Income-Driven Repayment for Physicians
The OBBBA created RAP, ended SAVE, and restricted IBR for new borrowers. Here's how each remaining plan works — and how to decide between them as a resident, fellow, or attending physician.
By Devin Talbot, MBA | Artham Advisors | July 2026
The rules governing federal student loan repayment changed fundamentally in 2025 and 2026. The One Big Beautiful Bill Act (OBBBA, P.L. 119-21) created a new plan — the Repayment Assistance Plan — eliminated three legacy income-driven options, and restricted access to IBR for new borrowers. This page explains what changed, how each remaining plan works, and how to think through the decision as a resident, fellow, or attending physician.
What this page covers: How the OBBBA changed income-driven repayment. The RAP payment formula (1%–10% of AGI). Why IBR still matters for existing borrowers. Side-by-side payment examples for residents through attendings. How to decide between plans.
What Changed Under the One Big Beautiful Bill Act
The OBBBA (signed July 2025, effective July 1, 2026) is the most significant overhaul of federal student loan repayment since income-driven repayment programs were created. Five changes matter most for physicians:
RAP LAUNCHED JULY 1, 2026. The Repayment Assistance Plan is now the primary income-driven option for new federal borrowers. Payments are based on a tiered percentage of your adjusted gross income (AGI), ranging from 1% to 10% depending on income level. If your payment falls short of monthly interest, the government covers the difference — your balance does not grow.
SAVE, PAYE, AND ICR ARE SUNSETTING JULY 1, 2028. Borrowers currently enrolled in these plans must transition to RAP or IBR before then. Anyone still enrolled after July 2028 will be moved to the Standard 10-year plan.
QUALIFYING PAYMENT COUNT. If you have any PSLF-qualifying payments — even a small number from residency — the math changes. Payments made at a qualifying employer on a qualifying plan are already on the books. They disappear permanently if you refinance.
IBR SURVIVES — BUT ONLY FOR EXISTING BORROWERS WITH A DEADLINE. Borrowers whose federal loans were first disbursed before July 1, 2026 can still enroll in IBR. But they must elect IBR before July 1, 2028. After that date, existing borrowers who have not yet enrolled lose IBR eligibility permanently.
CAREER TRAJECTORY. Physicians who are uncertain about private versus nonprofit employment should be cautious about irreversible decisions. A physician who refinances in private practice and then takes a qualifying nonprofit position three years later cannot recover PSLF eligibility.
NEW BORROWERS HAVE TWO OPTIONS: RAP OR STANDARD. If your first federal loan disbursement was July 1, 2026 or later, IBR is not available to you. Your income-driven option is RAP. The default is the Standard 10-year plan — you must actively enroll in RAP.
IDR FORGIVENESS IS NOW TAXABLE. Forgiveness through RAP, IBR, or any non-PSLF path is taxable as ordinary income as of January 1, 2026. PSLF forgiveness remains tax-free.
PSLF is unchanged. Public Service Loan Forgiveness remains tax-free, applies after 120 qualifying payments, and RAP payments qualify just as IBR and SAVE did before. The 10-year commitment to a nonprofit or government employer is unchanged.
The RAP Payment Formula
RAP payments are not calculated as a percentage of discretionary income (as IBR, SAVE, PAYE, and ICR were). They are calculated as a tiered flat percentage of your entire adjusted gross income — a structurally different formula with meaningfully different results.
RAP formula: Monthly payment = (AGI × applicable rate%) ÷ 12. Minimum: $10/month. Dependent reduction: subtract $50 per dependent (floor: $10/month).
There is no poverty line subtraction. The rate applies to your entire AGI within each tier. This produces higher payments than IBR at most attending income levels — where IBR first subtracts ~$23,250 (150% FPL) before applying the 10% rate.
