The 2026 Resident's Guide to Student Loan Repayment

The student loan landscape for physicians has been demolished and rebuilt in the span of eighteen months. The SAVE plan is dead. Grad PLUS loans are disappearing. A new repayment plan called RAP is taking shape. If you matched in 2026, every piece of advice from even two years ago is wrong — or at best, incomplete. This guide covers every repayment option still standing, the exact math behind each one, and a step-by-step action plan for your first month of residency.

The SAVE Plan Is Dead

In March 2026, the Supreme Court ruled 6-3 that the SAVE (Saving on a Valuable Education) plan exceeded the Department of Education's statutory authority. The plan had offered the most generous income-driven repayment terms in history — 5% of discretionary income for undergraduate loans, 10% for graduate, with a 225% poverty-line threshold that sheltered far more income than any prior plan. It also cancelled unpaid interest monthly, meaning balances could never grow.

All of that is gone.

Borrowers enrolled in SAVE at the time of the ruling were placed into administrative forbearance — a holding pattern where no payments are due but interest continues to accrue and months do not count toward any forgiveness program. Most have since been transitioned to IBR, but some remain in forbearance limbo as of mid-2026.

If you were on SAVE: Log into your servicer portal today. Confirm which plan you are currently on. If you are still in administrative forbearance, you are hemorrhaging money. On a $250,000 balance at 6.5% interest, forbearance costs approximately $1,354 per month in accruing interest — roughly $16,250 per year — and every month in forbearance is a PSLF qualifying payment you can never recover.

If you are a new PGY-1: The SAVE plan never existed for you operationally. Your options are RAP, IBR, or the sunsetting PAYE plan. Do not let anyone — including your servicer — default you into forbearance.

Grad PLUS Loans Eliminated (July 2026)

Starting July 1, 2026, the federal government will no longer issue Grad PLUS loans. This is the most significant structural change to medical education financing in decades.

Grad PLUS loans allowed medical students to borrow up to the full cost of attendance minus other financial aid, with no aggregate limit. Interest rates were higher (currently 8.05% for 2025-2026 disbursements), but the unlimited borrowing made it possible to attend any medical school regardless of cost.

What replaces them: New federal graduate lending will operate under lower aggregate limits. Students entering medical school in fall 2026 will need to fill the gap with institutional aid, scholarships, or private loans — which lack IDR eligibility and PSLF access.

If you already have Grad PLUS loans: Your existing loans are fully grandfathered. They remain eligible for IDR plans, consolidation into Direct Consolidation Loans, and PSLF. This change affects new borrowing only. If anything, your existing Grad PLUS loans have become more valuable because the forgiveness infrastructure they qualify for is no longer available to future borrowers.

The ripple effect: Medical schools with high tuition and limited institutional aid will face enrollment pressure. Expect more aggressive scholarship offers from schools competing for students who can no longer borrow without limit. This does not help you now, but it reshapes the landscape you will advise future applicants about.

The New RAP Plan

The Repayment Assistance Plan (RAP) is the congressionally authorized replacement for SAVE. Unlike SAVE, which was created by executive action and struck down by the courts, RAP was passed through legislation and is on firmer legal footing. Here are the details:

Payment Calculation

RAP uses a graduated sliding scale tied to adjusted gross income:

Interest Cancellation

If your calculated payment does not cover all accruing interest, the government cancels the remaining unpaid interest each month. Your balance will never grow beyond the original principal. This is the single most important feature of RAP — it eliminates the psychological and financial horror of watching your balance balloon during residency despite making payments.

Principal Reduction Credit

RAP credits $50/month toward your principal on top of your calculated payment. This is modest — on a $300,000 balance, it reduces principal by $600/year — but it means your balance is guaranteed to shrink, even if slowly.

Forgiveness Timeline

• Undergraduate loans: 20 years
• Graduate/professional loans: 25 years

PSLF Compatibility

RAP payments count as qualifying payments for PSLF. This is confirmed in the statute. For residents at 501(c)(3) hospitals, RAP is likely your optimal plan.

For a PGY-1 earning $70,000 (single): RAP payment is approximately $310-$380/month. This is slightly higher than SAVE would have been but significantly lower than standard repayment ($3,300+/month on $300K at 6.5%).

IBR Remains Available

Income-Based Repayment survives in two versions, both still accepting new enrollments:

Old IBR (loans disbursed before July 1, 2014)

• Payment: 15% of discretionary income (AGI minus 150% FPL)
• Forgiveness: After 25 years
• Payment cap: Never exceeds what you would pay on the 10-year standard plan

New IBR (loans disbursed on or after July 1, 2014)

• Payment: 10% of discretionary income
• Forgiveness: After 20 years
• Payment cap: Same as old IBR

Most residents with loans originating from 2014 onward qualify for new IBR. On a $70,000 salary (single), discretionary income is approximately $37,200 (AGI of $70,000 minus 150% of $21,870 FPL). Ten percent of that is $3,720/year, or $310/month.

IBR vs. RAP comparison on $70K salary:

Bottom line: RAP's interest cancellation makes it superior for most residents despite slightly higher payments. IBR is your backup if RAP enrollment is delayed or if your specific numbers favor it.

PAYE Sunsetting in 2028

The Pay As You Earn plan stops accepting new enrollments in 2028. If you are already on PAYE, you can remain indefinitely. PAYE functions identically to new IBR — 10% of discretionary income, 20-year forgiveness — but the income threshold uses 150% of FPL.

