What Happened to SAVE, PAYE, and ICR?
Before getting into the IBR vs. RAP comparison, a fast recap of where things stand.
The SAVE plan was vacated by court order and is no longer accepting new enrollments. The One Big Beautiful Bill Act (OBBBA), signed into law in mid-2025, formally eliminated SAVE and created the Repayment Assistance Plan as its replacement.
PAYE and ICR are being phased out. Both plans will be terminated on July 1, 2028. If you are currently on either plan and do not switch before that date, you will be automatically moved to RAP.
IBR is permanent. Unlike PAYE and ICR, IBR was explicitly preserved by the OBBBA and will remain available indefinitely — but with a critical catch covered below.
The bottom line for residents: your two meaningful options going forward are IBR and RAP. Understanding the difference between them is worth real money over the course of a physician's career.
What Is RAP and How Does It Calculate Your Payment?
The Repayment Assistance Plan (RAP) is the new federal income-driven repayment plan created by the OBBBA. It launches July 1, 2026, and will be the only income-driven option for new borrowers who take out federal loans on or after that date.
RAP calculates your monthly payment as a percentage of your total adjusted gross income (AGI) — not discretionary income. The percentage follows a sliding scale:
| Annual AGI | RAP Payment Rate |
|---|---|
| $10,000 or less | $10/month minimum |
| $10,001 – $20,000 | 1% of AGI |
| $20,001 – $30,000 | 2% of AGI |
| $30,001 – $40,000 | 3% of AGI |
| $40,001 – $50,000 | 4% of AGI |
| $50,001 – $60,000 | 5% of AGI |
| Resident Avg: $60k – $80k | 6% - 7% of AGI |
| $80,001 – $90,000 | 8% of AGI |
| $90,001 – $100,000 | 9% of AGI |
| Attending Avg: Above $100,000 | 10% of AGI |
Critical difference from IBR: RAP uses your total AGI with no poverty line deduction and no payment cap. As your physician income grows up into the attending brackets, your RAP payment will grow un-capped at a flat 10%.
RAP does include a generous interest subsidy — unpaid monthly interest is waived rather than capitalized onto your balance. This prevents your loan from growing during low-income residency periods.
Forgiveness under RAP occurs after 30 years of qualifying payments, unless pursuing PSLF which remains locked at 10 years (120 payments).
What Is IBR and How Does It Calculate Your Payment?
Income-Based Repayment (IBR) has been originally available since 2009 and is one of the most physician-friendly plans that will remain available long-term.
IBR calculates your monthly payment based on discretionary income — your AGI minus 150 percent of the federal poverty guideline for your family size. The applicable percentage depends on when you first borrowed:
- New IBR (loans after July 1, 2014): 10 percent of discretionary income, forgiveness after 20 years
- Old IBR (loans before July 1, 2014): 15 percent of discretionary income, forgiveness after 25 years
Most current residents fall under New IBR at 10 percent of discretionary income.
The feature that matters most for physicians: IBR caps your monthly payment at the 10-year Standard Repayment amount for your loan balance. No matter how high your attending salary climbs, your IBR payment cannot exceed what you would pay on a standard 10-year plan. RAP has no equivalent cap.
Both RAP and IBR qualify for PSLF (Public Service Loan Forgiveness).
The Real Math: What Each Plan Costs a Resident
Here is how the two plans mathematically compare for a typical PGY-2 resident earning $70,000 per year with $230,000 in federal student loans.
Assumptions: $70,000 gross salary, $5,000 in pre-tax deductions (401k contributions, health insurance), AGI of $65,000, family size of one, 2026 federal poverty guideline of approximately $15,060 for a single-person household.
RAP Calculation (Resident):
$65,000 AGI falls in the 6 percent bracket.
Monthly payment: $65,000 × 6% ÷ 12 = $325 per month
IBR Calculation (New IBR):
Discretionary income = $65,000 − (150% × $15,060) = $65,000 − $22,590 = $42,410
Monthly payment: $42,410 × 10% ÷ 12 = $354 per month
During residency at this income level, RAP saves approximately $29 per month — modest but real.
But now look at what happens when that exact same physician finishes residency and earns $350,000 as an attending, while still pursuing PSLF:
RAP Calculation (Attending):
$350,000 AGI is above $100,000 — flat 10 percent rate.