AGI Range | Rate | Monthly Payment | Typical Physician Stage |
|---|---|---|---|
$0 – $10,000 | $10/month minimum | $10 | N/A |
$10,001 – $20,000 | 1% of AGI | $8 – $17 | N/A |
$100,001+ | 10% of AGI | 10% ÷ 12 | Most attending physicians |
$20,001 – $30,000 | 2% of AGI | $33 – $50 | N/A |
$30,001 – $40,000 | 3% of AGI | $75 – $100 | N/A |
$40,001 – $50,000 | 4% of AGI | $133 – $167 | N/A |
$50,001 – $60,000 | 5% of AGI | $208 – $250 | Lower-income PGY-1 |
$60,001 – $70,000 | 6% of AGI | $300 – $350 | PGY-1 resident (~$63K) |
$70,001 – $80,000 | 7% of AGI | $408 – $467 | PGY-4 fellow (~$78K) |
$80,001 – $90,000 | 8% of AGI | $533 – $600 | Late fellow / early attending |
$90,001 – $100,000 | 9% of AGI | $675 – $750 | Community attending, lower range |
For residents and lower-income fellows, the tier structure and interest waiver make RAP highly favorable compared to any private refinancing option. For attendings at high incomes, RAP produces higher required payments than IBR — which matters for PSLF-track physicians trying to minimize payments and maximize the forgiven balance.
The Interest Waiver: Why It Matters for Residents
RAP includes a full interest waiver. If your required monthly payment is less than the interest accruing on your loans, the government covers the unpaid interest — permanently. Your principal balance does not grow while you are making RAP payments.
For a resident with $280,000 in loans at 7% interest, monthly interest accrual is approximately $1,633. A PGY-1 earning $63,000 (6% RAP tier) owes about $315/month. The $1,318 gap is waived. The balance stays flat for the entire duration of residency and fellowship — typically four to eight years.
IBR, by contrast, does not include a broad interest waiver. Under IBR, if your payment is less than monthly interest, the unpaid interest capitalizes onto your balance. The 3-year interest subsidy under IBR applies only to subsidized loans and only for the first three years of IBR enrollment. After that, your balance grows.
For residents and fellows: the RAP interest waiver is the single most valuable feature of the plan during training. A resident who stays on RAP for six years preserves the entire loan balance — no capitalized interest — while also counting those 72 payments toward PSLF if employed at a qualifying nonprofit hospital.
IBR: Still Relevant — If You Have Existing Loans and Act Before July 2028
or physicians whose federal loans were first disbursed before July 1, 2026, Income-Based Repayment (IBR) remains available — and in many cases produces lower required payments than RAP at attending income levels. The critical constraint is the enrollment deadline: you must elect IBR before July 1, 2028 or lose eligibility permanently.
Why IBR produces lower payments at high incomes: IBR calculates your payment as 10% of discretionary income, defined as AGI minus 150% of the federal poverty line (approximately $23,250 for a single person in 2026). RAP uses your full AGI with no poverty line subtraction. At $215,000 AGI:
-
RAP: 10% × $215,000 ÷ 12 = $1,792/month
-
IBR: 10% × ($215,000 − $23,250) ÷ 12 = $1,598/month — about $194/month less
For a PSLF-track attending with 5+ years remaining to forgiveness, $194/month × 60 months = $11,640 in additional payments under RAP versus IBR. More directly: lower IBR payments preserve more of the principal balance outstanding at forgiveness, which is forgiven tax-free under PSLF.
IBR strategy for attending physicians: If you are an attending at a nonprofit hospital or academic medical center with loans first disbursed before July 1, 2026, model both plans before July 2028. IBR's lower payment at attending incomes means less paid out-of-pocket and more balance preserved for PSLF forgiveness. Enrolling in IBR before the July 2028 deadline costs nothing and preserves the option.
One important caveat: IBR does not include the broad RAP interest waiver. For residents and fellows earning below $100K, the RAP interest waiver is worth more than IBR's formula advantage. The IBR strategy is most relevant during the attending years when income is high enough that the payment difference outweighs the waiver benefit.
Payment Examples: RAP vs. IBR at Each Career Stage
The table below shows illustrative monthly payments under both plans for a physician carrying $280,000 in federal loans at 7% interest (monthly interest accrual: ~$1,633). IBR payments assume loans disbursed before July 1, 2026 and IBR elected before July 2028.
There is no poverty line subtraction. The rate applies to your entire AGI within each tier. This produces higher payments than IBR at most attending income levels — where IBR first subtracts ~$23,250 (150% FPL) before applying the 10% rate.
