How Your Federal Student Loans Are Changing

Major changes to federal student loans are on the horizon—here’s what you need to know and how it may impact you.

Major federal student loan changes take effect on July 1, 2026, under the One Big Beautiful Bill Act (OBBBA). These changes will affect how current and future rheumatology fellows borrow and repay their loans throughout training and early practice. This guide translates complex, rapidly changing federal loan rules into clear, specific guidance that rheumatology fellows can use to make important financial decisions.

What Changes on July 1, 2026

OBBBA introduces a new Repayment Assistance Plan (RAP) and a revised Standard Repayment Plan that will eventually replace current income-driven repayment (IDR) options for new borrowers. Graduate PLUS loans—used by nearly half of medical students—are being eliminated for new borrowers, and new annual and lifetime limits are being set on Unsubsidized Direct Loans and Parent PLUS loans.

• New borrowers on or after July 1, 2026, will only be able to choose between the new Standard Repayment Plan and RAP when they enter repayment.
• Existing borrowers can stay in some legacy plans for a limited period but will gradually need to move to RAP, another fixed plan, or (for some) Income-Based Repayment (IBR) by 2028.
• Returning students may qualify for a limited “legacy” exception that lets them continue Grad PLUS borrowing under current rules if strict criteria are met.

New Standard Repayment Plan

As of July 1, 2026, new borrowers will see a tiered Standard Repayment Plan with fixed payments and a term length based on their starting balance.

Under the new Standard Plan:

• You will have a fixed payment for 10, 15, 20, or 25 years, depending on your total federal loan balance (see table below).
• Consolidation loans can have terms up to 30 years, with no prepayment penalty.
• Borrowers with larger balances will have longer repayment terms and lower monthly payments compared to the current 10 year standard, which may reduce the appeal of income-driven plans for higher-income specialists.

New Standard Repayment Terms (for Direct Loans made on/after July 1, 2026)

What Is the Repayment Assistance Plan (RAP)?

RAP is the new income driven repayment option that will eventually replace existing IDR plans (IBR, ICR, PAYE, REPAYE, and SAVE) for new borrowers. It functions similarly to PAYE/REPAYE but with important differences in how payments are calculated and a required minimum payment.

Key RAP features:

• Available starting July 1, 2026, and will be the only IDR option for new borrowers.
• Monthly payments are based on your adjusted gross income (AGI) and follow a tiered schedule from 1% to 10% of income, with a minimum payment of $10 per month for everyone.
• Payments increase by 1 percentage point for each $10,000 income band above $10,000, up to a maximum of 10% of AGI for incomes over $100,000.
• Each dependent child triggers an annual reduction in required payments (estimated at $600 per child per year in current descriptions).
• RAP is expected to provide loan forgiveness after a set number of years of qualifying payments, similar to existing IDR plans.

RAP Income Tiers and Annual Percentage of AGI (rounded summary)

Compared with REPAYE, RAP produces similar burdens for many middle income borrowers but higher payments for high earners and eliminates the $0 payment option for the lowest income borrowers. RAP also reduces the buildup of unpaid interest, which may mean smaller remaining balances for some borrowers after years of repayment.

Impact on Public Service Loan Forgiveness (PSLF)

OBBBA does not change PSLF’s basic eligibility rules or the 10 year forgiveness timeline, but it does change which payments qualify.

• Payments on the new tiered Standard Plan will not count toward PSLF; new borrowers must be in an income driven plan (RAP) to earn PSLF credit.
• Because RAP will often require higher payments for higher income borrowers and reduce unpaid interest, some PSLF eligible physicians may reach year 10 with smaller remaining balances to be forgiven.
• Borrowers in legacy income driven plans or the current 10 year Standard Plan (for older loans) can still have qualifying PSLF payments under existing rules, but only for loans originated before July 1, 2026, and only as long as those plans remain open.

For rheumatology fellows planning academic or safety net careers, choosing RAP (rather than the new Standard Plan) will be essential to continue qualifying for PSLF on new loans.

Which Situation Fits You?

