Student Loan Borrowing and Repayment Q&A from 3rd Year Veterinary Students, Class of 2027
This post was originally published in 2023 and has been updated with new questions reflecting student loan borrowing and repayment changes for 2026.
The following are questions asked during a recent VIN Foundation Climbing Mt. Debt session with 3rd-year veterinary students at a U.S. college of veterinary medicine.
They will be graduating from veterinary school in 2027.
With recent legislative updates, changing repayment options for those who receive loans after July 1, 2026, federal student loan repayment strategies will look different starting with their class.
The questions are arranged under larger category headings with the questions listed under each category. Answers are provided as a commentary under each list of questions for each category.
The "July 2026" Transition & Student Loan Repayment Plan Eligibility
- What changes after July 2026 compared to the loans we have now?
- Does the IBR plan apply to us if we are borrowing after summer 2026? Is our only option RAP for all of our loans?
- Should we avoid taking loans after July 2026 to keep “legacy” plans available?
- If I use a private loan for my 4th year, does that let me keep legacy plans for my federal debt?
- What happens if IBR is no longer an option after 2026?
The One Big Beautiful Bill, signed into law on July 1, 2025, makes major changes to the federal student loan system. For veterinary students graduating in 2027, the focus is on changes to available repayment options after graduation. Anyone who receives a federal Direct Loan after July 1, 2026, will be limited to two federal repayment plans: the Repayment Assistance Plan (RAP) and a Tiered Standard Plan with a term between 10 and 25 years, determined by the total student loan balance.
The Income-Based Repayment (IBR 2009 and IBR 2014), Pay-As-You-Earn (PAYE), and Income-Contingent Repayment (ICR) plans (i.e. “legacy” income-driven plans) will no longer be available to borrowers who receive a federal student loan after July 1, 2026. However, RAP will be available to all borrowers with federal student loans.
A 2027 veterinary school graduate could retain access to the legacy income-driven plans if they were able to forgo federal student loans for their final veterinary school year (not receive a Direct Loan after July 1, 2026). However, if that means taking a private loan instead, you may be increasing your repayment risk after veterinary school to have access to those legacy plans.
If you were to choose a private student loan instead of a federal student loan to remain eligible for legacy Income-Driven Repayment (IDR) plans, you would have separate private and federal student loan payments due each month. Private loan repayment is not as flexible as federal student loan repayment. The more you have in private student loans, the higher your overall monthly student loan payments will be. Increasing your repayment risk may not be worth maintaining access to the legacy federal student loan repayment options.
If you could waive a magic wand, not borrow at all after July 1, 2026, and reach student loan forgiveness using IBR 2014 for your remaining federal student loan balance, then go for it. However, any situation beyond that will be more complicated and require careful planning to evaluate. If you would like assistance evaluating your situation, then post your 4th year borrowing plan and post-graduation career plans in the student debt message board area, anonymously if you’d prefer, and we’ll be happy to review the pros and cons with you! (Access to the message boards requires a VIN username and password. VIN access is FREE for all veterinary students.)
Strategic Timing: Graduation, Internship, Residency, or Private Practice
- Is it better to start paying right away or wait until the end of the grace period?
- Do internships and residencies qualify for deferment?
- Should I wait to pay on loans until after residency, when income is higher?
- How does the “tax return method” work for those going into residency?
- I’m confused about the difference between academic vs. private residency strategies, particularly when it comes to consolidation. Can you explain?
As you approach graduation, the most important thing you can do to prepare for federal student loan repayment is to file a federal tax return before graduation. Regardless of your federal student loan balance, having a tax return on file makes applying for an income-driven plan, like the new Repayment Assistance Plan (RAP), easier. Starting with RAP is going to be the best option, no matter what you’re doing after graduation, and even if you have access to the legacy income-driven plans. With a recent tax return on file, your minimum payment due will most likely be $10/mo for the first 12 months of repayment in RAP, the lowest monthly payment available. The new RAP option will also eliminate all of the interest that your payment does not cover (100% unpaid interest subsidy), as well as reduce your principal by $50/mo.
RAP is going to be particularly beneficial for veterinarians pursuing internship or residency pathways. The longer your income is lower, the more you will benefit from RAP. Avoid deferment or forbearance during internship or residency training. RAP is the only repayment option that will prevent interest from accruing on your federal student loan balance. Deferment or Forbearance options continue to add interest to the balance you need to repay, which means higher costs and longer repayment time.