Career Stage | AGI | RAP Payment | IBR Payment* | Monthly Interest | RAP Interest Waiver |
|---|---|---|---|---|---|
Hospitalist / OBGYN | $310,000 | ~$2,583 | ~$2,389 | $1,633 | $0 (payment covers interest) |
IM / FM Attending | $215,000 | ~$1,792 | ~$1,598 | $1,633 | $0 (payment covers interest) |
PGY-4 Fellow | $78,000 | ~$455 | ~$456 | $1,633 | ~$1,178 waived |
PGY-1 Resident | $63,000 | ~$315 | ~$331 | $1,633 | ~$1,318 waived |
* IBR payment applies only to borrowers with loans first disbursed before July 1, 2026, who enroll in IBR before July 1, 2028. IBR formula: 10% × (AGI − 150% FPL) ÷ 12, using ~$23,250 for 2026 single-person FPL × 1.5.
Key Takeaways
Residents and Fellows
RAP and IBR produce nearly identical payments at training-level incomes. RAP's full interest waiver makes it the better option for most residents — the balance stays flat, versus IBR where unpaid interest capitalizes. Unless you have a specific reason to prefer IBR during residency, RAP is the right default.
Attending Physicians (PSLF Track)
IBR produces meaningfully lower payments at attending incomes. For PSLF-track attendings with existing loans, lower payments = more balance preserved = more forgiven tax-free. Evaluate IBR enrollment before the July 2028 deadline.
Attending Physicians (No PSLF Path)
At $215K+ income, both plans produce payments that cover or exceed monthly interest, so the interest waiver advantage disappears. For private-practice attendings, refinancing to a lower rate often makes more sense than staying on IDR and paying 10% of AGI annually.
Which Plan Is Right for You?
The answer depends on your career stage, employment setting, and whether your loans predate July 1, 2026. The table below covers the most common physician scenarios.
Your Situation | Likely Best Path |
|---|---|
Existing borrower uncertain about PSLF eligibility | Enroll in RAP or IBR now (do not wait). Submit Employment Certification Form. The July 2028 IBR election deadline is a hard cutoff. |
New borrower (first disbursement July 1, 2026 or later) | RAP is your income-driven option. IBR is not available to you. If pursuing PSLF, RAP payments qualify. Confirm employment with PSLF Help Tool. |
Confirmed private-practice attending, no PSLF path | Evaluate refinancing if you have a stable income and plan to pay aggressively. IDR may still make sense if income is variable — model both paths. |
Attending at nonprofit/academic center, only 1–2 years to PSLF forgiveness | Stay on your current qualifying plan. Confirm payment count with your servicer. Do not refinance. |
Attending at nonprofit/academic center, 5+ years remaining to 120 payments | Run the PSLF analysis before touching anything. Existing borrowers: model IBR vs. RAP — IBR often produces lower payments at attending incomes, which preserves more balance for tax-free forgiveness. |
Resident or fellow at a nonprofit hospital (likely PSLF employer) | Stay federal. Enroll in RAP (or IBR if loans pre-date July 2026 and you elect before July 2028). Every qualifying payment is counting toward PSLF. |
* IBR payment applies only to borrowers with loans first disbursed before July 1, 2026, who enroll in IBR before July 1, 2028. IBR formula: 10% × (AGI − 150% FPL) ÷ 12, using ~$23,250 for 2026 single-person FPL × 1.5.
IDR Forgiveness: Tax Consequences Under Current Law
IDR forgiveness — forgiveness through RAP or IBR that occurs outside of PSLF — is taxable as ordinary income effective January 1, 2026, under the OBBBA. RAP forgiveness comes at the 30-year mark. IBR forgiveness comes at 20 years (loans disbursed after July 1, 2014) or 25 years (older loans).
In practical terms: a physician who enters RAP in residency, shifts to private practice after year four, and carries $280,000+ in loans may have a balance significantly exceeding the original principal at the 30-year mark — depending on income, payment amounts, and accrual during low-payment years. That forgiven amount will be taxable as income in the year forgiven.
IDR vs. PSLF forgiveness: A physician forgiven $250,000 through PSLF owes $0 in tax on that forgiveness. A physician forgiven $250,000 through 30-year RAP forgiveness may owe $60,000–$100,000+ in taxes in the year of forgiveness, depending on their marginal rate. Build this into any long-term IDR model.
→ See also: Is PSLF Worth It for Physicians?