Monthly payment: $350,000 × 10% ÷ 12 = $2,917 per month
IBR Calculation (Attending):
Discretionary income = $350,000 − $22,590 = $327,410
Monthly payment: $327,410 × 10% ÷ 12 = $2,728/month — but this is capped at the 10-year Standard amount for $230,000, which is approximately $2,000 per month
Over the remaining years of a PSLF window, the IBR payment cap can save an attending physician pursuing forgiveness tens of thousands of dollars compared to RAP.
The math is crystal clear: RAP is marginally cheaper during low-income training years. But IBR is significantly cheaper — and the payment advantage compounds — as income rises toward attending levels, especially for PSLF borrowers.
IBR vs. RAP for Residents Pursuing PSLF
If you are training at a nonprofit hospital or academic medical center and planning to pursue Public Service Loan Forgiveness, the IBR vs. RAP decision has major financial consequences.
PSLF strategy is simple: minimize total payments made before the 120-payment threshold is reached. PSLF forgives the remaining balance tax-free. Every dollar you do not pay before that point is a dollar you do not owe.
Under PSLF, IBR wins for most physicians because of the unique payment cap. Once your attending salary exceeds roughly $200,000, IBR's cap at the 10-year Standard payment amount keeps your monthly obligation far below what RAP would charge at 10 percent of AGI. Over the 5 to 7 years most physicians spend completing PSLF as attendings, that difference in monthly payment represents a substantial reduction in total amount paid before forgiveness.
Crucial Nuance: If you are very early in training (PGY-1 or PGY-2) and still have 8 to 9 years of PSLF qualifying payments ahead of you, spending part of that time on RAP during residency at a slightly lower payment is not necessarily the wrong move, provided you switch to IBR before income rises significantly.
However, given the July 1, 2028 deadline to enroll in IBR before it identically closes to borrowers with new loans, the simplest and safest approach for most PSLF-pursuing residents is to enroll in IBR now and stay there.
Once you switch to RAP, re-enrolling in IBR is not possible after July 1, 2028 if you take out any new federal loans after July 1, 2026. That restriction makes leaving IBR for PSLF purposes effectively permanent for most borrowers. Do not leave IBR without running the full numbers first.
IBR vs. RAP for Residents Not Pursuing PSLF
If you are training at a for-profit hospital, planning a private practice switch, or have already decided to refinance once you finish training, the analysis is very different.
In this scenario, you are not trying to minimize payments before forgiveness — you are trying to manage cash flow during residency while positioning to aggressively pay down or refinance the debt as an attending.
For these residents, the choice between IBR and RAP during training is less consequential because neither plan is part of a long-term forgiveness strategy. The small monthly payment difference matters less than getting your financial fundamentals in order during residency — building an emergency high-yield savings fund, starting a Roth IRA, getting disability insurance in place — so you are positioned to refinance strategically when your attending income begins.
WARNING: Do not refinance federal loans during residency.
Refinancing converts federal loans to private, permanently ending access to IBR, RAP, and PSLF. The income-driven repayment protection during training is worth preserving until you have clarity on your post-residency employer and income trajectory.
The July 1, 2026 Deadline Every Resident Needs to Know
This is the most time-sensitive action item in this entire article.
- If you are currently on SAVE: You have a 90-day window starting July 1, 2026 to choose between IBR and RAP. If you do not choose within that window, you will be automatically enrolled in Standard Repayment or the new Tiered Standard Plan — neither of which qualifies for PSLF and both of which will have significantly higher monthly payments than any income-driven option.
Do not wait for the auto-enrollment. Go to StudentAid.gov now and apply for IBR if that is the right plan for your situation. - If you are currently on PAYE or ICR: These plans end July 1, 2028. You have until that date to switch to IBR or RAP. However, the longer you wait to analyze your situation and choose, the more likely you are to miss the window or make the switch under time pressure without running your numbers properly.
- If you are starting residency in July 2026 with new loans: RAP will be your only income-driven option. IBR will not be available for loans disbursed after July 1, 2026. Your decision is RAP versus the Standard Plan — and for PSLF-eligible residents at qualifying institutions, RAP is the clear choice since the Standard Plan does not qualify for PSLF.
The Married Filing Separately Question
For married residents, one of the most powerful tools for reducing income-driven repayment payments is filing taxes as Married Filing Separately (MFS) rather than jointly. Both IBR and RAP allow you to globally exclude a spouse's income from the payment calculation when filing separately.
This matters significantly when one spouse is a resident earning $70,000 and the other earns $100,000 or more. Filing jointly would include the higher income in the payment calculation, materially increasing monthly payments. Filing separately entirely excludes it.
