Sitting on about $33,000 in tuition per year, Karima Mohammed, an incoming fourth-year student at the University of Iowa, has relied on federal student loans to fund her undergraduate education.

For the past three years, Mohammed has worked countless hours and stayed up late into the night to ensure success as she works toward attending medical school.

But recent federal loan caps have caused Mohammed to worry about the stability of paying for medical school.

“I was already stressed, but now I’m worried about having to pull out private loans, which usually have higher interest rates and could tank my credit score,” Mohammed said.

Mohammed is not alone, as 72 percent of students who earned a professional practice doctoral degree in the 2019-2020 academic year had pulled out Title IV loans and owed an average of $177,100, according to the Congressional Research Service.

On July 4, President Donald Trump officially signed the One Big Beautiful Bill Act, which will reshape student loans beginning July 1, 2026.

When the new law takes effect, several major changes will reshape federal student lending:

• A lifetime cap of $257,500 will be placed on all federal student loans, marking the first time a universal borrowing limit has been enforced.
• Graduate students will be restricted to $20,500 per year in unsubsidized loans, with a total borrowing limit of $100,000. Students pursuing professional degrees—such as in law or medicine—will be permitted to borrow up to $50,000 annually, with a maximum of $200,000. Currently, these students can borrow up to the full cost of attendance each year.
• Parent PLUS loans will also be curtailed, with borrowing capped at $20,000 per year per child and a lifetime maximum of $65,000. This is a significant change from the current policy, which allows parents to borrow the full cost of attendance.
• The Grad PLUS loan program will be eliminated altogether. These loans currently enable graduate students to cover any remaining tuition and expenses not met by other aid.

For students like Mohammed, the new loan limits are a source of frustration and stress.

“The issue is, they’re putting a cap on loans, but it’s frustrating because these schools keep charging more and more, and there’s no limit,” Mohammed said.

Though Mohammed has not made any sure-fire decisions on her choice of medical school, she has considered the University of Iowa as an option. But, as an out-of-state student, she would have to pay $60,712 per year in tuition alone, totalling more than the $200,000 maximum limit.

In a statement regarding the final passage of the bill, Association of American Medical Colleges CEO David J. Skorton, a former UI president from the early 2000s, and Chief Public Policy Officer Danielle Turnispeed said they are disappointed and dismayed by the reconciliations in the bill.

“Eliminating the Grad PLUS loan program will affect many prospective medical and other health professions students and worsen the nation’s persistent doctor shortage,” the statement reads.

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Sarah Austin, a policy analyst for the National Association of Student Financial Aid Administrators (NASFAA), said that, without financing, many students likely won’t be able to enroll in or complete their programs.

NASFAA is particularly concerned about low-income and first-generation students, who may have a harder time finding private loans.

“If they don’t have those options, but also cannot obtain a private loan — either because they don’t have credit or they don’t have as good of credit to get those loans — we’re going to see that impact,” Austin said.

While it’s hard to predict exactly what will happen with private loans, Austin believes they will see private lenders change their standards.

“We may see private lenders looking into changing requirements or the approval process to allow more students to borrow private loans, but either way, I think we will see an increase in private loans if federal loans are not available,” Austin said.

Austin also said there may be a trickle-down effect on students going into the public service industry, as they may no longer be incentivized by the Public Service Loan Forgiveness (PSLF) Program, which forgives the remaining balance on Direct Loans for qualifying government or not-for-profit organization employees.

“You’re not going to get PSLF for private loans,” Austin said. “Students are going to be less likely to go into fields of public service, because the incentive of PCLF is maybe not there.”

Mohammed worries about the risk of pulling out private loans.

“The interest rates are higher, they cost more, and I worry about my credit score,” she said.