The Repayment Assistance Plan (RAP) and the 2026 Federal Student Loan Changes: What Residents and Physicians Should Know

You're three months into a new academic year, you've finally learned where every elevator in the hospital goes, and your loan servicer has started sending emails with phrases like "Repayment Assistance Plan" and "action required." If you've been wondering whether any of this changes your plan for Public Service Loan Forgiveness or refinancing, you're asking the right question at the right time.

The federal student loan system changed on July 1, 2026. The 2025 budget law (the One Big Beautiful Bill Act, signed July 4, 2025) created a new income-driven plan called the Repayment Assistance Plan, or RAP. It also began closing off the older income-driven repayment (IDR) plans, capped how much future medical students can borrow from the federal government, and ended Grad PLUS loans for new borrowers. If you set up income-driven repayment during residency before this summer, some of the ground under that plan has moved.

This article walks through what changed and what a resident or fellow typically checks. The details reflect Department of Education guidance as of October 2026; confirm the specifics for your own loans on StudentAid.gov or with your servicer.

What Changed on July 1, 2026

The law did several things at once, and it helps to separate them, because each one touches a different group of borrowers.

• A new income-driven plan (RAP). Payments are based on a percentage of your adjusted gross income (AGI, the number near the bottom of page one of your tax return), with a small reduction for each dependent.
• Older IDR plans closing. Per StudentAid.gov's income-driven repayment FAQ, loans disbursed on or after July 1, 2026 can use only RAP among the income-driven plans, and the Pay As You Earn (PAYE) and Income-Contingent Repayment (ICR) plans will be retired no later than July 1, 2028.
• New federal borrowing limits for professional students. Grad PLUS loans ended for new borrowers, and federal unsubsidized borrowing for professional programs like medical school is capped at $50,000 per year and $200,000 in total.
• RAP and PSLF. RAP is an income-driven plan, and payments under it can move you toward Public Service Loan Forgiveness (PSLF) as long as the other PSLF requirements are met.

One change took effect right away in July 2025: the law removed the "partial financial hardship" test for Income-Based Repayment (IBR). According to the Department of Education's July 2025 guidance to schools and servicers, borrowers with eligible loans made before July 1, 2026 can enroll in IBR without showing that hardship. For a resident whose income will jump at the attending transition, that removes a barrier that used to come up later in training.

How the Repayment Assistance Plan Works

RAP uses a sliding scale. Your annual payment is a percentage of your AGI, and the percentage rises with income. Per the federal servicer's RAP information page on StudentAid.gov, the scale runs from 1% of AGI at $10,001 to $20,000 of income, up one percentage point for each additional $10,000, to 10% of AGI once income is above $100,000. That annual amount is divided by 12, then reduced by $50 per month for each dependent on your tax return. The minimum payment is $10 per month.

Here's what that looks like with round numbers. Say you're a PGY-2 with an AGI of $68,000. That falls in the 6% tier, so your annual RAP payment would be about $4,080, or $340 a month. If you have one child listed as a dependent, the monthly amount drops to roughly $290. Your actual figure depends on your filing status, household, and what your servicer certifies, so the StudentAid.gov loan simulator is the place to run your own numbers.

The Interest and Principal Features

RAP has two features that matter during training, when payments are often smaller than the interest your loans generate each month:

• Unpaid interest is waived. If your on-time monthly payment doesn't cover all the interest that accrued that month, the remaining interest is covered rather than added to your balance.
• A principal match. If your payment reduces principal by less than $50, the government makes up the difference (up to $50), so your balance moves down at least a little each month you pay on time.

For a resident, the practical effect is that your balance may not grow during training the way it could under some older plans. That's a meaningful change if you're on the fence about PSLF or expect to repay in full later.

Forgiveness Timelines Under RAP

Outside of PSLF, RAP forgives any remaining balance after 360 qualifying payments, which is 30 years. That's longer than IBR's 20 or 25 years. With PSLF, the timeline is still 120 qualifying payments (10 years) of full-time work for a qualifying employer. That gap is why RAP's place in PSLF matters so much during training.

How RAP Payments Count Toward PSLF

The StudentAid.gov PSLF page lays out the core requirements: Direct Loans, full-time employment with a qualifying employer (a government organization or a 501(c)(3) nonprofit), and 120 qualifying monthly payments under a qualifying plan. StudentAid.gov notes that most payments made on an income-driven plan count toward PSLF if you meet the other requirements, and the federal RAP page says that RAP borrowers may be eligible for forgiveness after 10 years through PSLF.

A few details are worth knowing. Payments need to be made on time and in full to count. Months spent in deferment or forbearance generally don't count, so pausing payments during training may slow your PSLF count. And because RAP has a $10 minimum instead of a $0 payment, even a very low-income month involves a small payment to keep the count moving.

Employer certification still matters too. If you're moving from residency to fellowship, or from training to your first attending job, it's common to certify employment with each employer as you go. The mechanics of that are covered in our piece on changing jobs without losing PSLF progress.

Whether PSLF ends up forgiving a large balance, a small one, or nothing at all depends on your income path, your employer over ten years, your family size, and future rule changes. No plan choice can promise a particular forgiveness amount. What RAP changes is the payment formula you follow along the way.

