On July 1, future doctors and other professionals will no longer have access to the federal Graduate PLUS loan program, a popular borrowing vehicle heavily utilized by medical and other professional students.
Current borrowers will see their access to funds curtailed, and likely will see shortfalls in what they can borrow vs. their school-related and living expenses. In response, separate programs launched by a Tennessee lender and physician’s association are aimed at helping ease costs at two different stages of a young doctor’s career.
ELFI, a division of Knoxville-based SouthEast Bank, has rolled out EdMed, a private student loan program designed specifically for medical and healthcare professionals. And the Tennessee Academy of Family Physicians (TNAFP) Foundation has begun a new annual program with awards to five family doctors, a specific financial incentive to locate their practices in rural or underserved areas of the state.
While neither offering was created in direct response to the government’s specific elimination of the Graduate PLUS loan program for new borrowers in last year’s One Big, Beautiful Bill Act (OBBB), developers of each say they are designed to provide a pressure release for students facing towering debt during school that follows them as they move into practice.
What is the Graduate PLUS program, and why the heartburn over its exit? The program, which began in 2006, provides graduate and professional students access to federal loans up to the full cost of attendance, minus other aid. For medical students, the program became a key financing tool because tuition, fees and living costs often far exceeded the limits on standard federal unsubsidized loans.
The Association of American Medical Colleges reports 71% of the class of 2024 graduated with education debt, and the average debt among those borrowers was $212,341. The AAMC also reported that the median four-year cost of attendance for the class of 2025 was $286,454 at public medical schools and $390,848 at private schools.
From the 2007-08 through 2017-18 award years, the federal government disbursed about $71 billion in Grad PLUS loans to roughly 1.7 million borrowers, the U.S. Government Accountability Office reports.
President Trump’s signature bill eliminates Grad PLUS for new borrowers starting July 1. The OBBB also set new federal loan caps that distinguish between graduate and professional students. The law’s implementation narrowed which health-profession programs qualify for the higher professional-student borrowing line.
Current borrowers are grandfathered in for up to three additional years or until completion of their program. Those new caps will max out direct unsubsidized loans of $50,000 a year and $200,000 total, within a broader lifetime federal loan limit of $257,500.
The reaction has been vocal. Supporters of the restructuring say it reduces federal lending exposure. Critics counter that the loss of lower-interest loans with forgiveness mechanisms built in could push more future doctors toward private loans.
Further, they charge, more costly borrowing will move new physicians away from family medicine and lower-paying specialties following entry into the workforce and force some students out of medicine altogether.
Closing the borrowing gap
By launching EdMed alongside its other offerings, ELFI hopes to support med students and those pursuing dental, podiatric, veterinary, osteopathic medicine, veterinary, optometry, pharmacy and nursing degrees. Eligibility is subject to credit approval, school certification, enrollment verification, legal residency and other requirements.
The program comes with features that include multiyear eligibility, financing for up to 100% of the cost of attendance, flexible income and cosigner requirements, and up to 96 months of residency deferment, which borrowers should find attractive, says Marc Schoonover, ELFI general manager.
“Even before the bill was passed last year, we saw a number of graduate students taking out private student loans, but many students relied on the Grad PLUS program because of the structure that it provided, especially those in the healthcare profession, in order to have flexibility throughout that training timeline that they have before they go into their full profession,” Schoonover says. “We wanted to make sure we had a product that was built to meet those needs right off the bat.”
ELFI crunched some numbers to get to that point. It commissioned a study examining the cost of medical school and healthcare training, the challenges students face in financing their education and the broader impact on the physician pipeline.
Findings revealed that the median four-year cost of medical school has increased 16% over the past five years, and 70% of the medical school class of 2025 graduated with education debt. Their average balances exceeded $220,000 upon entry into residency, nearly 8% higher than in 2020.
Without those numbers in mind, and without Graduate PLUS around, Schoonover says the lender didn’t want to create another loan program. Rather, the goal was to stand up something that could partially fill this new gap.
“[Borrowers] need to consider a multitude of options, including our loan program, as well as other loan programs that are available in the market now,” he says. “And with that comes nuances within all of the loans available. That ranges, from what happens when you go into residency, what is the minimum payment you need to make, all the way through how long you have to pay off that loan. Those elements can differ from product to product, and that’s where both students as well as schools and all of the partners that work with them are having to become more knowledgeable.”
The bank had been looking at its current student-loan portfolio even before the OBBB was a factor, Schoonover says, a constant process of evaluation to see if the products were meeting market needs. This new program is an offshoot of that.
“We already had a really great product that fit for undergraduate and graduate students,” he says. “But as we started to talk to both students in schools, there were a couple areas that mentioned where there might be gaps in what either our product offered or at what was being offered from other lenders.”
