Physician Student Loan Guide for 2026: The RAP Plan
Physician student loan guide for 2026 explaining RAP, PSLF, SAVE changes, and medical school loan repayment options.
By Jared Andreoli, CFP®, CSLP®
If you’re a physician just out of residency, chances are your student loan balance feels overwhelming enough without new legislation changing the rules. Many early-career doctors are now wondering whether their repayment strategy still makes sense, whether PSLF is still worth pursuing, and how the end of the SAVE plan will affect their future.
When the One Big Beautiful Bill Act (OBBBA) passed in 2025, it introduced sweeping changes that reshaped student loan planning. Several major federal student loan provisions under OBBBA are scheduled to take effect on July 1, 2026, including new repayment options, new borrowing limits, and the phaseout of Grad PLUS for new borrowers.
In this physician student loan guide for 2026, we’ll walk you through the key updates and what they could mean for your financial future.
How Does the RAP Plan Replace the SAVE Plan in 2026?
Beginning July 1, 2026, borrowers will start seeing major changes to federal student loan repayment. The Department of Education’s final rule creates two streamlined repayment options: the new Repayment Assistance Plan (RAP), which is income-driven, and a new Tiered Standard repayment plan.
While the popular SAVE plan and other older income-driven plans are being phased out, the transition rules vary depending on when you borrowed, which repayment plan you are currently using, and whether you take out new loans on or after July 1, 2026.
SAVE borrowers should pay especially close attention. As of 2026, the Department of Education has described SAVE as no longer legally available, and borrowers enrolled in SAVE are expected to receive instructions about choosing another available repayment plan. If a borrower does not choose a plan, they may be placed into a standard-style repayment plan rather than RAP.
PAYE and ICR are expected to be phased out by July 1, 2028. However, IBR is not being eliminated, and some current borrowers may still be able to remain in or switch to IBR depending on their loan history.
For anyone starting medical school or taking out new federal loans after July 1, 2026, RAP and the Tiered Standard plan will generally be the primary repayment options available for those new loans.
Under RAP, payments are calculated based on your total Adjusted Gross Income (AGI). Unlike previous plans that "protected" a portion of your income, RAP takes a slice of every dollar:
With RAP, payments are calculated based on adjusted gross income (AGI). If your annual income is $10,000 or less, you’ll be charged a flat $10 per month. Otherwise, payments follow this tiered percentage:
$10,001-$20,000: 1%
$20,001-$30,000: 2%
$30,001-$40,000: 3%
$40,001-$50,000: 4%
$50,001-$60,000: 5%
$60,001-$70,000: 6%
$70,001-$80,000: 7%
$80,001-$90,000: 8%
$90,001-$100,000: 9%
Over $100,000: 10%
These percentages are used to calculate an annual base payment, which is then divided by 12 to determine the monthly payment before any dependent adjustment. RAP also includes a $50 monthly reduction per dependent, subject to the plan’s minimum payment rules.
Contrary to early fears, RAP may provide a meaningful safety net for residents and other lower-earning physicians early in their careers. If you make your required on-time RAP payment and it does not cover all accrued interest on eligible federal loans in RAP, the Department of Education does not charge the remaining unpaid interest for that month.
RAP also includes a principal benefit. If your on-time monthly payment does not reduce principal by at least $50, the government can provide a dollar-for-dollar principal match of up to $50, helping eligible federal loan balances decline instead of grow.
Income-driven repayment plans have typically allowed for forgiveness after 20-25 years, but RAP requires 30 years of qualifying payments before forgiveness.
Does Residency Still Count Toward PSLF Under the OBBBA?
Physicians in residency or fellowship may still receive Public Service Loan Forgiveness (PSLF) credit if they work full-time for a qualifying nonprofit or government employer and make qualifying payments on eligible Direct Loans.
This is important because many residency and fellowship programs are connected to nonprofit hospitals or 501(c)(3) organizations. If your employer qualifies and you meet the other PSLF requirements, payments you make during training can still count toward your 120 required payments for PSLF.
