How the RAP Plan Changes Student Loan Repayment and PSLF for Medical Residents

The new Repayment Assistance Plan (RAP) will be the only income driven repayment plan in town for new borrowers who take out a loan after July 1, 2026.

Borrowers who finish medical school before July 2026 will retain access to choice in their selection of income driven repayment: stick with the Income-Based Repayment (IBR) plan or go with RAP.

But borrowers taking out new loans post July 2026 will likely be stuck with primarily the options of Standard, RAP plan or refinance.

What will the implications be of the RAP plan for borrowers during their residency or fellowship? And what PSLF implications exist?

We’ll cover what you need to know about RAP during the training years.

How much will med school students be able to borrow under RAP?

Med school loans will be capped at $50,000 a year under the new loan limit regime. There will be a grandfathering clause where med students enrolled prior to July 2026 who have at least one loan for that program will be able to borrow the full amount of cost of attendance until they graduate (provided that’s by July 2029).

For a small number of years, you’ll see med students with very large balances who will be enrolling in RAP. For the med school class of 2030 entering fall 2026, the loan limits for most new grads will be quite similar. Most will probably max out their med loan limits, and thus they’ll finish school with $200,000 of loans + the accrued interest during med school (assuming a 6% interest rate on med school loans, that total would be about $230,000 — as an example).

How will RAP payments will work in residency and fellowship

The RAP plan only has a deduction of $50 per dependent per month. The old “discretionary income definition” will no longer be relevant.

That means you get a much lower deduction before having to pay whatever percent of AGI the RAP plan demands compared with IBR.

However, the RAP plan also allows for a lower percentage of income at lower income levels.

Here’s how a resident earning $65,000 a year would pay under two different IDR plans: 

• RAP: They’d be in a 6% of income threshold, resulting in a payment of $325 a month.
• New IBR or PAYE: They’d owe $346 a month.

At $75,000 of income, the numbers would be 

• RAP: 7% of income, at $438 a month.
• New IBR or PAYE: $429 a month.

For many borrowers in residency or fellowship, due to the stepwise percent of income featured in the RAP plan, payments won’t be all that different from New IBR or Pay As You Earn (PAYE), although they will generally be more expensive than the formerly available Saving on a Valuable Education (SAVE) plan.

Should physicians use RAP in residency and fellowship?

Most should, due to the interest subsidy that ensures no negative interest accrual if you’re current on payments.

However, there are situations where physicians in training might have high income spouses, which would cause the RAP payments to be very high or taxes to be very high from the increased cost of married filing separately for spouses in very different income brackets.

With the overall set up of RAP though, most physicians will use this plan during training and get large interest subsidies. Besides the loan limits being so low, there isn’t a major difference between SAVE and RAP for physicians in training who eventually want to pay off their loans.

For physicians hoping for PSLF though, there are more complex considerations.

How will PSLF work in residency or fellowship with RAP?

The major problem with RAP comes for physicians who hope to receive PSLF during training. Similar to the SAVE plan, there is no payment cap for the RAP plan, which means maximum payments once physicians have become attendings will be significantly higher than most would like, particularly compared to physicians who retain access to the IBR plan.

The IBR plan now allows for borrowers to access capped payments based on the Standard 10 year amortized monthly payment for their loan amount.

So, a physician with $200,000 of loans from before July 2026 could simply sign up for the IBR plan even if they have a $500,000 income and pay a capped payment somewhere around $2,000 a month (rough approximation of the 10 year Standard plan for a $200,000 loan).

However, a physician on the RAP plan with that income would pay about $4,167 a month.

With total student loan borrowing capped at $200,000, many physicians in the highest earning specialties will struggle to have much if any balance left to forgive. 

That said, many specialist physicians, through careful planning (like the kind we provide at Student Loan Planner), will be able to minimize payments for long enough to still make pursuing PSLF better than refinancing.

That said, the math does look very, very different when comparing receiving PSLF on $200,000 vs. receiving PSLF on $500,000.

This will likely cause increased pressure in the labor market for non-profit medical centers, as the lure of unlimited loan forgiveness diminishes with lower caps on total amounts eligible. Private sector employment for physicians will simply be more appealing than it used to be with the incoming PSLF changes.

Get a plan for the upcoming PSLF and RAP impacts

If you want to discuss your med school loan repayment optimization and plan, we’d love to help.

The rules of the game are very different, and with proper planning, you can select the right tax filing status, the right plan between IBR and RAP, and get either forgiveness or the maximum interest subsidies before you reach eventual debt freedom.