Payments using RAP fall between 1-10% of your Adjusted Gross Income (AGI) and should be affordable, no matter your internship or residency income. Continue to make minimum monthly payments using RAP during your internship, residency, and after to keep your payments manageable. Take advantage of the unpaid interest subsidy and principal reduction benefits of RAP for as long as your income will allow. Once your tax returns start to show a full year’s worth of specialty income, re-evaluate your long-term repayment strategy.
Because you can use a recently filed federal tax return as income documentation to establish your RAP payment, you will often have a lower minimum monthly payment than you expect. For example, if you file a tax return before you graduate and that tax return shows less than $10,000 of AGI, your minimum monthly RAP payment will be $10/mo. If you start your internship or residency in June after you graduate and earn $50,000 per year, your 2027 tax return AGI will show about $25,000 (or less) when you file in early 2028 because you only had half of 2027 to earn income. That means your RAP minimum payment will increase from $10/mo to $42/mo for year 2 of repayment. When you reach year 3 of repayment, you may have a higher monthly student loan payment since you could have a 2028 AGI that shows a full year’s worth of income. If that 2028 AGI is $50,000 when you file in early 2029, then your RAP monthly payment will be about $167/mo for year 3 of repayment.
When it comes to academic vs. private practice internships or residency, consider your long-term plans. If you see yourself in academia throughout your post-graduation training and beyond, then you may want to consolidate your federal student loans immediately after graduation by applying for a federal Direct Consolidation loan. In most cases, you’ll want to forgo consolidation of your Direct Loans and apply for RAP as your grace period is expiring. However, the grace period is not eligible for Public Service Loan Forgiveness (PSLF) credit, even if you were to make payments. PSLF allows you to reach tax-free student loan forgiveness after 10 years of qualifying payments: income-driven plan payments made to federal Direct Loans while working for a qualifying non-profit organization. If you wait until your grace period expires, then you will miss out on about 5-6 months of qualifying PSLF credit.
The only way to end your grace period early is to apply for a Direct Consolidation loan after graduation, choose to end your grace period early during the application (select the “do not delay processing” option), and choose RAP as your repayment option. Unfortunately, consolidation will capitalize your unpaid interest, i.e., add your unpaid interest to your principal. Allowing your grace period to expire and entering RAP will not capitalize the unpaid interest for your veterinary school loans. If you reach PSLF, unpaid interest capitalization is financially irrelevant. However, if you don’t reach PSLF, unpaid interest capitalization will cost you more and could extend your repayment time. Pursue consolidation of your Direct Loans immediately after graduation only if you’re confident that your career path will include PSLF-eligible employment.
Repayment Logistics & Plan Comparison
- Can we still do the RAP if we have undergrad loans in deferment?
- What is the income threshold for IDR plans to start paying?
- Do I have to be in a specific plan, or can I pay as I am able?
- Can I switch repayment plans later (e.g., from Standard to IBR)?
- Can I pay the Standard 10-year amount while enrolled in RAP to pay it off faster?
- Can you differentiate the new RAP plan from the Standard plan?
- What does “aggressive repayment” look like when payments exceed interest?
The Repayment Assistance Plan (RAP) will be available to anyone with federal Direct Loans, whether those loans are from undergraduate, graduate, or professional school. There is no income threshold for RAP. The monthly payment is a tiered percentage (1-10%) of your Adjusted Gross Income (AGI). If your AGI is zero (or negative), the lowest your RAP monthly payment can be is $10/mo. Once your AGI exceeds $100,000, your minimum monthly payment is 10% of your AGI with no payment cap.
After you graduate, as your grace period is expiring, you will need to choose a repayment option. For anyone who receives a federal loan after July 1, 2026, your option is either RAP or a Tiered Standard repayment option with a term length between 10 and 25 years, depending on your federal student loan balance. If you do not select a repayment option, the Dept of Education will assign you the Standard repayment option. You can switch between RAP and Standard repayment options.
As long as you pay your minimum payment due each month, you can pay any amount you would like above that without penalty. However, ensure that your extra monthly payment helps to reduce your balance before making it. If you are receiving the RAP unpaid interest subsidy (your minimum payment is less than your monthly interest accrual), then your extra payments will first be applied to the interest that the Department of ED would otherwise cover for you. For example, if your student loans accrue $1000 per month of interest and your RAP monthly payment is $500 per month, the Department of ED covers the remaining $500 per month, and you will receive an additional $50 per month principal reduction. If you were to pay an extra $600 per month, you would eliminate the $500 per month unpaid interest subsidy and the $50 per month principal reduction. Your extra $600 per month contribution has a net $50 per month impact on your student loans — not a great use of your money. Rather than paying extra while receiving the RAP subsidy and principal reduction, pay the minimum and boost other areas of your financial wellness. Once your RAP minimum monthly payment exceeds your monthly interest and you no longer receive the principal reduction, re-evaluate your budget and repayment plan to see if paying more will make sense for you.
