In late April, House Republicans pushed through the Student Success and Taxpayer Savings Plan, a massive bill that could reshape higher education and student loan management. It is not yet law, requiring passage in the Senate, but could hit physicians and dentists hard with higher payments or longer repayment terms. Picture this: a med student facing $400,000 in private loans with no option of Public Service Loan Forgiveness (PSLF). While there are a few bright spots, like extra funding for loan servicers, increased Pell Grants and more accountability for colleges and universities, the student loan system is truly a mess.
In this post, I’m diving into what this means for doctors, dentists and other high earners. You’ll learn how new loan limits will impact those interested in medical or dental school, why PSLF is safe for current docs but tougher for new students and what changes are on the horizon for repayment plans.
New Loan Limits, Grad Plus and Subsidized Loans Elimination
The new bill is proposing changes to the amount a borrower can receive in student loans. Previously in undergrad, you would receive a portion of subsidized and unsubsidized loans. During school, the government pays the interest on your subsidized and unsubsidized start to accrue interest immediately. In graduate and professional school, many borrowers would utilize Grad Plus loans as part of their financial aid package to borrow up to the cost of attendance. Grad plus loans had higher interest rates than direct unsubsidized loans and didn’t have borrowing limits.
Starting on July 1 2026, new borrowers will not be eligible for Grad PLUS loans or subsidized loans for undergrads. Resulting in more interest growth on loans during undergrad and a higher likelihood of borrowing privately for expensive graduate programs such as medical or dental school. This could shut out first-generation or low-income students from graduate programs as private loans require stronger underwriting requirements.
Please note: There is a three-year exception for those who enrolled in a program of study as of June 30, 2026.
The limits for borrowing are capped at
- $50k for undergrad
- $100k for graduate school
- $150k for professional school
The only MD program in my home state is the University of Utah. Based on the 2024-2025 academic year for a Non-Resident On Campus, the cost of attendance is $130,344. It won’t take long for a medical student at the UofU to borrow up to that federal cap of $150k. Assuming tuition increases 3% per academic year this med student would borrow over four years ~$545,311.
Now, only $150,000 of that would be federal and the other 400k could end up as private loans. And, we aren’t even factoring in the interest rates of 6%-9% students are borrowing at these days. While in a four year program, the interest accrual alone could be six figures…
This shift could price out first-generation or low-income students, as private lenders have stricter requirements than federal programs. While Grad PLUS loans fueled tuition hikes, they also opened doors for diverse applicants. Now, aspiring doctors in lower-paying fields like primary care might rethink their careers. It’s a steep mountain to climb if you owe 300,000 + of private loans without the option for income-driven plans or public service loan forgiveness.
Public Service Loan Forgiveness Major Setback For Residents
The PSLF program has now seen more than 1,000,000 borrowers receive forgiveness. PSLF has become a consideration for every doctor with six figure student loans. In the past, if a doctor was considering working at a nonprofit or academia, PSLF would be the most cost effective approach to loan repayment. Typically any time in training, residency + fellowship, would count towards your progress for PSLF. Those low payments in training years made PSLF more and more attractive.
The proposed changes would make medical or dental residency ineligible for PSLF if you start borrowing later than June 30, 2025. That means, your 3-6 years of residency will not be counting towards your 10 years for PSLF. Resulting in more years of higher payments when you are an attending physician if you pursue PSLF. Those who started borrowing prior to June 30, 2026, would still be eligible for PSLF during residency.
Let’s take a look at an example. You are a psychiatrist with $350,000 in student loans making $70,000 while in your 4 year residency and $300,000 when you are in practice. You are single with no kids.
Here’s an idea of your monthly payments and total payments. We are assuming this doctor is in the Old Income-Based Repayment plan (15% of discretionary income).
- Gray columns – doctor starts to qualify for PSLF in residency
- Light blue columns – doctor starts to qualify for PSLF post-residency
- [Student loan payments are based on taxes for the prior year]
The psychiatrist that progresses towards PSLF while in residency has much lower payments early on and pays ~$150,000 less towards their student loans. The psychiatrist who can’t start qualifying for PSLF until they graduate from residency has much larger payments. Without the ability to start PSLF in residency, this psychiatrist may opt to start out at a private practice job versus starting their career in academia, a nonprofit or the VA.
This would make PSLF far less attractive for many docs. Though, there is one positive for residency programs. You can defer payments for up to four years in residency and interest will not accrue. So, although you won’t receive PSLF credit, your loans won’t grow either.
