What Is the RAP Plan Replacing SAVE, PAYE, and IBR?
by Malik
What Is the RAP Plan Replacing SAVE, PAYE, and IBR?
If you're a physician with student loans, you need to pay attention to this.
The Department of Education is sunsetting SAVE, PAYE, and IBR. All three plans are being replaced by a single new program called the Repayment Assistance Plan, or RAP, by July 2028.
This is the biggest change to income-driven repayment in over a decade. And most physicians I talk to haven't heard about it yet.
Why Are SAVE, PAYE, and IBR Going Away?
The short version is that the government wants to simplify repayment. Right now there are multiple IDR plans with different rules, different payment calculations, and different forgiveness timelines. It's confusing. Even financial advisors get tripped up by which plan is optimal for which borrower.
RAP consolidates everything into one plan. One set of rules. One payment formula.
That sounds great on paper. But the details matter, and for physicians specifically, some of these changes are not in your favor.
How Does RAP Work?
Here's what we know so far about the new plan.
Payments will be based on your adjusted gross income, similar to the current IDR plans. The formula is still being finalized, but early guidance suggests payments will fall somewhere between what SAVE and PAYE currently charge.
The forgiveness timeline is expected to stay at 20 years for undergraduate loans and 25 years for graduate and professional loans. That's consistent with current IDR plans.
Here's the catch. Under SAVE, interest that exceeded your monthly payment was subsidized by the government. That subsidy is going away under RAP. Starting August 2026, interest accrual resumes in full under SAVE. And when RAP officially launches, there's no indication that interest subsidy will carry over.
For a physician with $250,000 or more in student loans, that interest subsidy was saving thousands of dollars per year. Losing it changes the math significantly.
What Does This Mean for Residents?
If you're a resident right now making $65,000 a year with $300,000 in medical school debt, here's what you need to think about.
Your SAVE payments were keeping interest from capitalizing. That was a big deal. It meant your balance wasn't growing while you were in a low-income training period.
Under RAP, that protection likely disappears. Your balance will grow during residency. By the time you're an attending making real money, you could owe significantly more than you borrowed.
This doesn't mean IDR is a bad strategy. It means you need to plan around the new rules, not the old ones.
Should Physicians Refinance Instead?
This is the question I get the most right now. And the answer is, it depends.
The Fed held rates at 3.50 to 3.75 percent in January 2026, and March looks like another hold. The first rate cut might not come until June 2026 at the earliest. So private refinance rates are still elevated compared to a few years ago.
If you're pursuing Public Service Loan Forgiveness, do not refinance. PSLF requires federal loans. The moment you refinance into a private loan, you lose PSLF eligibility permanently.
If you're not pursuing PSLF and you're already an attending with a stable income, refinancing might make sense. But you need to run the numbers. Compare the total cost of RAP over 25 years versus a private refinance at current rates. Don't guess. Actually calculate it.
How Does This Connect to PSLF Changes?
Here's where it gets really important. The PSLF rules are also changing effective July 1, 2026. Residency and fellowship years will no longer count toward the 120 qualifying payments.
So if you were planning to stack residency PSLF payments under an IDR plan and then finish your 10 years as an attending at a nonprofit hospital, that math just changed. You now need 10 full years of qualifying payments after residency.
Combine that with RAP removing the interest subsidy, and the landscape for physician student loan strategy looks completely different than it did even a year ago.
What Should You Do Right Now?
Here's what I'd tell any physician or resident who's paying attention.
First, figure out what plan you're currently on. A surprising number of people don't actually know. Log into studentaid.gov and check.
Second, if you're on SAVE, understand that interest accrual resumes in August 2026. Your balance will start growing. Plan for it.
Third, if you're pursuing PSLF, verify your employer qualifies. With federal layoffs hitting VA and NIH physicians, some people are losing qualifying employment without realizing it. Check your employer certification now, not later.
Fourth, run the numbers on RAP versus refinancing versus aggressive payoff. This is where having a financial planner who actually understands physician finances makes a real difference. The generic advice online doesn't account for your specific tax situation, income trajectory, or career plans.
It's not complicated once you have the right information. But you do need the right information. And right now, most physicians don't have it yet.
Frequently Asked Questions
When does the RAP plan officially start?
RAP is expected to fully replace SAVE, PAYE, and IBR by July 2028. However, changes to SAVE begin earlier, with interest accrual resuming in August 2026.
Can I stay on my current IDR plan?
Current borrowers on SAVE, PAYE, or IBR will be transitioned to RAP. The exact transition timeline and process haven't been fully detailed yet, but you won't be able to remain on a discontinued plan indefinitely.
Does RAP affect PSLF eligibility?
RAP is expected to be a qualifying repayment plan for PSLF, just like current IDR plans. However, the separate PSLF rule changes effective July 1, 2026 will impact how residency years count. These are two different policy changes happening around the same time.
Should I make extra payments now before RAP starts?
It depends on your overall strategy. If you're pursuing PSLF or IDR forgiveness, extra payments could actually hurt you by reducing the amount that gets forgiven. If you're planning to pay off loans aggressively, the interest subsidy removal makes earlier payoff more attractive. Talk to someone who can model both scenarios for your specific situation.
How much more will I pay under RAP compared to SAVE?
The biggest difference is the loss of the interest subsidy. For a physician with $300,000 in loans at 6.5 percent interest, the subsidy was worth roughly $15,000 to $20,000 per year during residency. Without it, your total repayment cost over 25 years could increase by $50,000 or more depending on your income trajectory.
Malik is a financial advisor helping physicians and tech entrepreneurs build wealth. Have questions about student loan strategy? Schedule a conversation.