County Clerk Lisa Tollefson. Thank you.
>> Thank you. >> With Wisconsin trying to
tackle a physician shortage, new limits around graduate
student federal loans could dissuade some would be
doctors from going to medical school at all. New
federal provisions passed as part of the One Big
Beautiful Bill act, set lower borrowing limits for
medical and law students and eliminate grad Plus
loans for what the changes mean for graduates and
undergraduates. Were joined by a specialist in this
area, Nick Hillman, professor in the UW-Madison
School of Education. And professor, thanks very much
for being here. >> Of course. Thank you for
the invitation. >> How big of a sea change
is this when it comes to federal student loans?
>> It's significant for two main reasons. One is that
these are now amendments to the Higher Education Act.
So these are now laws. And a lot of student loan
policy has been done through regulations. And so
it's a big sea change because it really
galvanizes these changes into legal statutes. So
that's one thing. Which means it's also going to be
harder to change over time. But the other thing is that
it just really shifts the flavor of student loans,
how students are going to be interacting with the
loan system. And it brings some simplicities to the
system, but it also brings some complexities.
into that a little bit. But have you heard of medical
students say deciding not to attend medical school
because of kind of the caps on borrowing?
>> I've heard rumblings of this. I haven't heard that
directly from prospective students, but I have heard
concerns in different forums and through
different networks about what does this mean for me
in terms of how to pay for college? If loans are less
available to me, then I have two options. I can go
and try to find a loan in the private market which
might have high interest rates. Or I can decide
maybe I should do something else with my career. And I
think that's the tension that either people are
already feeling or they will soon be feeling.
>> So the law also eliminates I understand the
grad plus loan. What will that mean?
>> Well, the Grad Plus loan is pretty significant.
About 17% of all federal student loans are in that
program. And so this is a sizable share of federal
student loans. And if that's no longer available
to borrowers, then again, they'll likely go out to
the private sector, to banks or to different
lenders and take out loans that could be as high as
25% interest rates. These loans currently have. The
plus loans currently have like 8 or 9% interest rates.
>> Do you know what the justification for all of
this was? >> To save money for the
One Big Beautiful Bill act. I believe it's in the
hundreds of billions of dollars. 270 billion is one
Congressional Budget Office estimate of how much some
of these changes have saved the federal government. And
ultimately, that's the end game here, is to restrict
the amount of spending that the federal government does.
>> Back to details. There were also changes to loan
repayments. Is that significant?
>> That is in a couple of different ways. So this is
what I said earlier about the simplicity and the
complexity. There's some things that I think are
pretty popular about the new repayment options for
borrowers. There is now basically just two
different options that borrowers can have starting
in 2026. They could do a standard repayment plan
that's pegged to how much they borrowed, and then
they could do a repayment assistance plan that's
pegged to how much they earn. And so in either of
those cases, the idea is to have loan repayment be more
sensitive to borrowers economic circumstances.
However, there are some details that also make it
more difficult and even potentially punitive for
some of the lowest income borrowers.
>> Interestingly, also, there's new accountability
standards for undergraduates. What's that?
>> There are. And this is something that's really
much on my radar is essentially a bachelor's
degree recipient, has to earn more than a high
school graduate at some point in their future. And
that by itself doesn't seem very problematic. That's
kind of the whole point of education is to boost your
economic well-being. But there are a lot of majors
and academic programs where the gap between a high
school graduate and a college graduate are not
that large. And so these accountability measures are
going to starting in 2026, they're going to start to
identify what academic universities across the
country are showing that positive return above a
high school graduate. And I worry that maybe it's not
this year, maybe it's not next year. But at some
point down the road, a lot of programs that produce
graduates who go into public sector and nonprofit
work that tend to have low wages are going to be
either penalized by being with, you know, withheld
federal funds. Or colleges might just say, we're not
going to do this. It's too risky to run this program
anymore. >> Lastly, do you think
that student borrowers know about these changes?
>> No, I think there's a lot of confusion. And one
of the big struggles that I see and I'm hearing about
is the timeline of all of these changes are supposed
to be taking place July 1st, 2026. That's ten months
away. And so prospective students, current students,
and current borrowers are all wondering. There's
already been several years of a lot of
miscommunication, confusion and misunderstanding about
the student loan system. And I'm worried, especially
as the federal government of Education has laid off
at least 50% of staff at the Department of Education.
I'm very concerned about how this will be
implemented and how well it will be implemented.