Tony and Rebecca

Photo by Audra Fenimore (L) and courtesy of Dr. Rebecca Mears (R)

Dr. Tony Bartels, left, shown with his daughter, Lucy, and Dr. Rebecca Mears, right, are student debt educators for the Veterinary Information Network and its nonprofit counterpart, the VIN Foundation.

Changes are almost certainly coming to federal student loans in the United States for new and existing borrowers alike. How far the changes go depends on the final form of the "One Big Beautiful Bill Act" and whether Congress passes it. The House has already signed off, and a Senate version was released yesterday. Passage requires only a simple majority.

As it stands, the legislation would eliminate most existing repayment options, compelling many veterinary school borrowers to accept new terms. One new option would be created that contains a mix of more favorable and less favorable terms compared with what's available now.

New loans to borrowers in professional programs including veterinary school and medical school, currently allowed for up to the cost of attendance, would have an aggregate cap of either $150,000 (House) or $200,000 (Senate). Cost of attendance encompasses tuition, fees, books, supplies and living expenses, including housing, food and transportation.

For context, there is no school in the country in which the cost of attendance to complete a veterinary degree is $150,000 or less, and the great majority are above $200,000. In 2024, among new veterinary school graduates, 83% had debt, which averaged $202,647.

Before diving into the details of the proposed changes, let's review the current state of federal loan repayment — which is messy, to put it nicely.

There are two general ways to structure repayment: by time or income. Under the standard time-driven plan, the balance and interest must be paid off in 10 years. There are also time-driven repayment plans that allow for repayment over longer periods of time. These would remain as-is.

The current mess and focus of changes is around income-driven repayment (IDR) plans. With IDRs, a borrower's monthly payment is keyed to their income. After 20 to 25 years of payments, any remaining balance is forgiven. Many veterinarians use IDRs because, with high student debt relative to their incomes, the monthly payments are more affordable than under the standard time-driven plan.

Of the IDR plans in place today, one, called Income-Based Repayment (IBR), comes in two variations that have different eligibility criteria — an original version from 2009 and an updated version from 2014. Congress explicitly authorized IBR to provide forgiveness. The other income-driven options, called Income-Contingent Repayment (ICR), Pay As You Earn (PAYE) and Saving on a Valuable Education (SAVE), were created by the Department of Education under a different law that didn't spell out forgiveness.

Why does that matter? Because in July 2024, a federal appeals court temporarily blocked the newest IDR plan, SAVE, pending further review. Then, this February, the court blocked SAVE permanently on the grounds that the Department of Education had overreached its authority. The court questioned the legitimacy of ICR and PAYE on the same basis.

The ruling left intact both versions of IBR, as well as Public Service Loan Forgiveness (PSLF), a separate program available to federal student loan borrowers who work for qualifying government or nonprofit employers and who use IDR plans.

Following the court decision last summer, the Department of Education paused granting forgiveness to borrowers using ICR, PAYE and SAVE. Those in ICR and PAYE still earn credit toward forgiveness; those in SAVE do not.

After the ruling this February, the Department of Education ordered loan servicers to stop processing applications for any IDR plan, including income verifications that borrowers must supply periodically to renew their participation. A status report the government filed with the court shows that as of April 30, there were nearly two million IDR applications pending.


IBR and PAYE require borrowers to show a "partial financial hardship," meaning their calculated income-based payment is lower than it would be under a 10-year time-driven repayment. Without current income documentation on file — regardless whether the borrower didn't submit it or their loan servicer didn't process the paperwork — a borrower cannot pass the partial financial hardship test, and their required monthly payment automatically updates to that of a fixed 10-year plan, which for most veterinarians in an IDR, is notably higher.

As an example, a recent graduate with a loan balance of $200,000 at 6.5% and a monthly payment of $900 per month under PAYE or IBR 2014 would face a monthly payment of $2,200 under a fixed 10-year schedule.

Proposals on the table

Moving on to the significant potential changes to repayment on the horizon:

Eliminating existing repayment plans for borrowers, many who have been using them for years, is a new move in the federal student loan program. Historically, the government introduced changes over time, allowing those who were already in programs to stay, while adjusting the options available to new borrowers. Also, nearly all previous changes to student loan repayment were more beneficial to the borrower.

Now, anyone shifted out of ICR, PAYE or SAVE would be left with repayment options that are less beneficial than what they signed up for. Their monthly payments would be higher under RAP. They also face a longer time to reach forgiveness, increasing the cost of their debt. If the Senate proposal to retain IBR 2014 prevails, borrowers eligible for that plan would experience the least change to their repayment options.

How RAP works

RAP uses the borrower's Adjusted Gross Income (AGI) figure from their federal income tax return to determine their monthly loan payment. The payments range from 1% to 10% of the AGI, depending on income. Above $100,000, the minimum monthly payment is 10%. Borrowers with dependents receive a $50-per-dependent reduction on their monthly payment. If the borrower's AGI on their recently filed tax return is not a good measure of their current income, the Senate proposal retains an alternative documentation of income option that is already allowed.

There is no cap on the RAP monthly payment. With PAYE and the IBRs, the monthly payment never exceeds that of the time-driven 10-year plan. (That could change for the IBRs, depending on which proposal prevails.)

