The information below is general in nature and may affect each borrower’s strategy differently. A personalized student loan analysis with Hippocratic Financial will be the best way to determine your strategy.
Updates On Income-Driven Repayment (IDR) Plans
- SAVE (Saving on Valuable Education) is effectively dead. Borrowers will be phased out of SAVE in the coming months
- The two currently active IDR plans that are good options are Pay-As-You-Earn (PAYE) and Income-Based Repayment (IBR)
- Payments on PAYE are 10% of discretionary income. IBR payments are also 10% if you have no loans from before July 1, 2014; those that do pay 15% on IBR
- Partial financial hardship is no longer required to apply for IBR, but does still apply for PAYE (i.e. No income limit on applying to IBR)
- PAYE will cease to exist by July 2028 due to recent legislation
- The new Repayment Assistance Plan (RAP) is supposed to begin in July 2026 and may be the best option during residency and fellowship
- Payment Calculation is based strictly on a percentage of Adjusted Gross Income (AGI), and the calculation changes based on income brackets. Minimum payment is $10.
- Payment is reduced based on tax dependents, not family size
- Payments are not adjusted proportionally for spouses who both have federal loans
- Provides both an interest and principal subsidy for some borrowers
- For the latest about IDR plans, visit: https://studentaid.gov/manage-loans/repayment/plans/income-driven
- To estimate your IDR payment, visit: https://studentaid.gov/loan-simulator/
Public Service Loan Forgiveness (PSLF)
- All IDR plans listed above qualify for PSLF
- Changes to PSLF require an act of Congress
- PSLF continues to be granted and is guaranteed as an option in your Master Promissory Note (MPN)
- PSLF buybacks are currently available to those affected by the SAVE forbearance
- You can only apply for buybacks when your current qualifying payments plus the buyback months = 120 payments
- PSLF Buybacks were created through executive order and are not enshrined in law
- Because of this legal vulnerability to buybacks, there are no circumstances where you should forego a known PSLF-qualifying payment
- Proposed changes to PSLF in July 2026 will face significant legal challenges, so PSLF is still seen as a viable strategy for the vast majority of those who qualify
Changes To IDR Plans in the 2025 Big Beautiful Bill
- Borrowers with ANY new loans after July 1, 2026 (including consolidations) will only have access to the RAP or Standard repayment plans. Therefore, consolidations are a bad choice for nearly all borrowers
- The PAYE and Income-Contingent Repayment (ICR) plans are eliminated after July 1, 2028. Therefore, all borrowers must enroll in IBR, RAP, or Standard repayment plans
Income Certification Options
- You have three options to certify your income when you apply for an IDR plan or have your annual IDR recertification: Tax returns, a statement of income letter, or using a paystub
- Depending on your circumstances, there may be benefits to either of the three. Identifying which strategy is best depends on your overall strategy (PSLF vs. IDR forgiveness vs. payoff) and your income during recent and current years
Creating a “Litigation File”
- Due to potential legal challenges and data deletion at the federal level, as seen during early 2025, Hippocratic recommends creating a Litigation File to protect yourself. This involves the following documents and information from your profile on StudentAid.gov:
- Your Master Promissory Note (MPN)
- Your National Student Loan Data System (NSLDS) file
- Records of all payment history and PSLF employment certifications. We recommend keeping your own payment tracker to ensure payment and employment data on the website are correct
- All IDR and buyback applications
- All correspondence from or with your loan servicer and the Department of Education
This information is presented by longtime CAPAdvantage participant Hippocratic Financial.
Have questions or want to schedule an analysis? Email Andrew Van Treeck, CFP, at andrew@hippocratic.com
Hippocratic Financial is a comprehensive, physician specialized wealth management firm that integrates investments, retirement planning, insurance, tax, legal, and student loan services.
For more information, visit: https://hippocratic.com.