The bill’s impact on fellowships is unclear, but we’ll update you as soon as we know. Having guided hundreds of doctors to PSLF success, we’re here to help you navigate these changes. Not sure if PSLF is right for you? Book a consultation today.
Goodbye to ICR, SAVE/REPAYE and PAYE
The bill wipes out three of the four current income-driven repayment plans.
Repayment plans eliminated
- Income-Contingent Repayment (ICR)
- Saving on a Valuable Education (SAVE) – Previously known as Revised Pay As You Earn (REPAYE)
- Pay As You Earn (PAYE)
Repayment plans remaining
- Income-Based Repayment
For loans before July 1, 2026, only IBR will survive. Specifically the old version that bases payments on 15% of discretionary income. If you’re in ICR, SAVE or PAYE you’ll be moved into IBR. IBR will now drop the partial financial hardship requirement to enroll and remove the payment cap tied to the 10 year standard repayment plan. Be prepared to have a higher monthly payment as IBR is generally more expensive than PAYE and SAVE.
For borrowers who start taking out loans after July 1, 2026, you’ll have a different set of repayment options. Unfortunately, you will no longer be eligible to enroll into the IBR plan. The two payment plan options are:
- Standard Repayment and
- Income-Based Repayment Assistance Plan (RAP)
The standard repayment plan is not too different from the original time-based options where you pay for a set amount of time over 10, 25 or 30 years. Here’s the criteria for standard repayment
Most doctors would be on a 25 year term.
Repayment Assistance Plan (RAP): What to Expect
A new income-based repayment plan named Repayment Assistance (RAP) plan would be created. This would be a repayment option for any current and future borrowers. RAP bases payments on adjusted gross income rather than discretionary income. Dual earning couples can exclude spousal income by filing as a couple married filing separately. RAP deducts $50 per monthly payment per child (2 children =$100 deduction). The percentage of income RAP utilizes to calculate your payment is based on your income.
A notable difference between RAP and the previous income-driven plans is the payment cliff. If for example your income is $99,999 your payment is calculated on 9% of income. If your income is $1 dollar higher at $100,000, it bumps your payments up to 10% of income. Making $1 extra dollar bumps up your payment $83 p/mo and $1000 for the year!
A $10 minimum monthly payment is required, even for the lowest earners, unlike some current IDR plans (e.g., IBR) that allow $0 payments for incomes. Once you are enrolled in RAP, you cannot switch to another federal repayment option. This limits your flexibility to switch plans when you could do so with legacy IDR plans.
Similar to the previous REPAYE and SAVE plans, there is an interest subsidy with RAP. If your monthly payment does not cover the accrued interest, the government would waive the unpaid interest. This prevents your loan from growing higher when you move into repayment. In addition, the gov’t will provide a $50 monthly subsidy to ensure your principal balance decreases by at least that amount each month. Even if your required monthly payment is not sufficient to cover the interest or principal.
Suppose you owe $100,000 at a 6% interest rate. Your monthly interest accrual is $500. You are a low income earner with a required monthly payment of $100. In RAP, your $100 payment is not enough to cover the interest and the government would waive the excess unpaid interest of $400. Also, it would lower your loan’s principal balance from $100,000 to $99,950.
Here’s another example. You have the same loan balance and interest rate. But your income has increased resulting in monthly payments of $900 per month. The first $500 of your payment would cover the interest and the excess $400 would pay down the principal. Your loan balance decreases from $100,000 to $99,600.
RAP has loan forgiveness options. It qualifies for the PSLF program if you are working at a qualifying employer and for those not working at nonprofits it qualifies for forgiveness after you’ve made 360 months of payments. Old IDR plans had shorter repayment periods over 240-300 months. The loan balance forgiven on the 30 year track is taxable.
The jury is still out on if RAP will be superior to IBR for current borrowers. In the meantime, here’s a table calculating monthly payments in RAP and IBR for comparison. Assume this borrower is married in a single earning household with 3 children.
This bill isn’t law yet and your voice can shape the outcome. Contact your senators to let them know how this could potentially affect you as a healthcare professional. There are advocacy groups at the AMA and AOA already pushing for pro-borrower initiatives you can join.
The Student Success and Taxpayer Savings Plan could entirely transform your loan strategy, but it’s still in flux. Once it becomes law, the post will updated to reflect the changes. If you’re struggling with how to manage your loans, schedule an appointment with one of our student loan experts today!
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