However, as with existing IDRs, the minimum monthly payment in RAP can be less than the monthly interest accrual, known as negative amortization. With RAP, any interest unpaid each month is canceled. The government will also credit up to $50 per month toward principal during periods of negative amortization.

The maximum repayment period for RAP is 30 years. After that, any balance remaining is canceled — that is, forgiven. (Any forgiven debt, including student debt, can be subject to federal income tax.)

Comparing RAP and IBR

Because of differences in how they're calculated, monthly payments under RAP generally would be lower than under IBR 2009 but higher than under IBR 2014. RAP has a beneficial unpaid interest subsidy and may even contribute to the principal during periods of low income.

The 30-year repayment period, absence of a monthly payment cap, and potential inability to leave the plan (House version) are its biggest downsides.

IBR 2009 has a maximum repayment period of 25 years for graduate and professional school borrowers like veterinarians. Its minimum monthly payment is 15% of the borrower's discretionary income, and the monthly payment is capped at the fixed 10-year plan amount. IBR 2014 has a maximum repayment period of 20 years and a minimum monthly payment of 10% of discretionary income, with a similar cap. Only borrowers currently in repayment would be able to choose IBR. New borrowers and borrowers who consolidate their loans after July 1, 2026, would be limited to RAP or time-driven repayment.

Constraints on new borrowers

As of now, students are able to borrow federal loans up to the cost of attendance, which includes living expenses as well as tuition and fees. That means they don't need loans from private sources, such as commercial banks.

When following best practices, veterinary students at U.S. schools who need federal financial aid first borrow up to $47,167 in federal Direct Unsubsidized loans to cover their cost of attendance each year. They may then tap Direct Graduate PLUS loans to cover the remainder of their cost of attendance. There is no annual or aggregate limit on Grad PLUS.

Both House and Senate proposals eliminate Grad PLUS for new enrollees as of July 1, 2026. Students who are enrolled in a program before that date would be able to access Grad PLUS through June 30, 2029.

The House proposal updates the existing annual limits on Direct Unsubsidized loans to reflect the median cost of attendance for like programs, with an aggregate cap of $150,000. The Senate proposal sets a fixed annual limit of $50,000 for professional school students and an aggregate cap of $200,000.

Aspiring veterinarians who cannot afford to pay out-of-pocket the difference between their school's cost of attendance and the proposed limits would be compelled to turn to private lenders to make up the difference.

The more expensive the program, the sooner they would need to seek private funding. Of 34 U.S. schools, seven have a projected cost of attendance of less than $200,000 (based on 2024-25 academic year prices) — ranging from $172,000 to $199,988. Completing a veterinary degree at some schools costs upwards of $400,000. The least expensive schools typically are public institutions in the student's state of residency.

What's the problem with private loans?

Compared with private loans, federal loans historically have more favorable terms, more flexible repayment options and safety nets. For example:

• While the borrower is in school, payments aren't required on federal loans, whereas they often are on private loans, even if interest-only payments.

• Private lenders typically charge higher loan-origination fees and capitalize the interest, meaning it's added to the principal.

• Private student loans usually require a co-signer; federal loans do not.

• If the borrower becomes disabled or dies, their family is not held responsible to pay off their federal student debt.

• Private lenders tend to charge higher interest rates overall.
• Federal loans come with flexible payment options like IDR plans, enabling borrowers like veterinarians to repay their student debt and still afford to buy a house, buy into or start a veterinary practice or start a family.
• Federal borrowers are eligible for PSLF if they work for public or nonprofit employers. There's no such program in private loans.
• Borrowers of private loans might not be able to defer payments while engaged in advanced training programs, such as internships or residencies.

Ramifications

Assuming the cost of veterinary school remains as is, becoming a veterinarian may require students to accept an even more onerous debt burden than already exists — or leave the profession to those wealthy enough to not need private loans.

There's also a chance that students who opt for private loans are able to obtain them early on in their program but become unable to secure private funding to finish veterinary school — putting them in debt for nothing.

Those who make it through school might elect not to pursue advanced training because of their student debt and inability to afford their private loan payments during training.

We have long encouraged aspiring veterinarians to "Apply Smarter" to veterinary school. This concept focuses on keeping education costs lower by applying to programs where they can receive discounted tuition — such as by being a resident of the state where the school is located or a state that has a contract for discounted seats at the school. This strategy is more important than ever in light of the proposed changes.

Dr. Tony Bartels is a student debt educator at the Veterinary Information Network, an online community for the profession, and its affiliated nonprofit, the VIN Foundation. A graduate of the Colorado State University combined MBA/DVM program, Tony and his wife, Audra, a small animal internal medicine specialist, have more than $400,000 in veterinary school debt that they manage using federal income-driven repayment plans. When he's not staring holes into his veterinary colleagues' student loan data, Tony enjoys fly fishing and exploring Colorado with Audra, their daughter Lucy and their two rescued canines, Addi and Maggie.

Dr. Rebecca Mears works on VIN and the VIN Foundation's student debt education team. A graduate of the University of Georgia College of Veterinary Medicine living in Kentucky, Rebecca started her career as an equine general practitioner. She serves on the American Association of Equine Practitioners' Diversity, Equity and Inclusion Committee and as a national advisor to the Veterinary Business Management Association. In her time away from veterinary medicine, Rebecca obsesses over plants and hosts impromptu dance parties.