Federal Student Loan Caps Take Effect in 2026
The Private Loan Reality Premeds Need to Prepare For
Juno Team
Dec 10, 2025
By Jason DiLorenzo, Director of Medical at Juno
If you’re headed to medical school next year, you’ve already got enough to stress about. MCAT scores. Shadowing hours. Personal statements.
What you may NOT be thinking about is that the math of paying for your medical school education is about to completely change.
Beginning next academic year (2026-2027), federal student loans will no longer cover the full cost of attending most medical schools.
However, there is hope - if you can approach the new world with clear eyes. Medical students can make better lending candidates than other students given low attrition rates and high future income potential.
So let’s get clear on the details to ensure you don’t walk into med school financially blind.
Yes, Federal Loans Are Getting Capped
Federal Graduate PLUS loans for new borrowers are going away next year. These loans had rates around 9% in recent years, but they were available to cover your full cost of attendance, including living expenses.
Beginning July 1, 2026, federal borrowing for medical school students is capped at:
- $50,000 per year
- $200,000 in aggregate
However, for many medical schools, the actual cost sits closer to $300,000 to $400,000.
The simple equation: Your federal access becomes limited… Your med school bill does not. Many future physicians will need up to $80,000 per year in private loans to bridge the gap. Some data suggests that the average gap across 228 medical schools is just over $40k per year.
Private Loans Are Not the Same Game
Private loans behave differently than federal ones.
- Many require underwriting or a cosigner
- Rates vary significantly
- They do not qualify for federal relief and forgiveness programs like income-driven repayment and Public Service Loan Forgiveness (I’ll cover the increasing number of tax-advantaged loan repayment programs that will pay down private loans in a future article…)
- Residency repayment options are not guaranteed
Translation: lenders actually judge you in terms of financial risk. Your credit (or your cosigner’s credit) matters. Timing matters. Preparation matters.
Fortunately, this is a game you can win. But you have to start before your acceptance letter arrives.
What Premeds Should Do Now
Proper preparation doesn’t require you to become a finance person. You just need to do a few simple things early.
Here are the credit behaviors that can increase your chances of qualifying for private student loans with competitive rates and terms:
Five Practical Credit Moves To Qualify for Better Interest Rates
1. Open a credit card in your name and barely use it.
If you do not have credit in your own name, get it. Charge lunch once a month. Pay it in full. Done. This helps build your credit history; lenders want to see you as a reliable person who can pay your credit card bills, even if they are small.
2. Pay every bill on time.
One late payment today becomes a more expensive loan later. Set auto pay.
3. Do not go hunting for loans before you actually need one.
Multiple hard inquiries hurt your credit score, the number that tells lenders how risky you are.
4. Add a cosigner early if your profile will not stand on its own.
A parent, relative, or mentor with excellent credit can help reduce your rate. Do not wait until June before M1 orientation to ask.
5. Keep your credit utilization low.
If your limit is $2,000, carrying a $1,500 balance is a problem. Keep balances under 10 to 20 percent of your total limit.
Sure… these behaviors might be boring. But they’re the difference between affordable loans and painfully expensive, high interest ones.
Do Not Accumulate Dumb Debt While You Wait
Undergrad lifestyle debt often ages poorly. Car payments, expensive furniture, travel cards. All of it shows up when lenders price your med school loans.
Live lean now. It pays off later. Literally.
Calculate Your Real Gap
Do this exercise:
- Pull the cost of attendance for your target schools
- Estimate your federal borrowing under new caps
- Identify the private loan gap you will need to fill
For many students: $50,000 per year or more.
Knowing this now should inform your planning.
Do Not Rely on Loans Alone
Scholarships, grants, institutional aid, affinity programs, state funding. Check with nationwide resources like the AAMC and Going Merry. There are also a few medical schools today that offer free tuition.
Free money is worth hunting for; take that seriously.
Why This Matters Long After White Coat Ceremony
Private debt affects your choices. I’ve seen the prospect of large monthly payments steer graduates away from lower-paying specialties. And in this new normal, private balances will not qualify for PSLF.
Doctors should have the option to choose their specialty because of their passion, not because their lender boxed them in.
Your 90 Day Checklist
Here is what you should do next:
- Pull your credit report and fix errors. Not-so-fun fact: 1 in 4 credit reports contain errors.
- If you don’t already have one, open and responsibly manage a credit card
- Map out school cost estimates & calculate your likely private loan need
- Identify potential cosigners
- Apply for scholarships now
- Avoid unnecessary borrowing
None of this is hard. It just requires being intentional.
Let Juno Negotiate For You
Future physicians should not be blindsided by a financing shift they never saw coming. That is exactly why Juno exists.
We negotiate rates with lenders based on group buying power. Students do better as a collective than they do on their own… this year to date, Juno’s graduate members achieved a median rate reduction of 1.5%*... with some seeing rates as much as 4% lower than market rates.
Joining our waitlist is free. It takes one minute. It strengthens our negotiating power for you. You get guidance and loan readiness tools before decisions are made.
If you are planning on medical school, give your future self a win:
Student Leaders: If you’re interested in helping your peers get the most competitive rates and terms next year, consider hosting a workshop or lunch & learn for your region/chapter, or becoming a Juno Ambassador: Contact Jason DiLorenzo at jason@joinjuno.com.
*From Jan 1st, 2025 through June 27th, 2025, there was an Average Rate Reduction of 1.5% for the main domestic graduate degree group.
Written By
Juno Team
Juno came into existence to help students save money on student loans and other financial products through group buying power by negotiating with lenders. The Juno Team has worked with 200,000+ students and families to help them save money.