RAP is included as a PSLF-qualifying repayment plan under the new rules. However, payments made under certain older income-driven plans may only count for PSLF through the applicable transition period, so physicians pursuing PSLF should review their repayment plan well before July 2028.
Grad PLUS Elimination and the Medical School Funding Gap
The OBBBA eliminates the Grad PLUS Program for new borrowers, and Federal Direct Unsubsidized loans for medical students are now capped at $50,000 per year and $200,000 per lifetime.
This creates a significant funding gap for many medical students, as these caps may not cover the full cost of attendance (tuition plus living expenses).
Any amount above these limits would need to be covered through other sources, which could include institutional aid, scholarships, personal resources, employer or family support, or private loans. Private loans generally do not qualify for RAP subsidies or PSLF.
However, the legacy provision offers a vital bridge. If you were enrolled in medical school and had a qualifying federal loan disbursed before July 1, 2026, you may be able to continue accessing Grad PLUS under the legacy provision for up to three additional academic years or the remainder of your expected time to credential, whichever is less, as long as you remain continuously enrolled in the same program at the same school.
Physician Student Loan Strategic Moves
If you’re currently in school, verify you have at least one qualifying federal loan disbursed before July 1, 2026. This may help preserve access to Grad PLUS under the legacy provision, subject to the three-year/current-program limits.
These are a few other considerations to keep in mind:
Review Your Current Repayment Plan: SAVE, PAYE, ICR, IBR, RAP, and the new Tiered Standard plan do not all work the same way. Current borrowers should evaluate whether staying on an existing plan, switching to IBR, moving to RAP, or using another strategy makes sense based on income, family size, PSLF eligibility, and long-term career plans.
Prioritize Private Debt: Because private loans lack the new RAP interest and principal subsidies, any "extra" payments should be directed toward private debt first.
Reevaluate Tax Filing: Because RAP is based on AGI and includes a $50 monthly dependent adjustment, tax filing decisions may matter. Married physicians should review whether filing jointly or separately produces a better overall result, especially if spousal income, dependent adjustments, PSLF, and tax costs are all part of the equation.
Need Help With Your Physician Student Loan?
At Simplicity Financial LLC, we focus our financial planning efforts on physicians handling student debt while establishing their careers. If you need personalized guidance, we may be able to help.
Get started by scheduling a free consultation, or reach out to us by emailing jared.andreoli@simplicityfinancialllc.com or calling 414-207-6473.
Frequently Asked Questions
What is the RAP plan for physicians in 2026?
The Repayment Assistance Plan (RAP) is a new federal income-driven repayment plan created under the 2025 student loan law changes. RAP is expected to become available beginning July 1, 2026, along with the new Tiered Standard repayment plan. RAP calculates payments based on adjusted gross income, includes a dependent adjustment, and offers interest and principal benefits for borrowers who make required on-time payments. However, RAP also requires 30 years of qualifying payments before income-driven forgiveness, so physicians should compare it carefully against PSLF and any other available repayment options.
Does residency still count toward PSLF for physicians?
Yes, residency or fellowship can still count toward PSLF if the physician meets the program requirements. The key factors are whether the borrower has eligible Direct Loans, works full-time for a qualifying nonprofit or government employer, and makes qualifying payments under an eligible repayment plan. Because many residency and fellowship programs are tied to nonprofit hospitals or academic medical centers, these years can be valuable for PSLF progress. Residents should submit employer certification and track qualifying payments early rather than waiting until later in their careers.
Will SAVE still be available for physicians in 2026?
No, SAVE is no longer legally available following court action. Physicians currently enrolled in SAVE should watch for instructions from their loan servicer about choosing another available repayment plan. The Department of Education has said servicers will begin notifying SAVE borrowers starting July 1, 2026. Borrowers who do not choose another plan within the required timeline may be placed into the Standard Repayment Plan or the new Tiered Standard Plan rather than RAP.
