The Fellowship Year: Planning Your Money Around One More Year of Training Pay

You matched into fellowship. It's the career you wanted, and the training you're happy to receive. It also means the attending paycheck you've been picturing since your second year of medical school just moved back another year, maybe two or three.

If you're feeling a mix of excitement and "wait, how long are we doing this?", that's a reasonable reaction. Your classmates going straight into practice are signing contracts. Your partner may be weighing a job change for a city you've each visited once for an interview. And the money question underneath all of it sounds something like this: "We've been tight for years. Can we really do one more?"

Here's a different way to look at it. The fellowship year isn't just a delay. It's a year with a specific financial shape: a stipend and a clear end date. This article walks through how student loans and PSLF interact with fellowship, why Roth savings come up in training-year conversations, where disability insurance fits, what the move itself may cost, and how your partner's career belongs in the plan. If you're earlier in the process, our piece on setting up income-driven repayment and PSLF during residency covers the groundwork this article builds on.

What the Fellowship Year Looks Like Financially

Fellowship pay is still training pay. The AAMC Survey of Resident/Fellow Stipends and Benefits publishes this data annually, which can be a useful reference if you're comparing offers or estimating your budget in a new city. The American Medical Association has reported that recent stipend increases have trailed inflation, which matches what you may already be feeling at the grocery store.

The bigger financial detail isn't the stipend itself. It's the gap between the stipend and what you'd earn as an attending in your specialty. Each additional training year shifts your peak earning years back by a year. Seeing it that way makes the year its own planning window, with decisions that fit a lower income.

You'll still face the attending transition eventually, and our attending transition checklist lays out what that first year out of training tends to involve. For now, the focus is on the year (or years) between here and there.

Student Loans and PSLF During Fellowship

If you're pursuing Public Service Loan Forgiveness (PSLF), the federal program that requires the equivalent of 120 qualifying monthly payments on eligible Direct Loans while working full-time for a qualifying employer, fellowship is one more stretch of the timeline to plan around. According to the PSLF regulation (34 CFR 685.219), qualifying employers include U.S. federal, state, local, and tribal government organizations and 501(c)(3) organizations, and full-time means a minimum average of 30 hours per week. Payments made under a qualifying repayment plan, including an income-driven repayment plan, can count toward the 120.

Because qualifying employer status is what counts, it's worth confirming that your fellowship institution qualifies. We cover the mechanics in detail in changing jobs without losing PSLF progress.

One plan you may see mentioned is the Repayment Assistance Plan (RAP). Federal Student Aid's servicer information says RAP payments are based on a percentage of your adjusted gross income (up to 10%, divided by 12) and that borrowers may be eligible for forgiveness after 10 years if they're seeking PSLF.

If PSLF Isn't Part of Your Plan

Not every fellow works for a qualifying employer, and not every physician plans to stay in nonprofit or government work after training. Only Direct Loans qualify for PSLF, so refinancing into a private loan would take those loans out of the program. That's why the timing of any refinancing often depends on how confident you are about your post-fellowship employer.

Filing Status and Your Partner's Income

If you're married and your partner has meaningful income, how you file your taxes may affect your income-driven payment. On RAP, for example, Federal Student Aid's servicer information says that if you file a separate tax return from your spouse, only your income and the dependents you claim are used to determine your payment. This is a year-by-year decision, and our article on married filing separately for physician couples walks through how the two sides of that math are usually compared.

Roth Contributions While Your Income Is Lower

Roth accounts take after-tax money now, and the IRS notes that Roth IRA contributions are not deductible but qualified distributions are tax-free if the requirements are met. That's the core reason Roth savings come up so often in training-year planning conversations.

For 2026, the IRS set the IRA contribution limit at $7,500 and the 401(k) and 403(b) employee deferral limit at $24,500. Roth IRA eligibility phases out at higher incomes. For married couples filing jointly, the 2026 phase-out range is $242,000 to $252,000 of modified adjusted gross income. For singles and heads of household, the 2026 range is $153,000 to $168,000.

Your hospital or university retirement plan may also offer a Roth option. The IRS explains that designated Roth contributions can be made to a 401(k), 403(b), or governmental 457(b) plan, and are included in gross income in the year contributed. Choosing between Roth and pre-tax in the employer plan involves a few trade-offs, especially if you're on an income-driven repayment plan:

• Roth contributions are included in your gross income this year, but qualified distributions later are tax-free.
• Some income-driven payments, such as RAP, are based on adjusted gross income, so the choice between Roth and pre-tax may affect your payment.
• Employer matching contributions on Roth contributions must go into a pre-tax account, according to the IRS.
• On a fellowship budget, the amount you can comfortably set aside may be a bigger constraint than the account type.

