Culture and People
New legislation limits federal student loan options for veterinary students
Starting in 2026, students starting veterinary school may not be able to finance their entire veterinary education with only federal student loans due to caps put in place by recent legislation. We spoke to a veterinarian and accredited financial counselor to learn which options will still be available to students and how the landscape could be changed going forward to better support future veterinarians.
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The recent passage of H.R.1, the One Big Beautiful Bill Act, included some big changes to laws surrounding federal student loan borrowing for undergraduate and graduate students that, unless changed, will have significant effects on veterinary students and others pursing higher education who are in need of financial aid.
Meredith Jones, DVM, CSLP, AFC, a veterinarian, certified student loan professional and accredited financial counselor who created the Vet Financial Summit and the Debt Free Vets Facebook group, helps veterinary students and veterinarians manage their student loan borrowing and debt repayment through her consulting firm, Allvet Financial, and has been studying the changes in this new legislation so that she can help students and veterinarians make informed decisions. “My goal is always to make sure people have the facts so that they can plan accordingly,” she said.
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How new legislation affects student borrowing
H.R. 1 creates caps on federal student loan borrowing for undergraduate, graduate, and professional students. Starting in 2026, students will be limited to a $50,000 per year cap on federal direct unsubsidized student loan borrowing, with a $200,000 cap for federal direct unsubsidized professional school borrowing.
Graduate PLUS loans, an additional source of federal student loan coverage, will also be eliminated as of July 1st, 2026.
“Those are the loans that have enabled vet students to be able to borrow up to the cost of attendance in the past,” Jones explained. “So moving forward, they’re only going to have access to direct unsubsidized loans. As a result, a lot of vet students are going to have to [get] private loans.”
Jones expressed concern about the effects these caps will have on the accessibility of veterinary education going forward. “I do think the $200,000 limit on federal student loans is going to make it more difficult for students who come from lower and middle income families to go to vet school,” she said, adding that private student loans “generally have stricter credit requirements and often require a cosigner.”
And because they are based on credit worthiness, private student loans can have much more variability in interest rates and the risk for much higher interest rates for those with lower credit scores when compared to federal student loans.
The evolution of federal student loans
Federal student loans have changed significantly over the years both in terms of how they are structured, interest rates, and other variables. Before 2012, for example, graduate student loan borrowers had access to both subsidized and unsubsidized federal loans. Since 2012, however, none of the loans for professional and graduate school programs have been subsidized, Jones said.
Until 2010, many student loans (including federal subsidized and unsubsidized loans, Federal PLUS loans, and federal consolidation loans) were part of the Federal Family Education Loan (FFEL) Program, through which private lenders provided student loans that were guaranteed by the federal government. Because the loans were commercially held, Jones said there was some competition between lenders that resulted in lower interest rates for borrowers.
With the rising cost of higher education and higher interest rates, income-driven repayment (IDR) plans, some of which promise loan forgiveness after a certain period of time, have become increasingly popular among borrowers in need of a more affordable monthly payment. However, Jones said, because the monthly payment amounts associated with these plans are not based on the balance or interest rate of the loan, the payments are often not sufficient to cover the interest and make a dent in the principal of the loan. This is one of the reasons why some student loan balances increase instead of decreasing despite consistent payments over a long period of time.
Possible workarounds
While not all of these will be applicable to every student, Jones identified some existing programs and suggested ways in which other programs could be modified to support future veterinary students whose options of attending veterinary school are limited by the federal student loan caps.
Reducing the cost of education
She suggested that more scholarship funds could be created to help offset the price of veterinary education. Possible sources could include veterinary alumni, philanthropists interested in animal and human health, veterinary corporations, and animal health companies (such as pharmaceutical companies and pet nutrition companies).
To limit the need to go into debt to afford higher education, Jones anticipates that more students will try to attend a school where they can qualify for in-state tuition (where it is offered) and/or research the criteria to be treated as an in-state student after their first year.
Loan options and eligibility
Some other possible workarounds could involve private student loans that resemble “doctor” mortgages and other loans available to veterinarians and other healthcare professionals, many of which are assumed by lenders to be at lower risk for default by virtue of their profession. “Maybe [the lenders who offer these types of loans] will add private student loans to their offerings,” Jones mused. “But it’s going to take some time.”
Students with documented financial need may also be eligible for Health Professions Student Loans (HPSL), which typically have lower interest rates and may allow students to finance more of their educational expenses above and beyond the federal direct unsubsidized loan caps. Jones said that this loan type is a “hybrid” loan in the sense that it is backed by the federal government but administered by the school via a separate loan servicer. These loans are typically subsidized while the student is in school and then have a fixed 5% interest rate after graduation. They can also be consolidated with other federal student loans, making them potentially eligible for IDR plans and forgiveness, Jones added.
She said it’s also possible that private student loan providers will lower their interest rates and/or that private student loan companies will create better options to refinance higher interest debt.
Loan forgiveness and repayment
Jones also pointed to loan forgiveness and repayment programs as a way to help veterinarians manage their student debt. She indicated that additional federal and/or state level loan forgiveness programs, if created, could support veterinarians with student loan debt who are willing to serve in identified areas of need.
She also noted that the Public Service Loan Forgiveness (PSLF) program, through which individuals can apply for federal student loan forgiveness after working for a qualifying non-profit employer and making loan payments for ten years, is still in place. She suggested that more veterinary referral centers could decide to become non-profit organizations in the future, which would allow their employees to potentially qualify for loan forgiveness through the PSLF. Although she acknowledged that transitioning from a for-profit company to a non-profit is not an easy process, she noted that some large veterinary hospitals have operated successfully as non-profit organizations for decades.
Jones said that one positive change in the new legislation is the extension of the employer student loan repayment benefit instituted by H.R. 748, the CARES Act, that was previously set to expire at the end of this year. This allows for eligible employers to provide a student loan repayment benefit of up to $5250 per year to each employee who has federal student loans. This benefit is tax-free to both employer and employee, and the yearly amount may increase in future years via a cost-of-living adjustment clause.
As Jones explained, however, not all companies qualify for this benefit. The student loan repayment benefit cannot favor highly compensated employees (HCEs, currently defined as those earning more than $160,000 per year), and no more than five percent of the benefit can go toward loan repayment for practice owners. Because of these restrictions, this benefit will be most applicable to larger businesses and those where at least some of those with federal loans in repayment are not HCEs.
Advice for the future
Jones understands that this is a difficult and stressful time for students hoping to go to veterinary school. For those who are worried about how these changes will affect their ability to afford veterinary school, Jones recommends they stay informed on any changes to student loan programs and other forms of financial aid. “I do anticipate that there will be more changes in the coming years,” she said, “and there may be more repayment options available that are potentially more favorable in the future.”
She added that the next administration could decide to overhaul this new legislation, removing the federal student loan caps and making other changes that are “more favorable” to borrowers again.
Further reading:
Vet Financial Summit YouTube channel
Employer student loan repayment benefit: Amazing for some, unhelpful for most
VIN Foundation: scholarship information and student debt resources
American Association of Veterinary Medical Colleges: Funding your degree
American Veterinary Medical Foundation scholarships and grants
Photo credit: Visions/iStock via Getty Images
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