Week 19 - How to Graduate With Less Debt and More Options

The cheapest debt you’ll ever “pay off” is the debt you never borrow

If you’re still in school, you’re in the only phase of the student loan journey where you can make a move that lowers your total repayment cost without needing a higher salary, a bigger budget, or a perfect repayment plan later: borrow less up front. It’s the part you control right now; before interest, fees, and repayment decisions pile on.

This matters even more for the Class of 2026 and beyond because the federal borrowing landscape is actively changing. The goal of “Borrow Better” isn’t to be extreme or miserable; it’s to be intentional so future-you has better choices (and less stress) in repayment.

Borrowing rules are shifting soon, and it changes the urgency

A major federal student loan law passed in 2025 is reshaping how graduate and professional students can borrow, starting July 1, 2026. One of the biggest changes for vet students: Direct PLUS Loans for graduate/professional students are scheduled to end for new loans beginning July 1, 2026, with a limited exception for some students already enrolled who previously borrowed for the program.

At the same time, new annual and aggregate borrowing limits are being implemented. Current summaries and implementation materials describe caps of $50,000 per year and $200,000 total for professional programs, with separate lower caps for non-professional graduate programs.

Why should vet students care? Because when borrowing becomes more limited, the “borrowing phase” becomes more strategic: tuition choices, scholarships, living expenses, and avoiding unnecessary disbursements matter even more. The U.S. Department of Education has been rolling out implementation through negotiated rulemaking and proposed rules, which means details can still be refined, but the direction is clear: more guardrails, more caps, fewer “borrow up to anything” options for new loans after July 1, 2026.

One important nuance for vet med: a February 2026 fact sheet notes that “veterinary medicine” is included among the fields being treated as “professional” in the proposed definition used for these higher borrowing caps, though final definitions are still part of the implementation process.

Cost of Attendance is a ceiling, not a spending goal

When your school builds your financial aid package, it revolves around a number called Cost of Attendance (COA). COA is foundational in federal aid calculations because it sets a limit on the total aid you can receive for programs like Direct Loans.

Here’s the catch: COA is an estimate built from required costs, like tuition/fees, plus allowances for things like living expenses. Schools are allowed to use average or standard cost categories, rather than your exact real-life spending, which is practical for packaging aid, but it also means you can sometimes live below the estimate.

This is the core Borrow Better mindset shift: COA is not a recommendation. It’s not the “right” amount to borrow. It’s the maximum your school can generally package. If your real monthly spending comes in under the allowance, you may have room to reduce what you borrow, or return what you don’t need later.

If you want the simplest practical approach: treat COA like a medication label. It tells you what’s permissible. It does not tell you what’s optimal.

The 120-day “undo button” on federal loans is real

Most students don’t realize there is a short window where you can effectively say, “Actually, I didn’t need that,” and reverse part of a loan disbursement.

Guidance summarized by National Association of Student Financial Aid Administrators explains that no interest or loan fees are generally charged on federal student loan funds that are returned within 120 days of disbursement, citing Federal Student Aid.

Loan servicer documentation from MOHELA describes these as payments made within 120 days of disbursement that are treated as “loan cancellation”: the amount is applied as a reduction in “original principal,” and the servicer adjusts the associated interest and loan fees for the returned portion.

The practical takeaway is huge: returning extra loan dollars within the 120-day window is one of the cleanest ways to reduce your eventual balance, because it reduces the principal and avoids paying interest and fees on money you didn’t actually need.

One more detail students miss: returning money is easiest before it disburses (canceling the next disbursement). If it already disbursed, the same NASFAA summary notes that schools must follow loan cancellation timelines, commonly 14 or 30 days after required notification depending on the acceptance process, and many schools will still help coordinate returns within the 120-day window even after that.

Pick the least toxic loan option

When “all loans” are sitting in your portal looking identical, it’s easy to borrow in the wrong order. But loan type matters, because interest rates, fees, and repayment protections differ.

Some veterinary programs participate in federal, school-administered health professions loans like HPSL. These loans have unique terms: federal guidelines describe a 5% interest rate for HPSL loans made on/after Nov. 4, 1988, and specify that interest begins accruing after the grace period, not while you’re enrolled.

That grace period is also unusually favorable: the official HPSL guidelines state the grace period is one year, during which repayment is not required and interest does not accrue.

By contrast, most vet students rely heavily on Direct Loans. For the 2025–2026 academic year, federal guidance published for schools shows interest rates of 7.94% for Direct Unsubsidized Loans (graduate/professional) and 8.94% for Direct PLUS loans (graduate/professional).

Fees matter, too. A Federal Student Aid electronic announcement explains that, due to sequestration adjustments, loan fees remain 1.057% for Direct Unsubsidized and 4.228% for PLUS loans for first disbursements in the relevant window, meaning you receive less than you borrow, but you repay the full amount.

So if you’re building a “Borrow Better” order of operations, and your school offers these options, the logic is:

Use the lower-cost, school-administered programs when you qualify (like HPSL/LDS), then use the core Direct Loans, and only use higher-fee/higher-rate options when necessary. That ordering is consistent with the VIN Foundation checklist emphasis on prioritizing federal loans and avoiding private loans where possible.

One more update to keep in mind: because Direct PLUS loans for graduate/professional borrowers are being eliminated for new loans starting July 1, 2026, with limited exceptions, many students who would have leaned on Grad PLUS historically may need to rely more on budgeting, scholarships, school aid, and, if absolutely necessary,private gaps.

Don’t trade flexibility for a “better rate” without understanding what you’re giving up

A common trap, especially when students feel anxious, is chasing a lower interest rate through private loans or refinancing without accounting for the protections being surrendered.

The Consumer Financial Protection Bureau is blunt on a key point: major forgiveness benefits and income-driven forgiveness pathways are only available on federal student loans.

VIN Foundation Borrow Better Q&A materials reinforce the permanence of this choice: they note that once federal loans are refinanced into private loans, the move is not reversible, and borrowers lose access to federal tools like IDR and PSLF.

That doesn’t mean private loans are “never.” It means they should be treated as the last resort after you’ve exhausted scholarships, work, school-administered programs, and federal options, because the flexibility of the federal system is often what keeps vet debt manageable over time.

Make it real this week: create your Borrow Better plan with VIN tools

If you make financial decisions without numbers, it’s like diagnosing kidney disease without labs: possible, but unnecessarily risky.

VIN Foundation’s Student Debt Center lays out a simple workflow: upload your federal aid data into My Student Loans for a breakdown of loan types and weighted average interest rate; send those results into the In-School Loan Estimator to project remaining costs; then, when appropriate, use the Student Loan Repayment Simulator to explore repayment strategies.

To get the best results, you need your federal aid data file. Federal Student Aid partner documentation explains that the “Download My Aid Data” option provides a plain-text file with Title IV aid details (loans, grants, enrollment, and more), accessible from the “My Aid” page.

If you get stuck, the Borrow Better page highlights another under-used tool: the student debt message board where vet students can post, including anonymously, and get feedback—something the program emphasizes as part of making smarter choices before repayment starts.

To keep this actionable (and not overwhelming), a Borrow Better “homework” plan can be as simple as:

• Build a one-semester “real spending” budget from your last 30–60 days of transactions, compare it to your school’s living-expense allowance, and decide what you actually need to borrow.

• If you discover you borrowed too much, plan a return within the 120-day window so you don’t pay interest or fees on money you didn’t need.

• Run your loan data through the VIN tools so your borrowing decisions are based on your projected graduation balance, not guesswork.