Which of those trade-offs carries more weight depends on your loan balance, your forgiveness timeline, your tax bracket, and your savings capacity. It's a choice worth running with your real numbers.

Disability Insurance Before Training Ends

Fellowship is often the last chapter before attending income starts, which is why disability coverage tends to come up now. We won't repeat the full discussion here. Our article on own-occupation disability insurance and the narrow window before training ends covers how that coverage works and what to compare with a trusted agent.

Moving to a New City for Fellowship

If your fellowship is somewhere new, the move comes with its own costs: movers or a rental truck, travel, overlapping rent, security deposits, utility setups, new licensing and credentialing fees, and furnishing a different floor plan.

One detail catches people off guard. For civilians, moving expenses are no longer deductible on federal returns. The IRS limits the moving expense deduction to members of the Armed Forces on active duty moving under military orders and certain employees or new appointees of the intelligence community. IRS Publication 15-B also says the exclusion for qualified moving expense reimbursements has been eliminated, with narrow exceptions for those same groups, so a relocation payment from your program is generally included in income.

Because training budgets rarely have much slack, the move is usually something to plan for months ahead. One approach is a dedicated moving fund separate from your emergency reserve, so a surprise car repair in the first month doesn't collide with a deposit on the new apartment.

Cost of living is worth comparing before you sign a lease in a new city.

Here's how the main fellowship-year details tend to connect to the rest of your plan:

Keeping Your Lifestyle at Training Levels One More Year

There's a real emotional cost to watching co-residents buy houses while you're signing another lease on a two-bedroom apartment. It's easy to start spending like an attending a year early, especially if a new city comes with a fresh start and a longer list of things you "need."

The upside of living on a training budget one more year is that you already know how to do it. Your household has shown it can run on this income. Holding spending steady means the jump to attending pay can go toward the things that move your plan forward: paying down debt you're not having forgiven, building cash reserves, filling retirement accounts, and saving for your kids' futures. Those choices are far easier to make before a bigger lifestyle has had time to settle in.

That doesn't mean the year has to feel like deprivation. A few intentional spending choices, like a weekend trip to explore your new region or childcare that gives both of you some breathing room, can be part of a training-level budget. The goal is spending on purpose, not spending nothing.

One place to stay alert: new credit. Car loans, furniture financing, and credit card balances taken on during fellowship can follow you into attending life. If a purchase can wait a year, waiting often keeps more choices open.

Your Partner's Career in the Move

If you have a partner, the fellowship decision is a household decision. If you're moving, your partner may be leaving a job, searching in a new market, or bringing remote work along. Each of those paths has a financial side worth mapping out together before the moving truck shows up.

• If your partner will be between jobs, how long can the household run on your stipend alone, and what does that mean for the moving fund and emergency reserve?
• Whose employer will provide health coverage, and is there a gap between plans?
• Will a job change leave a 401(k) or 403(b) behind at the old employer, and is there an employer match your partner may give up by leaving before vesting?
• If your partner works in a licensed profession, does the new state require a new license, and how long does that take?
• Does the move change your state income tax picture, especially if your partner keeps working remotely for an employer based elsewhere?

These are also the conversations that tend to set the tone for how your household makes decisions once attending income arrives. If one of you has been carrying more of the career compromise during training, naming that out loud now, and planning for when it shifts, can make the next chapter feel more shared.

What the Fellowship Year Often Looks Like in Practice

Picture a married internal medicine resident heading into a three-year cardiology fellowship at a university hospital in a new state. Their partner is a teacher who'll need a new license and job. The household has federal loans on an income-driven plan and has been certifying employment for PSLF since intern year.

In a situation like this, the questions usually fall into a sequence. The first step is confirming that the university qualifies for PSLF and that payments will continue without a gap. Next comes sizing the moving fund, including any taxes on relocation assistance and a cushion for the months while the partner's license transfers. After that, it's time to look at disability coverage before training ends, and then to weigh the Roth vs. pre-tax question alongside the loan picture.

None of these decisions are permanent. Your repayment plan, your savings mix, and your budget can all be revisited as rules change and as your income moves. What helps is making them in an order that fits your household.

Making the Fellowship Year Count

A fellowship year is time well spent on your career. With a plan that fits the stipend, the loans, the move, and your partner's work, it can be a solid financial year as well.

If you'd like to talk through how your fellowship fits into your household's bigger picture, our CFP® professionals have worked with physician families for twenty-five years, through training, the attending transition, and the chapters after. You can get in touch with us whenever the timing feels right.

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