Managing student loan debt
Equip yourself with the latest resources and tools as the Department of Education implements several changes to federal loan borrowing programs.
Medical students, residents and family physicians with federal student loans need to be prepared for changes being implemented by the Department of Education.
Understanding the new loan rules
Federal borrowing options are shrinking.
Graduate PLUS loans are going away.
New borrowing caps start July 1, 2026.
You may need private loans or other funding to cover medical school costs.
Student loan repayment options will be simplified to two main plans.
Current students may qualify for temporary protection under the old rules.
For most future medical students, the practical impact is: you'll likely have less access to federal loan money and may need to rely more heavily on private financing than previous classes did.
Stay up to date on loan borrowing regulations
Download our member-exclusive resource that outlines key changes to:
Reimagining and Improving Student Education (RISE) rule
Public Service Loan Forgiveness (PSLF) program
Saving on a Valuable Education (SAVE) plan
Private loans for medical school
A guide for medical students and applicants
Private loans are issued by banks, credit unions or other financial institutions. They can help bridge funding gaps but usually come with higher interest rates, stricter credit requirements and fewer repayment protections than federal options.
Private loans may make sense if:
You’ve maxed out your federal loans
You have excellent credit or a co-signer with strong credit
You’ve carefully reviewed the repayment terms and compared rates
Commonly asked questions about private loans
In most cases, private loans should be considered only after maximizing federal student loan options. Federal loans are broadly accessible, often do not require credit checks, and offer substantial borrower protections. In comparison, private loans are credit-based, often offer limited (or no) borrower protections, and may require a co-signer.
Federal loans may align better with low-income residency years, PSLF eligibility, and forgiveness pathways, while private loans require full repayment regardless of income trajectory.
Key financial terms
| Principal | Amount borrowed |
| Interest rate | Cost of borrowing as a percentage |
| Annual percentage rate (APR) | Total cost including interest and loan fees |
| Capitalization | Unpaid interest added to the loan balance |
| Deferred payment | Payments paused during school (interest may still accrue) |
| Debt-to-income ratio | A masure used to assess a potential borrower's ability to repay |
Federal vs. private loans
| Feature | Federal loans | Private loans |
| Eligibility | Federal aid criteria | Credit-based underwriting |
| Credit/co-signer | Generally not required | Often required |
| Repayment options | Multiple, includes income-based options and forgiveness pathways | Limited; income-based repayment options uncommon |
| Protections | Strong; deferment, forbearance, and discharge options | Varied; protectiosn are often limited or absent |
| PSLF eligibility | Yes, if criteria met | No |
Interest and cost
- Fixed vs. variable interest rate
- Annual percentage rate (APR)
- Whether variable rates have a maximum cap
- When interest begins accruing
- How interest is calculated (e.g., daily, simple vs. compound)
Repayment structure
- When payments begin (immediate vs. deferred)
- Types of repayment plans available (fixed, graduated, etc.)
- Length of repayment term
- Ability to change repayment plans later
Fees and total cost
- Origination and processing fees
- Whether fees are added to principal or deducted from disbursement
- Whether prepayment penalties apply
Borrower risks and protections
- Deferment and forbearance options
- Default conditions and credit bureau reporting
- Co-signer requirements, level of liability, and release options
- Contingencies in case of the borrower or co-signer dies or becomes disabled
Training timelines and lower residency income can increase costs for private loans. Interest often accrues during medical school, residency, and fellowship, and private loans rarely offer income-based repayment options. Even when deferred repayment options exist, deferment can increase the total loan cost due to capitalization.
Private loan access may vary due to credit history requirements, co-signer criteria, and debt-to-income assessments. Private loans may be harder to access for lower-income applicants, and those with weaker credit are likely to receive higher interest rates. These factors can limit access for first-generation students and those without family financial support and may result in higher borrowing costs.
Most borrowers taking out private loans will require a co-signer with strong credit. A co-signer is legally responsible for repayment of the loan and may have their credit negatively impacted by missed payments. Additionally, some private loans automatically go into default if the co-signer dies or declares bankruptcy.
Use trusted, non-commercial tools to estimate cost and compare loan options:
How the AAFP is advocating for students and residents
Sixty-eight percent of AAFP members surveyed reported participation in a loan repayment program. Increases in student debt continue to be a major roadblock for those who want to enter primary care as a family physician.
The Academy consistently advocates for measures to mitigate the cost of medical school for students to lower the barrier of entry into the profession, and continues to call for the following measures to tackle the medical student debt crisis:
Expanding federal funding for loan and scholarship programs that target family medicine and primary care
Deferring interest and principal payments on medical student loans until after the completion of postgraduate training
Federal tax-deductible interest on all medical student debt interest
Recent advocacy on student loan forgiveness
Stay informed on how the AAFP is advocating on behalf of family physicians via letters and statements.