WASHINGTON, July 5, 2026, 09:05 (EDT)
- New federal loan caps leave the typical medical student with a gap of $97,745 at public schools and $208,150 at private colleges, using AAMC data quoted by CNN and the $200,000 professional-school loan cap.
- Almost 46,000 people signed up for the new Repayment Assistance Plan on launch day, as SAVE borrowers shift over in phases.
- SLM Corp and SoFi moved into the rule change as student-loan volumes climbed, though tighter approval standards could still exclude some borrowers from private credit.
New limits on U.S. student loans kicked in this week, and the gap is showing up in med schools. The $200,000 federal lifetime cap for professional degrees will pay for roughly two-thirds of the median four-year bill at a public med school. At private med schools, the cap covers less than half the cost.
That gap is what matters to investors. The change doesn’t just lower federal risk. It pushes some grad school borrowing away from the government and into private loans, scholarships from schools, family help, or students waiting to enroll. So the issue for SLM Corp NASDAQ:SLM, Sallie Mae’s parent, and SoFi Technologies NASDAQ:SOFI is how much of what’s lost will show up as new private loans, and how much goes away because of tougher lending standards or fewer people signing up for expensive programs.
| Medical-school funding math | Median four-year cost | New federal professional cap | Implied gap | Cap covers |
|---|---|---|---|---|
| Public med school | $297,745 | $200,000 | $97,745 | 67.2% |
| Private med school | $408,150 | $200,000 | $208,150 | 49.0% |
New rules will shut down Grad PLUS for borrowers who start a program after July 1. Grad students will face loan caps at $20,500 a year up to $100,000 total. Professional students are limited to $50,000 per year, $200,000 max. Parent PLUS loans get set at $20,000 per child per year, $65,000 per child overall. Federal borrowing can’t go above $257,500 for a lifetime, not counting Parent PLUS.
Repayment rules shifted at the same time. Borrowers taking out loans from July 1 face two main Direct Loan options now: the Repayment Assistance Plan, or RAP, and the Tiered Standard Plan. RAP payments range between 1% and 10% of income and drop by $50 for each dependent. After 360 on-time payments, any remaining balance is forgiven. The Tiered Standard Plan offers fixed terms of 10, 15, 20, or 25 years, depending on the loan balance.
The new repayment process is up and running. Business Insider said first SAVE plan notices started going out July 1. Borrowers have 90 days to pick a different payment plan. Nelnet, part of Nelnet Inc NYSE:NNI, said some SAVE customers will get notices sometime between July 2026 and March 2027. Under Secretary of Education Nicholas Kent said loan servicers could reach up to 250,000 borrowers a week.
The Education Department said RAP will forgive unpaid monthly interest for borrowers who make on-time payments. The plan will also match up to $50 a month toward principal if a borrower’s payment doesn’t bring the principal down by at least that much. Kent said a temporary rate cut for auto-pay should help push repayment rates higher.
Borrower advocates have doubts. The National Consumer Law Center’s Student Loan Borrower Assistance project said the RAP could push some borrowers into higher payments each month and delay forgiveness compared to older income-driven plans. Leslie Turner, a professor at the University of Chicago Harris School of Public Policy, told CNN schools face a “very precarious financial situation,” so it’s not clear they’ll be able to make up the gap with more aid. Student Loan Borrowers Assistance
Medical-school debt isn’t just a campus problem. CNN, citing the Association of American Medical Colleges, said nearly half of all M.D. hopefuls use Grad PLUS loans and pile up more than $1 billion in debt every year. AAMC says the U.S. could be short as many as 86,000 doctors by 2036.
| Company read-through | Latest disclosed student/education-loan figure | Why it matters |
|---|---|---|
| SLM Corp NASDAQ:SLM | $2.9 billion private education-loan originations for Q1 2026, up 5%; grad originations climbed 14% | Sallie Mae’s private education-loan market share moved up to 63% by the end of 2025, compared to 52% in 2020. |
| SoFi Technologies NASDAQ:SOFI | $2.6 billion Q1 2026 student-loan volume, a 119% jump | SoFi said this was its biggest quarter ever for student-loan originations. |
| SLM funding channel | $618 million in private education-loan ABS in Q1; $3.3 billion of private education-loan sales | Extra grad-loan volume could mean more supply in the private student-loan asset market. |
Sallie Mae is pitching the federal change to investors as a driver for growth. CEO Jon Witter told investors in April that first-quarter results didn’t yet reflect the boost expected from federal reforms. He said the changes “could increase our originations by up to 70%” over several years. CFO Pete Graham added that Sallie Mae is building up for more graduate loan sales, with growth expected for 2027 and 2028. Investing.com Nigeria
Private loans don’t switch over just on volume. Lenders look at credit, income and usually want a co-signer. Turner told CNN some borrowers may not get offers if they don’t have enough credit history. Private student-loan rates are running from 2.49% to 17.99% right now, according to the Wall Street Journal’s Buy Side guide out Sunday.
The policy is still in court. The Associated Press said nursing, physical therapy and other allied health grad degrees got a temporary $200,000 professional cap, after a judge stopped part of the Education Department rule. Some theology programs dropped to the $100,000 grad cap. Kent told AP the department would keep pushing that its definition is “both lawful and appropriate.” AP News
There’s also a separate lawsuit from states led by Democrats over the loan caps, and that case is still open.
