The educational loan landscape has changed dramatically since the federal government passed the 2025 One Big Beautiful Bill Act (OBBBA). In February 2025, the Department of Education removed access to applications for Income Driven Repayment, preventing graduates from applying for an initial repayment plan with payments based on their income and preventing those who were already using income driven repayment plans from recertifying their income as required. Previously submitted applications stopped being processed, causing many borrowers to become anxious and stressed.
In May of 2025, NPR (National Public Radio) reported, “Congressional Republicans are quietly working toward one of the most consequential overhauls in the history of the federal student loan program—one that would affect the lives of millions of borrowers. At the center of that overhaul is an effort to sunset most of the current student loan repayment plans and offer future borrowers a simple binary: Pay the same amount every month or tie your payments to your income.”
Eligibility for income-driven repayment (IDR) is determined by the types of loans a borrower has and their borrowing history. One of the most difficult aspects of federal student loan repayment (other than keeping track of all the acronyms!) is knowing which repayment options are available for your loans. The VIN (Veterinary Information Network) Foundation My Student Loans tool attempts to clarify the confusion and provide a simplified description of your eligibility via the IDR Profile. You can learn more here.
The Status of Current Loan Repayment Plans
As of 2026, several income-driven repayment options are available for federal student loans. The borrower’s income is used to calculate their minimum monthly payment. They then either pay the balance in its entirety or make payments for 20-30 years, after which if any balance remains, it will be forgiven, generating a taxable event. The number of necessary payments depends on the plan you choose.
The courts blocked one popular IDR plan called SAVE (Saving on a Valuable Education) in 2025, placing SAVE borrowers into forbearance. However, interest began accruing again on Aug. 1, 2025, following a court decision. Because no payments are required in forbearance, the interest accumulates and will increase the total loan balance. No retroactive interest gets applied between the start of the forbearance in July 2024 and July 31, 2025.
As such, it would be wise to choose another repayment plan now to avoid an increased loan balance from accrued interest. If they haven’t already switched repayment plans, loan servicers will begin sending notices to borrowers enrolled in SAVE on or around July 1, 2026, telling them to enroll in a different repayment plan within 90 days. If borrowers do not enroll in a different repayment plan by the end of the 90-day period, they will be automatically reassigned to another plan, likely the Standard Repayment Plan, in which payments are based on the loan balance, not the borrower’s income. This might result in much higher payments than other income-driven repayment plans.
Another IDR option currently available is the Income Contingent Repayment (ICR) plan created in 1994. Recent legislation will end ICR on July 1, 2028, for all borrowers. A third plan, called Pay-As-You-Earn (PAYE), was added in 2012. To be eligible for PAYE, graduates needed be new borrowers as of Oct. 1, 2007, and receive at least one loan after Oct. 1, 2011. PAYE has the most complicated qualification requirements; recent legislation will end this plan on July 1, 2028, for all borrowers.
In August 2025, the federal government updated the Income-Based Repayment (IBR) plan to remove the partial financial hardship requirement but maintained the monthly payment cap, allowing anyone to use IBR, with payments never more than a standard 10-year plan payment, no matter their income or remaining student loan balance. At the end of 2025, the Department of Education announced that OBBBA allows borrowers who don’t have partial financial hardship to enroll in the IBR plan.
The Repayment Assistance Plan (RAP) was created in July 2025 and scheduled to be available by July 1, 2026. Any direct loan will be eligible for RAP. However, any borrower who receives a direct loan after July 1, 2026, will be limited to RAP as their only income-driven repayment option. ICR and PAYE are scheduled to be eliminated after July 1, 2028, but borrowers who do not have a loan origination after July 1, 2026, are still eligible for ICR, PAYE, and IBR.
ICR and PAYE are scheduled to be eliminated after July 1, 2028, requiring borrowers to switch repayment plans before that date. IBR was amended and will remain available for the duration of repayment for any borrower who has selected it. Determining the best repayment plan for your unique situation can be complicated and depends on many factors. Fortunately, a number of resources are available from the VIN Foundation that can help you make the best choice for your individual situation.
