Heather from New Hampshire had a simple question after her daughter got into vet school: how does she pay for it? Under the new federal loan rules, the answer is more complicated than it used to be.
“My daughter was just accepted into vet school and we are thrilled, but how in the world does she pay for this?” Heather asked on the Clark Howard Podcast on March 13. “The school just told her that government loans, you can only borrow up to $50,000 now because of the big beautiful bill.” Another listener wrote in with the same concern about a son entering physician assistant school, facing the same cap.
Clark Howard’s answer was direct and largely correct. But families navigating professional school financing need to understand exactly what changed and what options remain.
What the New Law Actually Does
The One Big Beautiful Bill Act, signed in July 2025, restructured federal borrowing limits for graduate and professional students. Beginning July 1, 2026, students in qualifying professional degree programs — including veterinary medicine — can borrow up to $50,000 per year in federal loans, with a lifetime aggregate cap of $200,000. Beginning July 1, 2026, students in professional degree programs can borrow up to $50,000 per year in federal loans, with an aggregate cap of $200,000. That $50,000 annual cap sounds substantial until you look at what vet school actually costs.
Tuition at U.S. veterinary schools varies widely. For the 2025-26 school year, in-state tuition at one major program runs around $45,000, while out-of-state tuition can reach nearly $60,000 per year. Add living expenses, books, and fees, and total annual cost of attendance can easily hit $70,000 to $90,000 or more. For an out-of-state student, the $50,000 federal cap leaves a gap of $20,000 to $40,000 every year across a four-year program. That gap has to come from somewhere. And as Howard explained, “unfortunately, what your daughter is going to face is having to take out private student loans, which are going to usually be variable interest rates. And there’s no programs that have the ability to flex your payment, you know, no income-based repayment or anything like that. I mean, they’re just hard, harsh loans.”
Why Private Loans Are a Harder Deal
Federal graduate loans currently carry a fixed rate of 7.94% and come with income-driven repayment options, deferment, and potential forgiveness pathways. Private loans operate on entirely different terms. Rates on private graduate loans currently range from roughly 3% to nearly 16%, depending heavily on credit history, and many are variable rate products tied to benchmark rates.
The Federal Reserve’s current target rate sits at 3.75%, down from 4.5% at the start of last fall. That easing cycle has pulled variable loan benchmarks lower, which is modestly good news for borrowers today. But variable rates don’t stay put. A student who borrows at 6% today could face 9% or higher by their third year of practice, with no federal safety net.
Consider a student at an out-of-state vet program where total cost of attendance runs $80,000 per year. After borrowing the federal maximum of $50,000, the remaining $30,000 must come from private lenders each year. Unlike federal loans, those private balances accumulate with no income-based safety valve. If a new graduate’s earnings fall short in the early years of practice, there is no flexible repayment option to fall back on.
The Real Exit Ramp: Loan Repayment Programs
Howard’s most useful advice centered on loan forgiveness programs. The federal USDA Veterinary Medicine Loan Repayment Program (VMLRP) is the most established option. Veterinarians who commit to at least three years of service in a federally designated veterinary shortage area can receive up to $40,000 per year in loan repayment assistance. Over a three-year commitment, that’s up to $120,000 in debt eliminated.
Howard noted that state-level programs have expanded significantly as well. “There are loan forgiveness programs that have popped up in states all over the country. I bet by now it’s in 20 or more states,” he said, pointing to the “extreme shortage of veterinary medicine doctors in rural America.” These programs typically require three to five year commitments in underserved areas. After the commitment ends, the veterinarian can practice anywhere.
For a student staring at $300,000 or more in total debt, a combined federal and state repayment strategy could eliminate a substantial portion of that balance. It only works, though, if the student is genuinely open to rural practice for a defined period. That’s a real life choice, not just a financial one.
Who This Situation Applies To
The $50,000 annual cap creates the biggest financing gap for out-of-state students at expensive programs. An in-state student at a lower-cost program where tuition and fees run around $30,000 per year may find the federal cap covers most of their need, leaving only living expenses to finance privately.
The physician assistant student mentioned in the same broadcast faces a different situation. Under the proposed rulemaking, PA programs may not qualify for the $50,000 professional degree cap at all, potentially leaving those students subject to the lower $20,500 annual graduate loan limit. That’s a more severe constraint, and families with students in those programs should monitor the Department of Education’s rulemaking closely.
Families considering six-figure private debt at variable rates may benefit from modeling multiple interest rate scenarios, particularly given that variable rate risk is higher when the economic outlook is uncertain.
What to Do Before Signing Any Private Loan
Start by reviewing the actual annual cost of attendance at each school your student is considering, not just tuition. Identify the annual private loan gap after the federal cap, then project total private debt exposure over four years before interest.
Next, visit the USDA NIFA website and review the current Veterinary Shortage Situations map to understand where VMLRP-eligible positions exist. Cross-reference with your state’s veterinary association to identify state-level repayment programs. If your student is open to rural practice, a combined federal and state repayment strategy could eliminate a substantial portion of that balance for those who pursue a three-to-five year commitment.
When comparing private loans, families may want to research quotes from multiple lenders and understand the difference between fixed and variable rate structures. Given that the 10-year Treasury yield is currently at 4.21% and trending upward over recent weeks, fixed-rate loans carry consistent payments over the life of the loan, while variable-rate loans may start lower but can reset higher over a four-year program.
Howard’s advice is sound. Private loans are harsher instruments than federal ones, and the loan forgiveness pathway for rural veterinary practice is a well-established option worth serious consideration. The piece most families need to add is the specific math on their student’s program, so they know exactly how large the gap is before they start comparing lenders.
Top Gaining Stocks
Top Losing Stocks