Is RAP better than SAVE for physicians?
RAP may be better for some physicians, but it is not automatically better than SAVE would have been. RAP includes an unpaid interest benefit, a dependent-based payment reduction, and a principal matching benefit for borrowers who make required on-time payments. However, RAP uses adjusted gross income without the same income protection allowance older income-driven plans used, and it requires 30 years of qualifying payments before income-driven forgiveness. Whether RAP is better depends on income, family size, loan balance, PSLF eligibility, and long-term career plans.
Should physicians switch to RAP right away?
Physicians should not automatically switch to RAP without comparing their options. Current borrowers may still have access to IBR, RAP, or certain legacy repayment plans during the transition period, depending on their loan history and whether they take out new loans after the key effective dates. Borrowers in PAYE, ICR, or SAVE generally need to transition to an eligible repayment plan by July 1, 2028. For physicians pursuing PSLF, the right choice may depend on whether RAP, IBR, or another available plan produces the best combination of qualifying payments and manageable monthly costs.
What happens to medical students who need more than $50,000 per year?
Medical students who need more than $50,000 per year may need to use non-federal funding sources. Under the new rules, professional students face a $50,000 annual federal borrowing limit and a $200,000 aggregate professional student limit. If federal loans do not cover the full cost of attendance, students may need to explore scholarships, institutional aid, personal resources, family support, employer support, or private loans. Private loans can help fill a funding gap, but they generally do not qualify for RAP, federal income-driven forgiveness, or PSLF.
Are private student loans eligible for RAP or PSLF?
No, private student loans are not eligible for RAP or PSLF. RAP and PSLF are federal student loan programs, and they generally apply only to eligible federal student loans. This is why physicians should be careful before refinancing federal loans into private loans or using private loans to cover medical school costs. Private loans may still have a role in some situations, but they do not carry the same federal repayment, subsidy, forgiveness, deferment, or forbearance protections.
Should physicians refinance their student loans in 2026?
Physicians should be cautious about refinancing federal student loans in 2026. Refinancing federal loans into private loans generally means giving up access to RAP, IBR, PSLF, federal deferment and forbearance options, and other federal borrower protections. Refinancing may make sense for some physicians with existing private loans or for borrowers who are certain they will not use federal repayment or forgiveness benefits. Before refinancing, physicians should compare the interest savings against the value of keeping federal loan protections.
How does RAP work for married physicians?
RAP uses income based on a physician’s tax filing status. For married borrowers filing separately, only the borrower’s income is used. For married borrowers filing jointly, combined spousal income is generally used, although the rules include proration when spousal loan debt is also considered. Married physicians should compare filing jointly versus separately because the best choice may depend on student loan payments, tax costs, spouse income, PSLF strategy, and dependents.
Do children reduce RAP payments?
Yes, children and other dependents can reduce RAP payments. RAP includes a $50 monthly payment reduction for each dependent claimed on the borrower’s federal tax return, subject to plan rules and minimum payment requirements. For married borrowers filing separately, only dependents claimed on that borrower’s return count for RAP purposes. This dependent adjustment may be especially relevant for residents, fellows, and early-career physicians with growing families.
What should residents do about student loans before July 1, 2026?
Residents should review their repayment plan, PSLF eligibility, and SAVE transition options before July 1, 2026. They should confirm whether their employer qualifies for PSLF, make sure qualifying payments are being tracked, and understand whether RAP, IBR, or another available repayment option best fits their situation. Medical students should also verify whether they qualify for legacy Grad PLUS access before relying on future federal borrowing. With the rules changing, early planning can help physicians avoid being moved into a repayment plan that does not support their broader financial strategy.
About Jared
Jared Andreoli, CFP®, CSLP®, is the president of Simplicity Financial, a fee-only firm specializing in helping early-career physicians navigate complex student loans and build individualized financial road maps. Since founding the firm in 2017, he has focused on providing a personal, high-touch partnership to help clients solve problems and pursue their long-term goals.