While you can pay a standard 10-year plan amount while you are using RAP, due to the benefits you receive with RAP, particularly in the first couple of years after graduation (at least), it likely will not make financial sense for you to do so until or after your RAP minimum monthly payment exceeds your monthly interest accrual. You can see your monthly interest accrual in the VIN Foundation My Student Loans tool, In-School Loan Estimator, and Loan Repayment Simulator. The key metric to look for with RAP is when/if your monthly minimum payment exceeds your monthly student loan interest accrual. You can see when you’re projected to reach this point in the Student Loan Repayment Simulator in the “Monthly Repayment Summary” tab of the simulation results for the RAP option.
Aggressive repayment is making a payment above the minimum payment that is due for your student loans. Paying more than your minimum payment requires a good budget and financial plan to determine: 1) does it make sense for you to pay more than your minimum federal student loan payment?; and 2) what will the short- and long-term impacts be for total costs?
You can also use RAP as an alternative to aggressive repayment. Since your RAP payments will increase as your income continues to increase, you may end up paying your loans to zero faster as your student debt-to-income ratio declines. However, the longer you receive the RAP unpaid interest subsidy, the more likely it is that you will reach student loan forgiveness using RAP. Use the VIN Foundation Student Loan Repayment Simulator to see when your payment will exceed your monthly interest and whether or not you are projected to reach forgiveness.
Marriage, Family, & Household Finances
- How does getting married impact my IDR plan?
- If we file jointly, do we still get a grace period?
- Should we file taxes separately next year to keep payments low?
- If my spouse has a high income, could we just use one year of their salary to pay it all off?
When you are married, your most recent tax filing status determines whether or not your spouse’s income is considered in the Income-Driven Repayment (IDR) calculation. If you filed jointly, your combined incomes are used. If you filed separately, only your income will be used.
Whether or not you’re married or how you filed your taxes does not affect your student loan grace period. If you are married before you graduate from veterinary school, the tax filing status before graduation will determine whether or not your spouse’s income will be considered in your IDR calculation when you apply.
If your spouse has income while you are in school, consider filing your taxes separately before graduation to have your IDR payment calculated using your income for your first repayment application.
How you choose to use your income is up to you. Before you pay more than the minimum, exhaust the benefits of the Repayment Assistance Plan (RAP). Keep more of your (and your spouse’s) income for other areas of your financial wellness while you receive the RAP unpaid interest subsidy and principal reduction. When you no longer receive those benefits, your extra payments will have a bigger impact.
Private Loans, Refinancing, & Windfalls
- Can I “transfer” private loans to federal loans?
- If I’m gifted $100k, should I put it toward my loans?
- If I refinance to a lower interest rate (7-8% to lower), is it worth it?
- Is there a specific amount (like $20k) where it makes sense to pay it off ASAP?
Private loans cannot be converted or consolidated into federal student loans. Private loans have separate terms and conditions that you will need to follow per the agreement (promissory note) that you signed when you received the loan(s). If you have some costly private loans from before veterinary school, you may be able to repay some of those private loans with any extra federal student loans you receive during veterinary school. This can be very risky, however. Make sure you understand your private student loan repayment terms (no prepayment penalties) AND make sure you have enough federal student loan funding to cover your veterinary school tuition, fees, and living expenses. If you can pay off some of your costly private loans with your federal loans, you’re essentially “refinancing” your private student loans with federal student loans. Again, be careful.
How you choose to use gifted income is up to you. However, you’re more likely to see a larger benefit from using gifted money in other areas of your overall financial wellness vs. using gifted money to make lump sum payments to your federal student loans. Your federal student loans are the most flexible (but really annoying) debt that you’ll ever have. Try not to over-prioritize your student loan debt against other, more critical areas of your financial wellness. For similar reasons, resist the temptation to refinance your federal student loans with private student loans, even if you can get a lower interest rate. Your student loans are about more than an interest rate. Having the option to lower your monthly student loan payment when/if your income decreases, and earn forgiveness credit (in case you need it), is extremely valuable.