Key Actions
Residents and Fellows (Current Training Year)
✔ Confirm your loan type is Direct. Only Direct Loans qualify for RAP, IBR, and PSLF. FFEL and Perkins loans require consolidation first.
✔ Enroll in RAP. Log into studentaid.gov and select RAP as your repayment plan. Do not leave loans on the Standard plan.
✔ Submit an Employment Certification Form annually. Even if you are not yet committed to PSLF, certifying annually costs nothing and creates a paper trail of qualifying payments.
✔ Do not refinance during training. Refinancing to a private loan permanently surrenders federal protections, interest subsidies, and PSLF credit.
Attending Physicians (Within 2 Years of Completion)
✔ Confirm your employment qualifies for PSLF. Use the PSLF Help Tool at studentaid.gov/pslf to verify your employer's EIN.
✔ Existing borrowers: model RAP vs. IBR before July 2028. At attending incomes, IBR often produces lower required monthly payments. Lower payments preserve more balance for tax-free PSLF forgiveness.
✔ If pursuing PSLF: do not refinance. A single missed moment of refinancing cannot be undone.
✔ If private practice is confirmed: model refinancing. Compare private loan rates against RAP payments (10% of AGI) and projected IDR forgiveness tax exposure at year 30.
→ See also: Should Physicians Refinance Student Loans?
Talk Through the Numbers
The right IDR strategy depends on your specific loan balance, income trajectory, employer, and timeline. Artham Advisors works with physicians at every stage — from first-year residents establishing their repayment plan to attendings approaching PSLF forgiveness who need to verify every payment qualifies.
We review your loan servicer history, model RAP vs. IBR outcomes, verify PSLF payment count, and help you build a loan strategy that fits the rest of your financial plan. No commissions. No account minimums. Just a straightforward plan.
No obligation, no sales pitch.
Frequently Asked Questions
SAVE calculated payments as 5%–10% of discretionary income (AGI minus 225% FPL). RAP uses a tiered flat percentage of AGI with no poverty line subtraction, producing higher payments at incomes above roughly $100,000. Both include a government interest waiver for unpaid monthly interest. SAVE and PAYE are sunsetting July 1, 2028.
No. Borrowers whose first federal loan disbursement was July 1, 2026 or later are not eligible for IBR. Their income-driven repayment option is RAP. This is a hard eligibility rule, not a waiver — there is no opt-in.
It depends on your career stage. During residency and fellowship, RAP's full interest waiver is generally more valuable — your balance stays flat regardless of the formula. Once you reach attending income, IBR's discretionary income formula produces lower required payments than RAP's flat 10% of AGI. For PSLF-track attendings, lower payments = more balance preserved for tax-free forgiveness. The key constraint: if you want IBR, you must elect it before July 1, 2028.
Yes. RAP reduces your monthly payment by $50 for each dependent, subject to a $10/month minimum. A physician with two dependents would subtract $100 from their calculated RAP payment (but not below $10/month).
Yes. Payments made under RAP while employed at a qualifying employer in an eligible repayment plan count as qualifying payments toward PSLF. The requirement is 120 qualifying payments — the dollar amount of each payment does not affect whether it qualifies.
If you have existing loans and have not enrolled in IBR by July 1, 2028, you lose IBR eligibility permanently. At that point, RAP and the Standard 10-year plan are your only federal repayment options. For PSLF-track attendings, this means foregoing the lower IBR payment for the remainder of their 10-year commitment.
No. RAP forgiveness after 30 years is taxable as ordinary income. PSLF forgiveness after 120 qualifying payments is tax-free. This distinction is one of the primary financial arguments for pursuing PSLF if you work at a qualifying employer, rather than staying on RAP for the full 30-year term.
SAVE, PAYE, and ICR are sunsetting July 1, 2028. Before that date, log into studentaid.gov and actively switch to RAP (or IBR if you have pre-July 2026 loans and are eligible). If you take no action, the Department of Education will move you to the Standard 10-year plan, which will significantly increase your monthly payment.
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Information current as of July 2026 based on the One Big Beautiful Bill Act (P.L. 119-21) and Department of Education guidance. Repayment plan rules are subject to regulatory change. Disclosure: This article is for educational purposes only and does not constitute personalized financial, legal, or tax advice. Artham Advisors is a registered investment advisor (SEC disclosure). Please consult a qualified professional before making financial decisions.