For new residents in 2026: PAYE is still technically available, but RAP or IBR are better choices. PAYE has a partial financial hardship requirement that can cause you to lose eligibility if your income rises too quickly, and the sunsetting timeline means you may be forced to switch plans later anyway.

The Cost of Forbearance

Forbearance is the default path of least resistance. Your servicer may even suggest it. It is one of the most expensive financial mistakes a physician can make.

On $200,000 in loans at 6.5% interest:

On $300,000 in loans at 6.5% interest:

That $78,000 in accrued interest capitalizes — meaning it gets added to your principal, and you start paying interest on interest. A $300,000 balance becomes $378,000 without a single payment being made.

Forbearance should be used for one purpose only: bridging a gap of 1-2 months while transitioning between servicers or waiting for IDR enrollment to process. Never as a long-term strategy.

Marriage and Filing Status: MFJ vs. MFS

This is the highest-stakes tax decision married residents face, and most get it wrong because they default to filing jointly without running the numbers.

Married Filing Jointly (MFJ)

• Combined household income determines IDR payments
• Access to full tax benefits: education credits, higher SALT deduction, Roth IRA eligibility, earned income credit
• Standard deduction: $32,200 (2026)

Married Filing Separately (MFS)

• Only your individual income determines IDR payments (on RAP and IBR)
• Lose education credits (American Opportunity, Lifetime Learning)
• Cannot contribute directly to a Roth IRA (income limit is $0 for MFS)
• Standard deduction: $16,100
• Higher tax rates on equivalent income

The Math

Scenario: You earn $72,000, spouse earns $85,000, $280,000 in student loans

Filing separately saves approximately $8,760 in loan payments per year while costing roughly $2,800 in lost tax benefits — a net savings of $5,960 per year, or nearly $24,000 over a 4-year residency.

When MFS wins: Loan balances above $150,000 and you are pursuing PSLF. The IDR savings dwarf the tax penalty.

When MFJ wins: Low loan balances (under $100,000), not pursuing PSLF, or your spouse's income is very low.

Critical note on Roth IRA: MFS eliminates direct Roth IRA contributions. The backdoor Roth remains available but adds complexity. If PSLF savings exceed the Roth IRA benefit, MFS still wins — but plan accordingly.

Run both scenarios in tax software (TurboTax, FreeTaxUSA) before filing. The 30 minutes of comparison can save you $6,000-$10,000 per year.

Step-by-Step PGY-1 Action Plan

Week 1 of Residency

1. 1.Log into StudentAid.gov. Confirm your loan servicer, loan types (must be Direct Loans for PSLF), and total balance.
2. 2.Screenshot everything. Save a PDF of your loan details for your records.

Week 2

1. 1.Apply for RAP (or IBR if RAP enrollment is not yet open). You will need your most recent tax return. If you filed with $0 income as a student, your initial payments will be $0 — this is correct and these $0 payments count for PSLF.
2. 2.If you have FFEL or Perkins loans, start a Direct Consolidation Loan application to make them PSLF-eligible. This takes 30-60 days.

Week 3

1. 1.Download the PSLF Form (Employment Certification Form) from StudentAid.gov.
2. 2.Bring it to your GME office or HR department. Have them complete the employer section confirming your hospital is a 501(c)(3).
3. 3.Submit to MOHELA by upload, fax, or mail. This triggers your loan transfer to MOHELA if they are with another servicer.

Month 2

1. 1.Confirm your first qualifying payment was processed. Log into MOHELA and verify the payment appears on your PSLF tracker.
2. 2.Set three calendar reminders:

• Annual: Recertify income for IDR (within 10 days of your annual deadline — missing it can cause payment spikes)
• Annual: Submit a new ECF to MOHELA
• Each April: Run MFJ vs. MFS analysis before filing taxes

Month 3

1. 1.If in forbearance for any reason, get out immediately. Call your servicer and confirm you are on an active IDR plan with payments counting toward PSLF.

Refinancing Decision Framework

Refinancing means replacing federal loans with a private loan at a lower interest rate. This permanently removes your loans from federal programs — no more IDR, no more PSLF, no more forbearance options.

Refinance when ALL of the following are true:

• You will NOT pursue PSLF (private practice, non-501(c)(3) employer)
• You are an attending with stable income (never refinance during residency)
• You can get a rate below 4-5%
• You can aggressively pay down the loan within 5-7 years
• Your loan balance is under 1.5x your attending salary

Do NOT refinance when:

• You are pursuing PSLF (you forfeit all remaining forgiveness)
• You are still in training (you lose IDR payment protection)
• You are uncertain about your career path (you cannot un-refinance)
• Your balance exceeds 2x your expected salary (PSLF almost certainly saves more)

The breakeven analysis: On $300,000 in loans, PSLF typically results in total payments of $180,000-$250,000 over 10 years with the remainder forgiven tax-free. Refinancing at 4% with aggressive 5-year repayment costs approximately $330,000-$340,000. The PSLF advantage: $80,000-$160,000 in savings — plus the cash flow benefit of lower payments during training.

The Bottom Line

The 2026 repayment landscape is more complicated than it has ever been, but the core strategy for residents has not changed: enroll in the lowest-payment IDR plan on day one, pursue PSLF if you are at a qualifying employer, file taxes strategically if married, and never sit in forbearance. The plan names have changed. The math has not. Every month you delay costs you money you will never recover.