You have $1,000 left at the end of the month and $250,000 in federal loans. You can send it to your servicer, or you can make the minimum Repayment Assistance Plan payment and keep the cash. A resident on Reddit recently ran the numbers and concluded RAP mostly pulls about $25,000 of payments into late residency. Another asked whether to attack the balance now or bet on attending income and a contract loan-repayment benefit. Both questions belong in any plan for getting through training, and for most residents the answer turns on one line of arithmetic.
What RAP charges a resident on a PGY-1 salary
RAP, created by the One Big Beautiful Bill Act, bills 1% to 10% of adjusted gross income depending on your bracket, minus $50 a month per dependent, with a $10 monthly floor, according to NerdWallet’s breakdown of the plan. Anyone who takes out a new federal loan or consolidates on or after July 1, 2026 can choose only RAP or the new Tiered Standard plan.
Run it for a resident earning near the national PGY-1 mean of $68,166 from the AAMC’s 2025 stipend survey. That AGI falls in the 6% bracket: about $4,090 a year, or roughly $341 a month for a single borrower with no dependents. A $250,000 balance at about 8% accrues roughly $1,667 in interest a month. The bill covers about a fifth of it.
Two rules decide what happens to the rest. If you make the full payment on time, the Education Department waives the interest your payment didn’t cover. If your payment cuts principal by less than $50, the government adds a match to bring the reduction to $50, as The College Investor explains. On that $250,000 balance, roughly $1,300 of interest a month is waived and the balance still drops by $50.
Why an extra $1,000 can go nowhere
Under RAP, anything above your bill goes to accrued interest first, then principal. Add $1,000 to the $341 and you’ve paid $1,341 against $1,667 of interest. Every extra dollar lands on interest that would have been waived, and paying above the bill can shrink or erase that month’s subsidy and principal match. Your balance ends the month about where it would have with the minimum. Over a year, that is roughly $12,000 that bought nothing.
The test: multiply your balance by its interest rate, divide by 12, and compare the result with your RAP bill. If monthly interest is far above the bill, extra payments mostly replace a subsidy. If the two are close, say a $60,000 balance at 7%, which accrues about $350 a month, nearly every extra dollar goes to principal and prepaying works the way you’d expect.
When paying early still wins
Prepaying during residency makes sense when three things line up: your balance is small enough that the RAP bill already covers the monthly interest, you don’t expect ten years with a qualifying public or nonprofit employer, and no future employer is likely to pay the loans for you. For most residents carrying six figures, the first condition fails.
If you’re aiming for Public Service Loan Forgiveness, the case is weaker still. RAP payments count toward PSLF’s 120 qualifying payments, so every dollar above the bill during training only shrinks the balance that would have been forgiven. The department’s rule narrowing which employers qualify was vacated by two federal courts on June 30, and on October 21 the government dropped two of its appeals, with its brief in the remaining one due November 4, The College Investor reports. For now, the existing employer rules apply.
The contract benefit an early payoff can erase
Many attending offers include loan repayment. Employers can pay up to $5,250 a year toward your loans tax-free under Section 127, and the One Big Beautiful Bill Act made that permanent, with the cap indexed for inflation after 2026, per Mercer. A loan you cleared during residency leaves that benefit nothing to pay. Hiring money also comes with strings: in a February MGMA poll, 80% of medical groups said they use clawback provisions on signing or starting bonuses, with service commitments typically running one to three years.
When an offer lists loan repayment, ask the recruiter three things. Is it paid to my servicer or to me? If my balance is smaller than the benefit, is the difference paid in cash? If I leave in year two, what do I owe back?
Confirm which plan you’re on before anything else
If you were sitting in SAVE forbearance, servicers began mailing 90-day notices on July 1, and The College Investor estimated most borrowers would have to leave forbearance by September or October. Borrowers who don’t choose are placed in the Standard or Tiered Standard plan, and Tiered Standard payments don’t count toward PSLF. Log in to your servicer account this week and check. A resident counting on PSLF who was quietly moved to Tiered Standard is losing qualifying months.
How to decide this month
This is general education, not financial advice, and loan rules are still moving. An hour with a fee-only planner or a student loan consultant who works with physicians is worth paying for if you hold loans from before July 2026 and are weighing IBR against RAP, or if a loan-repayment offer is large enough to change where you sign.
Pull three numbers: your total federal balance, its weighted interest rate, and your RAP bill. If monthly interest is well above the bill, pay the minimum on the due date through autopay; paying early limits the waiver to interest accrued through the day the payment posts. Put the spare cash toward an emergency fund or retirement savings instead. The math flips at the attending transition: at $300,000 of AGI, RAP bills 10%, about $2,500 a month, which outruns the interest on a $250,000 balance, and from then on extra payments reach principal.