Refinancing federal student loans with a private loan does not guarantee a lower payment nor a lower repayment cost, even if you do receive a lower interest rate. It’s also not as easy as it sounds to get a lower interest rate. For new graduates, especially, you may need to bring a co-signer to the table just to get a comparable or lower interest rate. A co-signer would be responsible for your private student loan refinance if you were unable to repay. Your federal student loans are never the responsibility of another person. It’s not worth putting a spouse or family member on the hook for your student loans when you don’t have to. If/when you do reach a point where it makes financial sense to accelerate your loan payoff, you can do so using a federal repayment option and retain all of the benefits and protections that are unique to your federal student loans
There’s not really a student debt amount that lends itself better to an ASAP strategy. Everyone with federal student loans can benefit from the Repayment Assistance Plan (RAP) after graduation. Even a $20,000 student loan balance will accrue about $117/mo of interest. That means a $10/mo minimum payment in RAP will yield $107/mo of unpaid interest benefit and $50/mo principal reduction. You don’t have to take that benefit. But I would recommend that you do. You can even remain in RAP and end up paying your balance to zero relatively quickly with minimal interest cost. The lower your student debt, the more quickly you’ll exhaust the RAP benefits and accelerate your student loan payoff. RAP is your ASAP strategy in that case.
Long-Term Concerns
- How do you balance investing in your future and enjoying life while paying debt?
- Will I be able to buy a house and land with $180,000 in debt?
- In the current climate, would you bank on PSLF still existing in 10 years?
The student loan repayment plan you choose after graduation is critical to helping you balance your overall financial wellness. It is natural or even expected that you would want to try to eliminate your student loan balance as quickly as possible. The trick, however, is to repay your student loans without sacrificing other, more critical elements of your financial wellness. Your federal student loans are the most flexible (but really annoying) debt you will ever have. You can minimize the annoying parts while benefiting from the flexible parts to help grow your overall financial wellness as soon as you start earning income after graduation.
If you file a tax return before you graduate, you can nearly guarantee the lowest possible payment using the new Repayment Assistance Plan (RAP, $10 per month) while receiving the maximum benefits (100% unpaid interest subsidy and $50 per month principal reduction). Let the Department of Education cover your student loan interest and reduce your principal for as long as your income allows. In the meantime, use your after-tax income to build an emergency fund, pay down less flexible debt, maximize your contributions to tax-advantaged savings, like a 401k and Health Savings Account, and work towards other goals like saving for the down payment on a home, buying into a practice, starting your own practice, and enjoying life.
When your income reaches a level where your minimum RAP payment exceeds your student loan monthly interest accrual, then revisit your budget and student loan repayment projections to see if it makes sense for you to pay more than the minimum RAP payment each month. For most of you, the earliest this will happen will be year 3 of repayment due to how RAP uses your prior year’s tax return to calculate your payment. You can confirm your timing using the VIN Foundation Student Loan Repayment Simulator (the Monthly Repayment Summary graph in the results).
Use those early years after graduation to jump-start your overall financial wellness and build good financial habits that will continue, even after your monthly student loan payment increases. Those financial habits you build early on will pay huge dividends over time and significantly outpace the benefits you would get from paying your student loans off more quickly and postponing those other investing activities.
If your career path overlaps with Public Service Loan Forgiveness (PSLF), then it never makes sense to pay more than your minimum payment due using RAP. When you make payments to federal Direct Loans, using an income-driven plan (like RAP), while working full-time for a PSLF-qualifying organization, then you are also earning PSLF credit. PSLF requires 120 qualifying payments (at least 10 years) to have your loans forgiven tax-free.
Yes, I would bank on PSLF being available 10 years from now. We just went through one of the most significant legislative overhauls of the federal student loan borrowing and repayment system that we’ve seen in more than 15 years, and PSLF is still included in those changes. Could it change in the future? Maybe. Currently, PSLF remains an option. The surefire way to not qualify for PSLF is by not trying.
One of the most heartbreaking financial scenarios we see is new veterinarians sacrificing other areas of their financial well-being to aggressively repay their student loans, only to see them take a job at a PSLF-qualifying employer shortly after — where they could have had their student loans forgiven tax-free. You never know where your career may take you. Understand the benefits that your federal student loans provide and use them to help boost your overall financial wellness.
Need Student Loan Help?
Have more questions? Post a comment below or email [email protected].
We’re here to help!
Dr. Tony Bartels graduated in 2012 from the Colorado State University combined MBA/DVM program and is an employee of the Veterinary Information Network (VIN) and a VIN Foundation Board member. He and his wife have more than $400,000 in veterinary-school debt that they manage using federal income-driven repayment plans. By necessity (and now obsession), his professional activities include researching and speaking on veterinary-student debt, providing guidance to colleagues on loan-repayment strategies and contributing to VIN Foundation initiatives.
1 thought on “Student Debt Questions & Answers – from 3rd year veterinary students”
Thanks for sharing. I really appreciate it that you shared with us such informative post, great tips and very easy to understand.