RAP vs. IBR: How They Compare

The table below compares the two income-driven plans a resident or fellow is most likely to weigh this year.

Notice the difference in how RAP and IBR start the calculation. IBR subtracts a poverty-based allowance before applying its percentage. RAP applies its percentage to your full AGI. Depending on your income, household size, and dependents, one may produce a lower resident-year payment than the other, and the answer can flip once attending income arrives. That's a comparison worth running on the simulator with your own figures.

The July 1, 2026 Line: Are You an Existing or a New Borrower?

The single most useful thing to know about your own loans this year is which side of the July 1, 2026 line each loan is on. According to StudentAid.gov, if all of your loans were disbursed on or after that date, RAP is the only income-driven plan available to you. If all of your loans were disbursed before it, you may be able to choose among several income-driven plans, including IBR and RAP, with PAYE and ICR available until they are retired. If you have a mix, your loans may be eligible for two different plans, and the eligibility table on StudentAid.gov shows which loans go where.

If You Were on SAVE

If you enrolled in SAVE during medical school or early residency, it's no longer available: a federal court order ended the plan, and StudentAid.gov says borrowers enrolled in SAVE or with a pending SAVE application must choose a new repayment plan. Your servicer sends an email with your deadline to choose. If you haven't seen that notice or confirmed your new plan, your StudentAid.gov account and your servicer's message center are the places to check. The plan you land in also affects whether your months count for PSLF.

New Borrowing Limits and the End of Grad PLUS

If you're already in residency, the borrowing changes mostly affect the people coming up behind you: today's medical students, and possibly a younger sibling or spouse heading to professional school. According to the Department of Education's frequently asked questions on the new loan limits, Grad PLUS loans are eliminated for graduate and professional students, and professional students (medicine is one of the professional degrees) can borrow up to $50,000 per year in Direct Unsubsidized Loans, with a $200,000 aggregate limit. A separate $257,500 lifetime limit applies to federal student borrowing, and it counts loans without regard to amounts repaid or forgiven.

There's an interim exception. A student who was enrolled in a program as of June 30, 2026 and received a Direct Loan for that program before July 1, 2026 keeps the earlier loan limits, including access to Grad PLUS, for the lesser of three academic years or the time remaining in the program.

For students whose cost of attendance runs above the new caps, the gap may need to be filled with private loans. Private loans don't qualify for PSLF or federal income-driven plans, which changes the repayment conversation for anyone who trains under the new limits.

What a Resident or Fellow Typically Checks This Year

You don't need to become a student loan expert on top of everything else. But there's a short list of items that come up again and again in planning conversations with residents and fellows right now.

• Your loan disbursement dates. Your StudentAid.gov account lists every loan and when it was made. Knowing whether every loan predates July 1, 2026 tells you which plans are on the table.
• Which plan you're in today. If you were on SAVE, PAYE, or ICR, confirm where you are now and whether the switch has processed.
• Your PSLF payment count. The PSLF tracker on StudentAid.gov shows qualifying months to date, so you can see whether any months you expected to count are missing.
• Your employer's PSLF status. Teaching hospitals are often nonprofits, but not every one qualifies. Confirming your employer through the PSLF Help Tool takes a few minutes.
• Your tax filing status. How filing jointly or separately affects your payment under RAP or IBR is worth reviewing with a tax professional; our article on married filing separately for physician couples covers the trade-offs.

For most of these, the work is an hour on StudentAid.gov with a cup of coffee on a post-call afternoon. The harder part is interpreting what you find in the context of your career path.

How Your Career Path Shapes the Decision

The right repayment plan for a PGY-1 in a three-year internal medicine program may look different from the right plan for a surgical resident with seven years of training ahead, or a fellow about to start a private-practice job. A few of the questions that tend to shape the decision:

• Do you expect to work for a 501(c)(3) or government employer for ten years in total, counting training?
• How many years of training do you have left, and how much of your PSLF count could you build during that time?
• Is there a second income in your household, and is your spouse also carrying loans?
• If PSLF doesn't fit, would you lean toward repaying in full, possibly through private refinancing after training?

Refinancing into a private loan ends eligibility for PSLF and federal income-driven plans for that debt, so it's a decision that's hard to reverse. While the federal system is in transition, keeping loans federal preserves your ability to choose later, which matters if you're still undecided. The trade-offs are covered in more depth in our PSLF vs. refinancing decision framework.

The attending transition is where a lot of these decisions become concrete. Your first big paycheck can change your RAP or IBR payment the next time your income is recertified, and the timing of that recertification can matter. It's one of several items on the attending transition checklist that's easier to plan before you sign the contract than after.

Where to Go From Here

Student loans are one of the first big financial decisions of your career, and they often get made at 11 p.m. after a long shift. The new rules change the inputs. Getting clear on which plans you can use, what each one would ask of you during training, and how that fits your long-term career is what makes the decision feel manageable.

If you'd like to talk through how these changes fit your loans, your training timeline, and the rest of your household's plans, we'd be glad to have that conversation. You can start here to see whether working together makes sense for your family.

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