Big changes to federal student aid took effect July 1 and medical schools across the country have stepped up efforts to be sure students are informed of the changes, to boost the amount of funds available for scholarships and to create partnerships with private lenders.

The AAMC (formerly American Association of Medical Colleges) and the American Association of Colleges of Osteopathic Medicine (AACOM) are also conducting major reach-outs.

While the changes have sparked widespread concern about a drastic effect on medical school applications, as well as financial strain on students, financial aid officers and other experts outlined some hopeful strategies and avenues for help with Medscape Medical News.

About the Changes

After the Department of Education’s final rule took effect, federal direct unsubsidized loans are now capped at $50,000 a year, and $200,000 total, with a lifetime loan cap of $257,000 for medical school students. The federal Grad Plus program is no longer available. It previously allowed borrowing up to the cost of attendance. (The Department of Education explains regulations going forward for those who borrowed before July 1, the so-called legacy borrowers, here.)

How Wide Is the Money Gap?

When the cap becomes effective, it’s expected to leave many medical school students scrambling to pay for the additional costs.

According to the AAMC, the median cost of attendance for first year, in-state students for the class of 2025 was $75,654 for public allopathic medical schools and $106,787 for private allopathic medical schools.

According to the AACOM, the median 4-year total cost of attendance at a US college of osteopathic medicine in 2025 was $385,260, with a median per year cost of $96,159.

One Student’s Story

Jack Haseltine, 24, of San Francisco, scored 518 on his MCAT (95th percentile) and was accepted to nine medical schools. He runs an MCAT tutoring and premed advising service.

And he’s debating how to proceed. The university he is planning to attend this fall has an annual cost of $111,000. Originally, he thought about maxing out the $50,000 in a federal loan and then obtaining additional ones. He ran the numbers on private loans, looking at rates and payback times.

“I consider myself financially literate,” he told Medscape Medical News. But he found the numbers “scary,” the loan terms not always clear and the years required for payback too lengthy.

Now, he has a new plan — to apply for the US Army’s Health Professions Scholarship Program, which pays for medical education in exchange for service as a commissioned medical department officer after medical school.

Help From Medical Associations

Both medical school associations are working to keep students informed and to find alternative funding.

In May, AAMC and ELFI, a division of SouthEast Bank specializing in private student loans and refinancing, announced a collaboration — the MedLoans borrower benefit program. It aims to support medical students facing urgent education funding gaps.

AACOM announced a partnership with Sallie Mae on August 13. The collaboration, the group said in a news release will allow AACOM-referred students access to Sallie Mae’s medical school loans, which offer financing for up to 100% of the cost of attendance, multiple repayment options and an extended grace period. It also includes financing for eligible expenses related to residency and the costs associated with travel, moving and other expenses.

Medical School Efforts

University of Georgia: “We’ve been doing a lot of education with the incoming class about how private loans work,” said Emily Baldwin, MPA, director of Financial Aid at the University of Georgia School of Medicine, Athens, Georgia.

Costs here are somewhat lower than many other institutions, Baldwin told Medscape Medical News. With in-state costs of $61,000 a year including tuition, fees and living expenses, “our students will have about a $11,000 funding gap.” Baldwin’s office has given information about alternative loans and how to assess them.

She educates students about credit scores. While the GRAD Plus loans required a minimum credit score check, Baldwin said, “the requirements are stricter with private lenders.” She has talked to some who said they would require at a minimum a score of 660, termed fair, to be eligible, but says that would likely come with a high interest rate.

“We generally recommend students take out the federal unsubsidized federal loans first because there is leniency in regards to payment options for those,” she said, including the possibility of loan forgiveness.

For students who have saved up, Baldwin said she typically recommends holding on to some of that for years 3 and 4, which typically bring more expenses, with extra costs common, such as the cost of traveling to interviews.

The university has been raising more money for scholarships to fill the gaps. “We’ve been able to award a half million dollars in scholarships for the incoming class,” Baldwin said. That will mean half of the incoming students will be awarded a scholarship.

University of New England: At the University of New England College of Osteopathic Medicine in Portland, Maine, the aim is to identify students who need support and inform them of possibilities, said Paul Henderson, MEd, assistant vice-president of student financial services there.

“We are letting students know clearly what the changes are, and what the options are,” he said, hosting several webinars on campus. Follow-up of students has increased. When some students who were offered aid did not respond, the university reached out again to be sure they got the offer and understood it.

The university does not have a partnership with a bank, Henderson said, but they have re-assessed and updated the list of preferred lenders. They removed some lenders they didn’t feel were in the best interest of students and added more. “We doubled the size of our lender list,” Henderson said, with it now at 10.

The university is also hiring a senior assistant director of financial literacy who will start September 1, Henderson said. That person will be available to students who want to talk about loan options.

“We’re not just trying to solve it by putting more debt on students,” Henderson said. “We are also working hard to make sure we can provide scholarship money.”

Expert’s View: Concerns Are Changing

The loan cap has changed concerns and advice, according to Atul Grover, MD, PhD, founder of Academic Health, a consultancy for healthcare policy, and a visiting scholar at Stanford University, Stanford, California.

“We have historically told med students, ‘Look, the math will work eventually with basically any specialty practicing in any setting in any location and you will be able to comfortably pay back your loans,’” Grover told Medscape Medical News. “Now, I think the issue is not can you pay back the loans, but the issue becomes can you get the loans and under what circumstances.”

In the past, he said, he might have told prospective students that tuition and out-of-pocket expenses should be just one of the top three issues for deciding which school to attend if there are multiple officers.

“Now, I’d say, except for very rare circumstances, tuition has to probably be first and foremost on the list because if you are not in a position to pay for the full tuition out of pocket you want some assurances that the school of medicine is going to help you pay for medical school and keep your federal direct loans under $200,000 total.”

He added that “I would hope the medical schools would find a way to be as liberal as possible with giving student financial aid to make the cutoffs for people getting need-based aid at their school of medicine as high as possible.”

Identifying those at highest need is crucial, he said, especially since it’s already known that nearly 80% of medical students come from the top two quintiles of household income.

No sources reported relevant disclosures.