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 we're
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 not
laws. And a lot of student loan
policy has been done through
regulations. And so it's a big
C change because it really
galvanizes these changes into
legal statutes.
So that's one thing, which means
it's also gonna 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.
I'm going to dig 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.
I think that's the tension that
either people are already feeling or
they will soon be feeling.
Because describe how much lower
the caps are on barrow.
Well, for, it's
kind of splitting hairs here.
You have graduate students and then
professional students.
And so professional students would
be your medical,
your law students, a lot of
professional fields.
And those limits do
come down a bit.
$200,000 over the lifetime
of the career of that student's
professional degree is how much they
can borrow, it was 200,000.
And that is down from.
Well, I don't have the number
offhand in front of me, but it is
down. And then for graduate
students, that's who I've been
focusing a lot on, is
their cumulative is $100,000,
and that's down from 138,500.
So that's definitely a lower
ceiling. But in both cases, there's
some tighter limits on how much they
can take out under the federal aid
programs.
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 loan.
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,
these plus loans currently have like
eight and 9% interest rate.
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
governments. Um.
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 are 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 assistant 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
borrower's 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 under the radar, but
very 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 programs at
colleges and 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 is not
the 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 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 10 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 worry especially
as the federal government winds down
the Department 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.
Well, we will be watching Professor
Nick Hillman. Thanks very much.
Of course, thank you.
For more on this and other issues
facing Wisconsin, visit our website
at pbswisconsin.org
and then click on the news tab.
That's our program for tonight.
I'm Frederica Freyberg.
Have a good weekend.
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