Trump Budget Cracks Down on Bloated Grad School Debt

(LibertySociety.com) – Trump’s plan to slash Grad PLUS loans could block thousands from becoming doctors as the nation faces a critical physician shortage of 86,000 by 2036.

Key Takeaways

• Trump’s FY 2026 budget proposes eliminating Grad PLUS loans and capping medical student borrowing at $150,000—less than half the cost of medical education
• The average medical student graduates with $212,341 in debt, while the proposed cap would cover less than two years at many schools
• Republicans claim the $34.7 billion saved would help fund tax cuts, while medical organizations warn the changes would worsen the physician shortage
• Over 75% of medical students rely on federal loans, with minority and low-income students most vulnerable to being priced out of the profession
• The proposal comes as America faces a projected shortage of up to 86,000 physicians by 2036

Medical Education Under Attack

The Trump administration’s FY 2026 budget proposal takes direct aim at America’s future doctors, threatening to eliminate a critical funding lifeline for medical students. The plan would terminate Grad PLUS loans and impose a $150,000 borrowing cap on professional school students—a devastating blow when the average medical education costs between $250,000-$400,000. This comes at a time when our nation already faces a looming healthcare crisis with a projected shortage of up to 86,000 physicians by 2036, according to the American Medical Association.

Medical organizations across the country have sounded the alarm about these proposed cuts. The Association of American Colleges of Osteopathic Medicine notes that the $150,000 cap “wouldn’t cover even one year at many schools.” Meanwhile, the Asian Pacific American Medical Student Association warns of “disproportionate impacts on low-income and minority students” who rely heavily on federal loan programs to pursue medical careers. These changes would effectively slam the door on thousands of qualified students from diverse backgrounds.

Debt Crisis in White Coats

The stark reality of medical education in America is already financially daunting. Over 75% of medical students depend on federal loans, with 2024 graduates averaging a staggering $212,341 in debt. The proposed $150,000 cap falls dramatically short of the current median cost of attending even a public medical school, which stands at approximately $286,000. Private medical schools often cost significantly more, pushing total education expenses well over $400,000 for many students.

While Republicans claim these changes will pressure institutions to lower tuition costs, medical schools counter that such reductions are unrealistic given rising operational expenses. The Trump administration cites a 2023 National Bureau of Economic Research paper suggesting Grad PLUS increased costs without improving access. However, this theoretical argument ignores the immediate and devastating impact on current and prospective medical students who would be forced to turn to private loans with higher interest rates and fewer protections.

Tax Cuts Over Doctors

The motivation behind these cuts becomes clearer when examining the broader budget context. The $34.7 billion saved from eliminating Grad PLUS loans would help fund tax reductions primarily benefiting higher-income Americans. This represents a clear prioritization of tax cuts over healthcare workforce development at a time when our aging population requires more physicians, not fewer. The proposal also accompanies $300 million in reductions to SNAP and Medicaid restrictions expected to remove 14 million Americans from healthcare coverage.

“These proposed changes would have a devastating impact on our nation’s ability to train the next generation of physicians,” warns the American Medical Association. “At a time when we face critical physician shortages, particularly in rural and underserved areas, we should be expanding access to medical education, not restricting it through arbitrary borrowing caps that don’t reflect the true cost of becoming a doctor.”

Worsening the Doctor Shortage

The consequences of these proposed cuts extend far beyond individual students’ financial hardships. America’s healthcare system already struggles with physician shortages, particularly in primary care and rural communities. By making medical education financially inaccessible to all but the wealthiest students, these changes would exacerbate existing disparities in healthcare access. The physician workforce would become less diverse and more concentrated in lucrative specialties and affluent areas as graduates seek higher-paying positions to manage their debt burden.

Medical schools have pushed back against the administration’s claim that cutting federal loans would force tuition reductions. They point to rising costs for faculty, facilities, technology, and clinical training sites that make significant tuition cuts unrealistic. Without federal loan options, many qualified students would simply be unable to pursue medical careers, particularly those from middle and working-class backgrounds who lack family wealth to fall back on.

America’s Healthcare Future at Risk

The timing of these proposed cuts couldn’t be worse for America’s healthcare system. As Baby Boomers age and require more medical care, we face a growing physician shortage that threatens access to care nationwide. Primary care specialties, which already struggle to attract medical graduates due to lower compensation compared to subspecialties, would be hit particularly hard. Students burdened with private loans at higher interest rates would be even more likely to choose lucrative specialties over family medicine, pediatrics, or psychiatry.

The Asian Pacific American Medical Student Association emphasizes that these changes would have “disproportionate impacts on low-income and minority students,” many of whom come from communities already underserved by the healthcare system. With 33% of medical students coming from Pell-eligible backgrounds, the proposed cuts to both Grad PLUS loans and Pell Grants represent a double blow to socioeconomic diversity in medicine. The result would be a physician workforce that less accurately reflects the patients it serves.

As this budget battle unfolds, the stakes couldn’t be higher. The question Americans must consider is whether tax cuts are worth sacrificing our future healthcare workforce. With 72% of current medical students relying on federal loans, these proposals threaten to reshape the medical profession for generations to come—and not for the better. The physician shortage is already projected to reach crisis levels by 2036; these cuts would only accelerate and deepen that crisis.

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