RAP Student Loans: What Physician Residents Need to Know Before July 1, 2026

July 1st is one of the most consequential dates in federal student loan history for anyone who still has a balance.

What changes:

→ RAP launches July 1, 2026 -- the new federal income-driven repayment option

→ SAVE, PAYE, and ICR are being phased out -- transition before July 2028 or be moved to the Standard plan

→ IBR is now restricted to existing borrowers -- deadline to enroll is July 2028

→ Non-PSLF forgiveness is now taxable. PSLF remains tax-free.

Under RAP, if your required monthly payment falls short of the interest accruing on your loans, the government covers the difference. Your balance does not grow.

Because the government covers unpaid interest, your balance stays flat. A flat nominal balance means inflation is eroding the real value of what you owe -- so in real terms, your debt gets cheaper every year while you are in training.

For a first-year resident earning ~$63,000 AGI (RAP uses AGI not Gross income) with $300,000 in federal loans:

The government covers $1,560 every month in interest. Over four years of residency, that is nearly $75,000 in interest the government absorbs -- while your balance stays flat at $300K.

The Standard 10-year plan -- the default if you do nothing -- costs $3,561 per month starting day one of residency.

Forbearance feels harmless because the monthly payment is $0. But on a $300,000 loan balance at 7.5%, four years of forbearance turns into roughly $405,000 before you even become an attending.

RAP is not automatically the right answer for every borrower.

→ IBR may still matter -- especially for existing borrowers who have until July 2028 to enroll.

→ PSLF almost certainly matters if you are headed to a nonprofit hospital, academic medical center (or other public sector job)

→ Your spouse's income, family size, specialty, and employer path all affect the math.

→ Your tax filing status may matter.

That said, ignoring July 1st is not a good plan.

None of this is automatic. You have to actively enroll.

If you want to talk through what this means for your situation, reach out -- this is exactly what we do at Artham Advisors.