This post was most recently updated in February 2026.
Student loan servicers have begun processing the income-driven repayment plan applications of three plans for those looking to leave the SAVE Forbearance:
- Income-Based Repayment (IBR)
- Pay As You Earn (PAYE)
- Income-Contingent Repayment (ICR)
For early-career physicians, I will focus on IBR and PAYE. We will also assume that both plans have similar features below with two notable differences*.
Similarities
- Uses 150% of the Federal Poverty Line to Determine Discretionary Income
- Allows unpaid interest to accrue, allowing your loan balance to increase while making minimal payments during residency and fellowship
- Currently allows you to exclude spousal income if you file taxes married-separately
- For someone who has had every loan disbursed after July 1st 2014, the payment is based on 10% of your discretionary income
Differences
- For someone who had any federal loans disbursed before July 1st 2014, regardless if they’ve been repaid, consolidated or refinanced:
- PAYE calculates the payment based on 10% discretionary income
- IBR calculates the payment based on 15% discretionary income
- This is where people discern between “Old IBR” & “New IBR”
- IBR is written into law by congress, actually written as the plan alongside the Public Service Loan Forgiveness (PSLF) program when first introduced.
- PAYE was introduced by the Department of Education and was previously removed as an option for new enrollees (when the SAVE challenges hit) before being re-introduced in March 2025 with physicians in the plan continuing to count towards PSLF.
- PAYE will soon enter negotiated rulemaking with the end-goal of abolishment by Summer 2028 with anticipations of going away in 2027.
- PAYE requires a Partial Financial Hardship (income requirement) to qualify. The One Big Beautiful Act removed this requirement for IBR
As a reminder, the SAVE Forbearance currently has no payment requirements, no interest accruing, and no time counting towards the 120 months needed for PSLF.
Though making loan payments on a PGY salary is not fun or easy, most residents and fellows are clamoring to do so. This allows the time being underpaid in training (lower payment) to count towards PSLF and limit the number of payments made while in practice (higher payment).
For those looking to exit SAVE Forbearance and apply for another plan for PSLF purposes, what are some commonly recommended actions:
- If all your loans were disbursed after July 1, 2014, applying for IBR is likely the best route. Same lower payment as PAYE with the safer path towards PSLF.
- If you had loans disbursed before 2007, it’s possible you don’t qualify for PAYE and need to apply for IBR using the 15% discretionary income calculation.**
For those with loans disbursed before July 1, 2014, the question becomes:"Can’t I just apply for the cheaper PAYE now and then switch to IBR in the future if PAYE goes away?"
Good question! Here are some things to consider:
- The assumption is you would run into another wide-sweeping forbearance with similar administrative ineptitude in the length of time spent not qualifying for PSLF.
- The Repayment Assistance Plan has yet to be rolled out, and there is uncertainty as to whether it will require updated income documentation.
“Well then, what should I do? I’m overworked, underpaid, and honestly exhausted”
Connect with a financial advisor with a Certified Student Loan Professional Designation.
Kyle Flynn, CSLP® is a consultant with Twin Oak Advisors who intimately understands the financial path and challenges facing early-career physicians and where loan repayment fits in with retirement planning, home-buying, disability insurance, and simply trying to survive training financially.
To schedule a no-obligation, introductory conversation with Kyle, usethis link here.
*IBR limits a small amount of interest accrual for certain loans during the first three years of repayment. This is not often focused on for physicians due to the large amount of interest accruing over the 10+ years of a repayment or forgiveness path.
*PAYE limits the amount of interest that capitalizes when switching plans. A notable point is calculating the new principal if needing to switch from PAYE to IBR in the future.
**To qualify for PAYE, you must have had no outstanding balance on a Direct Loan or FFEL Program loan when you received a Direct Loan or FFEL Program loan on or after Oct. 1, 2007, and you must have received a disbursement of a Direct Loan on or after Oct. 1, 2011