President Donald Trump has signed a budget reconciliation bill into law that contains many student loan provisions of note. The overall bill reflects bipartisan consensus on the need to rein in federal lending and strengthen accountability in higher education.

Total federal student loan debt has tripled since 2007 and currently sits at $1.64 trillion owed by approximately 42.7 million borrowers, according to research site Best Colleges. The debt total climbs to $1.77 trillion when accounting for private student debt. Borrowers’ average federal student loan debt was just over $38,000 at the end of 2024, the site stated.

Pressure for federal student loan reforms is mounting, especially with six million borrowers more than 90 days overdue after pandemic-era protections expired, according to new data from TransUnion cited by The Wall Street Journal. Of that group, nearly two million are expected to enter default in July, nearly double the firm’s estimate from early May.

An additional one million borrowers could follow in August, with an added two million defaults projected by September, the article states. Under federal guidelines, borrowers are classified as in default after 270 days of missed payments, at which point the government can begin garnishing wages to recover the debt. The U.S. Department of Education in May restarted collections on defaulted student loans, a process that had been suspended during the pandemic.

The One Big Beautiful Bill

The One Big Beautiful Bill Act (OBBB), championed by House and Senate Republicans and aligned with the Trump administration’s agenda, was passed by Congress July 3 and signed by the president the following day. In addition to the educational loan reforms, the OBBB contains favorable tax provisions for the veterinary profession, spending cuts throughout government agencies, new Medicaid requirements, and additional funding for defense and border security.

The final bill eliminates educational loan repayment plans—not codified by Congress—Saving on a Valuable Education (SAVE), Pay As You Earn (PAYE), and Income Contingent Repayment (ICR) and phases out income-based repayment (IBR) plans. New borrowers as of July 1, 2026, would instead have access to two new plans: The Repayment Assistance Plan (RAP) and the Standard Repayment Plan (SRP). Existing borrowers, with loans taken out before July 1, 2026, must switch to RAP or SRP by July 1, 2028, or be autoenrolled.

The RAP is a new income-driven plan with the following provisions:

• Payments are 1%-10% of the borrower’s income, depending on the income level, with a minimum monthly payment of $10
• Payments are reduced by $50 per dependent
• Borrowers who make on-time payments always sese their balance go down, as unpaid interest is waived and there is a principal match of up to $50
• Any remaining balance is forgiven after 30 years
• RAP borrowers can also qualify for Public Service Loan Forgiveness (PSLF)

The other plan, SRP, allows borrowers to make fixed payments for 10-25 years based on the amount borrowed.

As for federal loan limits, the OBBB eliminates the Grad PLUS program—intended for graduate or professional students through schools participating in the Direct Loan Program—and caps aggregate graduate borrowing at $100,000. For professional students, the bill caps borrowing to $200,000, in addition to current undergraduate limits.

For Parent PLUS loans—which allow parents of undergraduate students to borrow money to help pay for their child's education—the bill sets a cap of $65,000 per student.

Finally, the bill prohibits any undergraduate or graduate program with “low-earning outcomes” from participating in the federal loan system. Under this provision, programs would need to demonstrate that at least half of their former students meet earnings benchmarks relative to statewide medians for educational attainment. For undergraduate programs, the comparison is to high school graduates; for graduate programs, it is to bachelor’s degree recipients. Programs failing to meet these benchmarks over a certain period would lose access to federal loan eligibility.

Additionally, the OBBB eliminates economic hardship and unemployment deferments for new loans. And unlike previous income-driven repayment programs, RAP requires a minimum $10 monthly payment even for borrowers with no income.

Veterinary education costs

Veterinary students and early career veterinarians will likely be impacted by these reforms that have been adopted.

The mean educational debt was just shy of $169,000 among 33 U.S and two Caribbean veterinary graduates in 2024, according to AVMA Senior Survey data presented at the 2024 AVMA Veterinary Business and Economic Forum this past October. Among only veterinary graduates with debt in 2024, that figure was $202,647. These figures account for debt incurred during veterinary college only.

Thirty-nine percent of graduating veterinarians reported having debt between $200,000 and $400,000 in 2024, with just under 16.6% having no debt at all. However, the same percentage (16.6%) of this year’s veterinary graduates have educational debt of $300,000 or higher.

The mean debt-to-income ratio (DIR) for new veterinarians entering full-time employment in 2024 was 1.4:1, indicating a debt that is 1.4 times the amount of the graduating veterinarian’s income.

The mean DIR had been decreasing since 2021, reflecting the previously historic low interest rates and loan deferment from the past few years. Yet, educational debt is starting to tick back up as it’s been nearly two years since the government paused payments and set the interest rate to 0%. These policies were effective from March 13, 2020, until September 1, 2023.

Federal student loan interest rates for the 2025-26 academic year for undergraduate loans will be 6.39%, a decrease from the previous year's 6.53%, and graduate and professional students will see a rate of 7.94%, while Parent PLUS loans will have an 8.94% interest rate. These rates are lower than the previous year’s rates.

Not to mention, seats at veterinary colleges are more expensive than ever. Dr. Tony Bartels, the Veterinary Information Network (VIN) Foundation’s student debt expert, said at last year’s economic forum that from 2013-23, median resident tuition and fees increased by 51% and median nonresident tuition and fees by 42%.

Veterinary schools are offering more nonresident seats and some of the newer veterinary colleges will continue to drive up the cost of education. Long Island University College of Veterinary Medicine received accreditation status from the AVMA Council on Education this past fall. It had the third highest tuition rate among U.S. and Caribbean veterinary colleges with the total cost of $450,143 for nonresident students in the Class of 2024.

Midwestern University, a private nonprofit institution in Glendale, Arizona, came in at the highest cost with a total of $480,571. Midwestern has plans to open a second veterinary college at its Downers Grove, Illinois, campus.

Those totals don’t factor in interest rates for borrowers. Dr. Bartels gave an example of a nonresident seat at an unnamed school in which tuition and fees totaled $312,693 for four years. Factoring in a 7.9% interest rate would equate to $51,354, or $364,047 for the total cost.

“Certainly, all of this suggests that we’ll see an upward trend as this is a class that had their interest rates turned off for a majority of their time at school. So those veterinary school seat prices that are at a higher cost are going to have a significant impact on those that are using student loans,” Dr. Bartels said.