That included an uncertainty of whether or not a student would be able to get through residency without having to start your full principal and interest payments, which led to the new product’s long residency deferral period with an automation for many of those degrees, he says.
“We also heard from students that are starting their schooling, but they’re unsure if they’ll qualify for private loans over the entirety of that school period. That’s where we introduced the multiyear eligibility, to give students the confidence that once they have qualified for our loan, they’d be able to cover their years of school. And all of those evolved out of conversations with students in schools, and those had been going on for well over a year,” he says.
The EdMed program is new, so there’s not much information yet on the number of applicants and funds provided. Even so, Schoonover says, the reaction has been positive from both students as well as college financial-aid counselors in search of new borrowing options, with inquiries in the hundreds if not thousands already.
“What we have heard is that what we have designed is at least meeting some of the needs that hadn’t been met within this new landscape,” he says. “That is really reassuring for us. We’re going to continue to talk to those various constituents and make sure that EdMed can evolve as new needs arise.”
Repayment program connects doctors, rural communities
Even with the most favorable loan structure, debt is still debt. Many new doctors would like to go into family medicine or return to a smaller community where they grew up but opt instead for a more lucrative, city-based specialty practice that will get them out of debt quicker. Further, those who have financed their education primarily through private loans do not qualify for federal assistance such as Public Service Loan Forgiveness programs.
That’s why the TNAFP Foundation has partnered with the state of Tennessee to help plug family doctors into underserved rural areas. The program offers up to $40,000 per year in exchange for a five-year practice commitment in qualifying medically underserved or primary care health professional shortage areas as designated by the U.S. Health Resources and Services Administration.
The incentive program began in 2025 after TNAFP received a contract with the Tennessee Department of Health to administer approved state funding. Doctors can apply at any point during their three-year training at one of 12 Tennessee family-medicine residency programs.
“We worked with Sen. Rusty Crowe [R-Johnson City, chair of the Senate Health and Welfare Committee] to sponsor legislation in 2023 that created the program,” says Dave Chaney, executive director. “The language of the bill specified that it would be maintained by the Tennessee Department of Health, and we have a seat at the table as a nonprofit focused on promoting and growing family medicine in Tennessee. The next year some statutory language had to be cleared up, and then finally we launched last summer. “
Five inaugural recipients were selected this spring, and the process will begin soon for the next group of recipients to be awarded in 2027, Chaney says.
“We began explaining the program to residents because there already are some incentive programs available for physicians and other healthcare providers. Ours differs in two ways: First, it’s designed specifically for family physicians, and it’s a greater monetary reward over a longer period of time. What we want to do is get doctors who are interested in this kind of underserved environment and then keep them there for a longer time so they can provide a great health benefit to that population.”
Hence a five-year commitment vs. one for a year or two, he notes.
“Our hope is that they put down roots in that community, really embed themselves and develop relationships, so when their time is up they really don’t want to leave,” he says. “That’s where we think this can make a real difference.”
Applicants had to be a family physician who was out of medical school and in a residency training program based in Tennessee. Interest was strong. The five inaugural recipients were chosen from 16 applicants who themselves were drawn from a pool of around 300 total submissions.
“We were pleased with that initial response,” Chaney says. “There are 12 family medicine residency programs across the state, and we talked to them, and we’re also speaking to med school students so they know this resource is out there now, and something they can consider.”
And consider it they will, he predicts, given the huge amount of costs young doctors carry with them after they finish their education and preliminary training.
“When we ask about debt, pretty much every hand in the room goes up, so we’re not surprised that there’s a lot of interest,” Chaney says. “When you’re talking about anywhere from $200,000 to double that, it’s a huge burden.
“We’re hearing about young physicians making decisions about where and how to practice purely based on financial reasons. We created a program for those who have an interest in going back to their hometown, or a community like the one where they group up, so they could have a practice like the one they envisioned when they decided to become a doctor.
“If they’re not doing that because they say they can’t make enough money doing that, we wanted to create a pathway so they could have that option.”
The organization says placing one doctor in these types of communities makes an immediate difference. Based on research from the American Board of Family Medicine, the average family physician sees as many as 1,700 patients in 18 months, which, Chaney says, “is a real impact on people’s lives in these communities. When it comes to family medicine and primary care access, especially for preventive care and chronic condition management, even one doctor is better than none for these areas.”
“Receiving the TNAFP Loan Repayment Incentive means the world to me,” says Dr. Blakely Graham, who will graduate in June from the East Tennessee State University Family Medicine Residency Program in Bristol and practice in rural East Tennessee.
“There is nothing more rewarding than returning to Seymour and serving my hometown’s residents knowing my debt has been relieved by this program.”