As a physician with substantial student loan debt, particularly if you’re on the path to Public Service Loan Forgiveness (PSLF), staying informed about legislative shifts is crucial. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, introduces major reforms to federal student loans. While some changes primarily affect future borrowers, existing PSLF participants should act to avoid overpaying thousands or delaying forgiveness.
Streamlining Income-Driven Repayment Plans
Most physicians are currently on one of four Income-Driven Repayment (IDR) plans: SAVE, PAYE, IBR, or ICR. OBBBA consolidates these into two options:
- Revised Income-Based Repayment (IBR) plan
- Repayment Assistance Plan (RAP)
This “simplification” aims to make repayment easier, but it could likely require action to ensure your PSLF progress continues uninterrupted.
PAYE and ICR Phaseout
PAYE and ICR will eventually be phased out. The timeline could extend to July 1, 2028, though it may end sooner. You can remain on these plans for now, but planning your transition to IBR or RAP in the future is important.
Why Physicians Should Exit SAVE
SAVE payments no longer count toward PSLF, and interest began accruing again on August 1, 2025. If you are on SAVE and pursuing PSLF, switch to PAYE, IBR, or RAP as soon as possible to keep making progress toward your 120 qualifying payments. Delaying could push your forgiveness back by months or years, costing you valuable time and money.
Updates to Income-Based Repayment
- IBR remains an option, but is divided into:
- Old IBR: for those with loans before July 1, 2014
- New IBR: loans after July 1, 2014
- Payment Calculations:
- Old IBR: 15% of discretionary income
- New IBR: capped at 10% of discretionary income
- Expanded Access: OBBBA removes the partial financial hardship requirement for IBR, allowing high-earning physicians to enroll regardless of income. Note that for many, Studentaid.gov has not yet reflected this change.
- Borrowers with loans made before 2014 should consider moving to or staying on PAYE for as long as possible because this bases payments on 10% of discretionary income, avoiding the higher old IBR 15% rate.
RAP Plan (Repayment Assistance Plan)
Launching by July 1, 2026, and is PSLF-eligible, with payments counting toward your 120 qualifying months. Unlike IBR, RAP uses Adjusted Gross Income on a graduated scale.
RAP Payment Scale
- Monthly payments are calculated by dividing the AGI percentage by 12, with a $10 minimum
- RAP payments are reduced by $50 monthly per dependent child
- Subsidizes unpaid interest to prevent loan balance growth
Payment Examples
Below are examples for a single filer to illustrate how RAP, new IBR, and old IBR compare at various income levels.
The Payment Cap
IBR and PAYE include a payment cap, ensuring monthly payments never exceed the standard 10-year repayment amount. For example, with $250,000 in loans at 6% interest, the maximum payment is approximately $2,700 per month even if your income-based calculation is higher. This protects attending physicians with rising salaries while maintaining PSLF eligibility.
Tax Filing Strategies
Filing taxes separately can exclude your spouse’s income from your AGI for RAP or discretionary income for IBR and PAYE, potentially lowering payments. For example, a physician earning $150,000 with a spouse earning $100,000 could base RAP payments on $150,000 ($1,250 per month) instead of $250,000 ($2,083 per month), saving nearly $10,000 annually.
Filing separately may increase overall tax liability by limiting joint credits and deductions. If your income already hits the payment cap, separate filing will not reduce payments further.
For Physicians Not Pursuing PSLF: Refinancing Considerations
If you are not pursuing PSLF, refinancing federal loans into private loans could secure a lower interest rate, saving thousands per year. However, refinancing eliminates federal protections such as IDR, forbearance, and potential forgiveness. Compare multiple lenders and ensure you can manage payments without federal safeguards.
See our article on refinancing student loans.
Contact Us
Act now to protect your finances and stay on track for PSLF. Schedule a meeting to review your plan, switch from SAVE, model PAYE, IBR, or RAP scenarios, and verify your PSLF payment count on Studentaid.gov. If you’re not pursuing PSLF, book a consultation to explore refinancing options, repayment strategies, and how to balance investing with paying down debt.