  New Graduate or Professional Student Starting in 2026–27

If you are starting a graduate or professional program in 2026–27 and have no Federal Direct Loan disbursement before July 1, 2026:

• Graduate PLUS loans will not be available to you
• You will be limited to new Unsubsidized Direct Loan caps; current guidance indicates:
  • Graduate loans: $20,500 annual; $100,000 aggregate
  • Professional loans: $50,000 annual; $200,000 aggregate
  • Combined graduate + professional borrowing capped at $200,000

Parent PLUS changes:

• New Parent PLUS loans will have a $20,000 annual limit per student and a $65,000 lifetime limit per student
• These amounts are separate from the new $257,500 total federal loan cap, which does not include Parent PLUS borrowed on your behalf
• New Parent PLUS loans issued on or after July 1, 2026, will not be eligible for any IDR plan, including RAP

  Returning Student in the Same Program

If you received any Federal Direct Loan disbursement before July 1, 2026 and remain in the same credentialed program at the same institution, you may qualify for a Graduate PLUS legacy provision.

• This allows continued Grad PLUS borrowing under current rules for up to three additional academic years or the remainder of your expected time to credential, whichever is shorter.
• You must remain continuously enrolled in the same program at the same institution to keep this benefit.

  Students Changing Programs or Institutions

If you:

• Change academic programs
• Transfer to another institution, or
• Withdraw and later enroll in a different program

You will not qualify for the Grad PLUS legacy provision and will be subject to the new loan limits and restrictions for all future borrowing.

  Professionals in Residency or Fellowship

For residents and fellows (including rheumatology fellows) with existing Grad PLUS loans:

• The Graduate PLUS program ends for new borrowers after July 1, 2026, but existing borrowers may continue using Grad PLUS for up to three additional academic years or until they complete their current program, whichever comes first.
• Grad PLUS has been widely used by medical trainees because it has no minimum credit score and can cover up to the full cost of attendance, often limiting the need for private loans; this flexibility will not be available to new borrowers.
• All federal student loan borrowers except those with Parent PLUS loans will be able to enroll in RAP starting July 1, 2026.

What Happens to Current Repayment Plans?

Depending on your current plan and whether you take out new loans after July 1, 2026, your options differ.

• Standard, Graduated, or Extended plan borrowers (no new loans after July 1, 2026): You may remain on your current plan; you also can switch to IBR, ICR, or PAYE through July 1, 2028, where allowed.
• SAVE Plan borrowers: You will have 90 days from July 1, 2026, to choose RAP or the new Standard Plan; SAVE will be closed to new and many existing borrowers.
• ICR and PAYE borrowers: You can stay in your current plan through July 1, 2028, or switch to RAP, IBR, or a fixed plan (Standard, Extended, Graduated). If you do nothing, you will be automatically moved into RAP on July 1, 2028.
• IBR borrowers: You may remain in IBR beyond 2028 if you prefer, subject to existing IBR rules.
• Existing Parent PLUS loans: Loans issued before July 1, 2026, can still qualify for an IBR style payment only if they are consolidated and enrolled in ICR before July 1, 2028.

For many rheumatology trainees, RAP will become the default income based option once legacy plans close, so reviewing your current plan and timeline now is important.

Upcoming Changes to Deferment and Forbearance (2027 and Beyond)

Additional changes arrive on July 1, 2027, for new loans issued on or after that date.

• Economic hardship and unemployment deferments will no longer be available for those new loans.
• Forbearance will be capped at nine months in any 24 month period.
• Borrowers will be able to rehabilitate federal loans out of default up to two times, with a minimum $10 monthly payment.

This makes proactive planning—especially during fellowship and early attending years—more important, as there will be fewer long term payment pauses available on new loans.

Where to Learn More and Get Help

• FIRST Program – Financial Information, Resources, Services & Tools: Comprehensive guidance on borrowing, repayment, and budgeting for medical students and residents.
• Loan Repayment, Forgiveness, and Scholarship Database: A free, searchable database of state and federal scholarships, loan repayment, and forgiveness programs—including many for physicians in shortage specialties and locations.

The American Medical Association (AMA) has resources for managing medical student loan repayment.

The National Education Association (NEA) has resources to help with student loan debt support.

The Health Resources and Services Administration (HRSA) offers eight programs that repay part of your student loan debt. In exchange, you serve in an eligible health care facility for a community in need. Learn more →