PSLF Changed in 2026: What Medical Residents Need to Know Now

Key Takeaways

• Residency years will NO LONGER count toward the 10-year PSLF forgiveness period for loans taken after July 1, 2026
• This delays forgiveness by 3-7 years for most physicians (the length of their residency)
• Grad PLUS loans are eliminated on the same date, creating a $50K+ funding gap for medical students
• The new RAP repayment plan (replacing SAVE/PAYE/IBR in 2028) has a 30-year term and reduced interest subsidies
• If you're a medical student or early resident, you need to rethink your loan strategy NOW

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The rules for Public Service Loan Forgiveness (PSLF) just changed, and physicians are furious. Starting July 1, 2026, residency years will no longer count toward the 10-year forgiveness timeline for new borrowers.

Let me explain why this matters and what you should do if you're a medical student or resident.

What Changed with PSLF for Physicians?

PSLF was created to forgive federal student loans for people working in public service (including doctors at nonprofit hospitals) after 10 years of qualifying payments.

Old rules (before July 1, 2026):

• You make 120 qualifying monthly payments while working full-time for a nonprofit employer
• Residency years counted toward the 120 payments (most residents work at nonprofit teaching hospitals)
• Many physicians got forgiveness 3-7 years into their attending careers (since they made payments during residency)

New rules (for loans taken after July 1, 2026):

• Residency years NO LONGER count toward PSLF
• The 10-year clock starts when you become an attending
• Forgiveness now happens 10 years AFTER residency (instead of during early attending years)

Why this is a huge deal:

The average physician has $200,000+ in student debt (according to the Association of American Medical Colleges). Most do 3-7 years of residency. Under the old system, you could have $150K forgiven as an early-career attending (after your residency years counted toward the 120 payments). Under the new system, you won't get forgiveness until 10 years into your attending career.

That's a 10-17 year total timeline (residency + 10 years) instead of a 10 year timeline. And during those extra residency years, interest keeps accruing.

What Happened to Grad PLUS Loans?

Grad PLUS loans are also being eliminated on July 1, 2026. These were federal loans that let medical students borrow up to the full cost of attendance (tuition, fees, living expenses) with no annual cap.

The problem: Medical school costs often exceed $80,000 per year. The new federal loan cap is $50,000 per year (with a $200,000 lifetime limit). That leaves a funding gap of $30K+ per year for many students.

Where does that $30K come from?

Private loans. And private loans:

• Don't qualify for PSLF (no forgiveness)
• Don't have income-driven repayment options
• Often have higher interest rates
• Don't have federal protections (deferment, forbearance)

This is a massive shift. Medical students who relied on federal loans covering their full costs now have to take on private debt that will never be forgiven.

What Is the New RAP Repayment Plan?

Starting in July 2028, the current income-driven repayment plans (SAVE, PAYE, IBR, ICR) will be replaced by a new plan called RAP (Revised Affordable Payment).

Key changes:

• 30-year repayment term (vs 20 years under PAYE/IBR)
• Minimum $10/month payment (vs $0 under some current plans)
• Reduced interest subsidy (SAVE covered 100% of unpaid interest; RAP covers much less)

What this means for residents:

Under the old SAVE plan, if your income was low enough (common during residency), your monthly payment could be $0 and unpaid interest wouldn't accrue. Under RAP, you'll pay at least $10/month and interest will grow faster.

Example:

Resident with $250K in loans at 6.5% interest. Salary: $65,000/year.

• Under SAVE: Monthly payment might be $200, unpaid interest covered, balance stays stable
• Under RAP (projected): Monthly payment $250+, interest subsidy reduced, balance grows by $10K+/year

This is not finalized yet (RAP rollout is 2028), but the direction is clear: repayment is getting less generous.

Should Physicians Still Pursue PSLF?

It depends on your situation. PSLF is still valuable for some physicians, but it's not the slam-dunk it used to be.

PSLF still makes sense if:

• You're already in residency or attending and grandfathered under the old rules
• You plan to work at a nonprofit hospital for 10+ years as an attending (even if residency doesn't count)
• You have very high debt relative to income ($300K+ loans, $200K salary)

PSLF might NOT make sense if:

• You're a medical student taking loans after July 1, 2026 (residency years won't count)
• You want to work in private practice or at a for-profit hospital
• You have moderate debt and high income (paying off loans aggressively might be faster/cheaper)

Math example:

New attending physician. $250K in loans at 6.5% interest. Salary: $250K/year.

Option 1 (PSLF): Work at nonprofit, make income-driven payments for 10 years, get remaining balance forgiven. Total paid: ~$150K (10 years of payments). Total forgiven: ~$100K (plus accrued interest).

Option 2 (Aggressive payoff): Work anywhere, live frugally, pay $5K/month for 5 years. Total paid: $300K (including interest). Loans gone in 5 years, freedom to work anywhere.

Which is better? Depends on:

• How much you value flexibility (PSLF locks you into nonprofit work)
• Whether you trust the government to keep PSLF rules stable (they just changed them once...)
• Your lifestyle goals (aggressive payoff requires living like a resident for 5 years)

What Should Medical Students Do Right Now?

If you're a medical student or early resident, here's my advice:

1. Understand your loan timeline

If you take loans BEFORE July 1, 2026, residency years still count toward PSLF. If you take loans AFTER July 1, 2026, they don't.

Action: If possible, maximize federal borrowing BEFORE the cutoff. Don't leave federal loan money on the table if you're graduating in 2026.

2. Minimize private loans

Private loans don't qualify for PSLF, don't have income-driven repayment, and can't be forgiven. Avoid them if you can.

Action: Apply for scholarships, work part-time, consider lower-cost medical schools (state schools vs private), live frugally.

3. Consider loan consolidation (carefully)

If you have loans from before and after July 1, 2026, consolidating them might average out the rules. But it's complex.

Action: Talk to a student loan specialist BEFORE consolidating. The rules are tricky and the wrong move can cost you tens of thousands.

4. Rethink your specialty choice (maybe)

This sounds harsh, but if PSLF was a major factor in choosing primary care or a nonprofit specialty, and now residency years don't count, does that change your calculus?

I'm not saying money should drive your specialty. But if you were on the fence between two paths, and one paid $100K more per year, and PSLF is less attractive now, it's worth reconsidering.

5. Track your loans obsessively

Log into your loan servicer every 6 months. Make sure your employment is being certified for PSLF (if you're pursuing it). The government has screwed up PSLF tracking in the past. Don't assume they'll get it right.

What About Residents Who Are Already in Training?

If you're already in residency and took loans before July 1, 2026, you're grandfathered under the old rules. Your residency years still count.

Action: Make sure you're on an income-driven repayment plan and that your nonprofit employer is certifying your employment annually. Don't assume it's happening automatically.

Summary

PSLF just got a lot less valuable for future physicians. Residency years won't count toward forgiveness for loans taken after July 1, 2026. Grad PLUS loans are gone, forcing students into private debt. The new RAP plan is less generous than current income-driven plans.

If you're a medical student or resident, here's what you need to do:

• Understand which of your loans qualify under old vs new rules
• Minimize private loans (they'll never be forgiven)
• Consider loan consolidation carefully (talk to a specialist first)
• Rethink your repayment strategy (PSLF isn't automatic anymore)
• Track your loans obsessively (the government makes mistakes)

This is complicated. The rules are changing fast. If you have $200K+ in student debt, it's worth paying a student loan specialist $500 for a custom analysis. Don't wing it.

Sources:

• Association of American Medical Colleges (AAMC) proposed loan changes
• Babylon Wealth PSLF Guide 2026
• Federal Student Aid announcements (July 2026 changes)