House Passes Budget Bill with Restrictions on Student Loans and PTET deductions
On May 22, 2025, the U.S. House of Representatives passed its budget reconciliation package, the One Big Beautiful Bill Act (H.R. 1), by a vote of 215-214-1. The bill addresses multiple policy priorities for President Trump and Congressional Republicans, including an extension of expiring tax cuts under the Tax Cuts and Jobs Act of 2017 and significant reforms to state-level financing mechanisms and beneficiary eligibility of Medicaid.
Notably, the bill includes the Student Success and Taxpayer Savings Plan, which introduces significant changes to federal student loan programs impacting medical and dental students. If enacted, the bill would eliminate the Grad PLUS loan program, restricting access to federal loans for graduate and professional students beginning in the 2026-2027 academic year for new borrowers and the 2029-2030 academic year for existing borrowers. The Grad PLUS loan program allows medical and dental students to secure federal loans for tuition and living expenses. The bill would also impose a borrowing cap of $150,000 on federal loans for professional education programs and exclude medical and dental residency from the definition of “qualifying jobs” under the Public Service Loan Forgiveness (PSLF) program. Under this provision, dentists working for Veterans Affairs hospitals, dental schools and non-profit organizations would not receive PSLF credit, lengthening their repayment period. Additionally, the bill includes language similar to the Resident Education Deferred Interest (REDI) Act, which would defer the accrual of interest on federal student loans during dental residency. However, the reconciliation package limits this deferral to four years.
The bill also contains a provision that would prevent small business dental practices from deducting state-level pass-through entity taxes (PTET) on their federal returns. PTET deductions allow small dental practices and other pass-through businesses to avoid the $10,000 cap on state and local tax (SALT) deductions and receive fair tax treatment relative to other types of business entities. If enacted, dentists who own practices structured as pass-through entities would face higher taxes.
Impact on General Dentistry: Dental school tuition has nearly doubled since 2000, with 78% of dental school graduates starting their careers with over $312,000 in student loan debt. AGD strongly opposes the elimination of the Grad PLUS program and restrictions on PSLF qualification. AGD also opposes the removal of federal deductibility for PTET payments. As the budget reconciliation package moves to the Senate for further consideration, AGD will continue its advocacy on behalf of general dentists and their patients.
Notably, the bill includes the Student Success and Taxpayer Savings Plan, which introduces significant changes to federal student loan programs impacting medical and dental students. If enacted, the bill would eliminate the Grad PLUS loan program, restricting access to federal loans for graduate and professional students beginning in the 2026-2027 academic year for new borrowers and the 2029-2030 academic year for existing borrowers. The Grad PLUS loan program allows medical and dental students to secure federal loans for tuition and living expenses. The bill would also impose a borrowing cap of $150,000 on federal loans for professional education programs and exclude medical and dental residency from the definition of “qualifying jobs” under the Public Service Loan Forgiveness (PSLF) program. Under this provision, dentists working for Veterans Affairs hospitals, dental schools and non-profit organizations would not receive PSLF credit, lengthening their repayment period. Additionally, the bill includes language similar to the Resident Education Deferred Interest (REDI) Act, which would defer the accrual of interest on federal student loans during dental residency. However, the reconciliation package limits this deferral to four years.
The bill also contains a provision that would prevent small business dental practices from deducting state-level pass-through entity taxes (PTET) on their federal returns. PTET deductions allow small dental practices and other pass-through businesses to avoid the $10,000 cap on state and local tax (SALT) deductions and receive fair tax treatment relative to other types of business entities. If enacted, dentists who own practices structured as pass-through entities would face higher taxes.
Impact on General Dentistry: Dental school tuition has nearly doubled since 2000, with 78% of dental school graduates starting their careers with over $312,000 in student loan debt. AGD strongly opposes the elimination of the Grad PLUS program and restrictions on PSLF qualification. AGD also opposes the removal of federal deductibility for PTET payments. As the budget reconciliation package moves to the Senate for further consideration, AGD will continue its advocacy on behalf of general dentists and their patients.