The trade-off is the loss of certain tax deductions available only to joint filers. Whether MFS saves money on balance requires running the combined federal and state tax implications against the loan payment savings. For many physician households, MFS produces meaningful net savings despite the lost deductions — often $5,000 to $15,000 or more annually.
One key difference between IBR and RAP on this point: IBR uses a broader definition of family size that can include household members you support even if you do not claim them as dependents. RAP counts only dependents explicitly claimed on your federal tax return. For residents with children or other dependents, IBR's broader family size definition typically produces a slightly lower payment for the same income level.
What to Actually Do Right Now
Log in to StudentAid.gov and identify what plan you are currently on.
If you are on SAVE, you are in a plan that no longer operates normally. Do not remain in administrative limbo. Take action before July 1, 2026.
Determine whether you are at a PSLF-qualifying employer.
If your residency program is at a nonprofit or government hospital — which most are — you are likely eligible for PSLF. Certify your employment using the PSLF Help Tool at StudentAid.gov. Do this now if you have not done it already.
Choose IBR if you are pursuing PSLF and have existing loans before July 1, 2026.
The payment cap IBR provides as an attending is worth significantly more than the small monthly savings RAP may offer during residency. Enroll now rather than waiting.
If starting residency with new loans after July 1, 2026, enroll in RAP.
It is your only income-driven option. For PSLF at a qualifying employer, RAP qualifies and your payments during training will be modest at resident income levels.
Do not refinance during residency.
Keep your federal loan protections intact until you have clarity on your specialty, practice setting, and post-residency income. Use our Student Loan Payoff Calculator to model your repayment trajectory under different plans and income scenarios.
Frequently Asked Questions
Does RAP qualify for PSLF?
Yes. Payments made under RAP count toward the 120 qualifying monthly payments required for Public Service Loan Forgiveness, the same as IBR, PAYE, and ICR. For new borrowers after July 1, 2026, RAP is the only income-driven option that qualifies for PSLF — the Standard Plan does not.
Can I switch from RAP back to IBR later?
Not if you take out any new federal loans after July 1, 2026. Borrowing after that date makes you a "new borrower" under the OBBBA, which eliminates IBR eligibility permanently. If you have existing loans only and do not borrow again, you can switch between RAP and IBR until July 1, 2028, when IBR closes to re-enrollment for those who have crossed into new borrower status.
What happens if I do nothing and stay on SAVE?
SAVE no longer operates normally. Borrowers remaining on SAVE will be transitioned out when RAP launches July 1, 2026. If you do not proactively choose a plan during the 90-day window after RAP launches, you risk being auto-enrolled in Standard Repayment — which has fixed, higher payments and does not qualify for PSLF.
Is IBR or RAP better for a single resident with no dependents?
For a single resident without dependents, IBR and RAP produce similar payments at resident income levels. The decision is almost entirely driven by your post-residency plans. If you are pursuing PSLF at a qualifying employer, choose IBR now to preserve the payment cap as an attending. If you are not pursuing PSLF and plan to refinance after training, either plan works during residency.
Does moonlighting income affect my IBR or RAP payment?
Yes. Both plans recertify annually based on your income. Moonlighting income reported on your tax return increases your AGI, which increases your IBR and RAP payment at recertification. If you moonlight significantly, model the impact on your annual payment before assuming your plan payment remains at the base resident level. You can reduce the taxable impact of moonlighting income by contributing aggressively to a Solo 401(k) — 1099 income makes you eligible to open one.
Will PSLF forgiveness remain tax-free under RAP?
PSLF forgiveness is tax-free under current law regardless of which qualifying repayment plan you are on. This is distinct from the regular standard IDR forgiveness at 20, 25, or 30 years, which became taxable after the American Rescue Plan Act exemption expired on December 31, 2025. For residents at PSLF-qualifying employers, the tax-free status of PSLF forgiveness applies whether you are on IBR or RAP.
Ready to run your numbers?
Use our interactive tools to model your exact payoff strategies based on the current rates and policies changing in 2026.
Disclaimer: This article is for educational purposes only and does not constitute financial, tax, or legal advice. Federal student loan rules are subject to ongoing regulatory and legislative changes. Always verify current plan availability and payment calculations directly with your loan servicer or a qualified student loan advisor before making repayment decisions. MedMoneyGuide earns commissions from some financial product providers featured on this site. This does not influence our editorial content.