 25, 2026).
5. SoFi, “Big Changes Are Coming to Student Loans. Here’s What to Know” (July 23, 2025).

Disclosures

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Private Student loans originated by  SoFi Bank, N.A. Member FDIC. NMLS # 696891. Terms and conditions apply; see SoFi.com/eligibility.

Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.