News

September 22, 2026By Physicians for a Healthy California CalHealthCares

New federal student loan limits could push future physicians and dentists toward greater reliance on private loans, potentially increasing demand for loan repayment programs such as CalHealthCares.

The federal budget reconciliation law enacted in 2025 established new limits, effective July 1, 2026, on federal loans for students pursuing professional degrees: $50,000 annually and $200,000 over the course of their professional education. Those limits are considerably lower than the educational debt reported by recent CalHealthCares awardees.

An analysis of 542 physicians and dentists who received CalHealthCares awards through Cohorts 4 and 5 found that awardees carried an average of nearly $335,000 in educational debt at the time they applied. Federal loans accounted for an average of more than $294,000, or 84%, of that debt.

Physicians, who represented nearly 88% of the awardees analyzed, reported an average total educational debt of approximately $323,000. The 66 dentist awardees reported an even higher average of nearly $424,000.

Although these awardees financed their education before the new limits took effect, their debt levels illustrate the potential gap facing future medical and dental students. Compared with the average federal debt held by Cohort 4 and 5 awardees, the new $200,000 federal limit would leave a difference of approximately $94,000 that students may need to cover through private loans or other funding sources.

CalHealthCares estimates that, under the new federal limits, the proportion of awardees carrying private educational debt could have increased from approximately 25% to 88%—a 248% relative increase. Private loans often have fewer borrower protections than federal loans and are not eligible for federal programs such as Public Service Loan Forgiveness (PSLF). As future graduates rely more heavily on private financing, PSLF may cover a smaller share of their overall educational debt, leaving continued need for state loan repayment assistance, such as CalHealthCares.

Physician workforce shortage continues to grow

That need comes as California continues to face a significant physician workforce shortage. The Health Resources and Services Administration projects that California will have a shortage of more than 13,500 physicians by 2038, with a nationwide shortage exceeding 141,000.

CalHealthCares is one of several efforts designed to strengthen the health care workforce by helping physicians and dentists manage educational debt while serving Medi-Cal patients. Through its first five cohorts, the program committed $323 million in award grants to 1,414 awardees. Even with that substantial investment, CalHealthCares was able to fund only about 35% of the applications received.

A Cohort 1 awardee recently described why programs such as CalHealthCares remain critical:

“These types of programs are invaluable, especially nowadays, as the costs of medical education are increasing exponentially, while insurance reimbursement and physician salaries remain relatively stagnant. Few private employers offer meaningful student loan repayment, or do so with many strings attached, and federal programs such as PSLF, PAYE, and SAVE are somewhat volatile and can end at a moment's notice with changing administrations. Having options such as CalHealthCares can truly be a lifeline for many new graduates who want to serve in low-income areas and teaching hospitals, but at the same time find themselves struggling with balancing their student loan repayment and other financial obligations. I have encouraged several of the newer attendings at my institution to apply for this program and would continue to do so if the program carries on in future years.”

As the financing of medical and dental education changes, loan repayment programs such as CalHealthCares will remain an important tool for helping California recruit and retain health care professionals committed to serving communities with the greatest need.