Smart Loan Repayment Strategies
In April 2026, VIN student debt experts Tony Bartels, DVM, MBA, and Rebecca Mears, DVM, presented the New Veterinary Graduate Student Loan Playbook free in-depth webinar. They counseled the graduating class of 2026 about their debt repayment decisions. Topics included “whether or not to file a 2025 tax return, the implications of consolidating loans, choosing the right repayment plan, and whether using a signing bonus to pay down loans during the grace period is a good idea.” Making informed decisions about student loan repayment and choosing a plan carefully can help reduce stress surrounding educational debt, especially given the recent complex changes in student loan repayment options.
Bartels urgently advised 2026 graduates to not consolidate their debt or replace one or more loans with a single new loan, such as a Direct Consolidation Loan. For federal student loans, applying for a federal Direct Consolidation Loan replaces some or all eligible federal student loans with a new loan, with an interest rate derived from a weighted average of all the loans included in the consolidation. Most importantly, receiving any new direct loan on July 1, 2026, or later will limit the borrower’s federal repayment options to the new Repayment Assistance Plan and tiered Standard Plan options.
“It will be logistically improbable for most 2026 graduates to get a federal Direct Consolidation Loan application processed and received before July 1, 2026,” said Bartels.
The class of 2026 will be the last graduating veterinarians eligible for the “legacy” income-driven repayment plans, which include the ICR, PAYE, and IBR plans described above. IBR is particularly beneficial as it provides a monthly payment cap and a 20-year forgiveness option for anyone who received their first direct loan after July 1, 2014, and does not receive a loan on or after July 1, 2026.
According to the office of Federal Student Aid, if an individual with an IBR plan borrowed before July 1, 2014, the IBR Plan monthly payment amount calculation is based on 15% of their discretionary income, with a 25-year repayment period. If you first borrowed on or after July 1, 2014, or had no outstanding balance at the time you received a new loan on or after that date, the IBR plan monthly payment amount calculation is based on 10% of your discretionary income, with a 20-year repayment period. If you have eligible loans taken out before July 1, 2026, you’re permitted to access the IBR, ICR, and PAYE plans on or after July 1, 2026. There will be no restriction on enrolling in those plans on or after July 1, unless you receive a disbursement on a new loan on or after July 1, 2026.
For graduate borrowers with Health Professions Student Loans (HPSL), Loans for Disadvantaged Students (LDS), or Perkins Loans, the usual recommendation was to consolidate those non-direct loans into a Direct Consolidation Loan because it allowed repayment with an income-driven repayment plan and made non-direct loan balances eligible for Public Service Loan Forgiveness (PSLF).
“Unfortunately, consolidating this year will most likely result in the loss of the legacy income-driven options for your entire federal student loan balance since you’re unlikely to receive that Direct Consolidation Loan before July 1st,” said Bartel. “Please do not consolidate your non-direct loans. Instead, repay them separately using their required standard 10-year plan after their post-graduation grace period expires (12-month for HPSL and LDS, 9 months for Perkins Loans).” He noted that HPSL and LDS interest can be deferred during postgraduate training programs.
Bartel called out an exception regarding consolidation for those entering postgraduate training such as PhD or residency programs. He said if a veterinarian is starting a new academic program before their loan grace period expires, they will want to explore the benefit of consolidation to get their loans into the new RAP option and prevent interest from accruing for the duration of the postgraduation program, especially if it will be lengthy, such as for a PhD.
New Rules Going Forward
New rules will be in place starting July 1, 2028. Borrowers whose only loans were taken out before July 1, 2014, will have access to two income-based repayment plan options: the original IBR or the RAP. Borrowers whose only loans were taken out between July 1, 2014, and July 1, 2026, will have access to two income-based repayment plan options: an updated version of the 2014 IBR or the RAP. Borrowers with any loans taken out on or after July 1, 2026, even if they have loans from before that date, will only have access to RAP. They will also have access to one non-income-based plan, the “new standard” plan, which bases a borrower’s payment term on their principal loan balance.
The RAP calculates a borrower’s total annual payment based on a percentage (1-10%) of their total adjusted gross income (AGI), then divides the total annual payment by 12 to calculate the monthly payment. This amount is then reduced by $50 per month per dependent child, with a minimum payment of $10 per month for all borrowers. The maximum repayment period is 30 years or 360 payments, with any remaining balance discharged after 360 payments but taxable. One positive aspect of RAP is that any interest a borrower’s monthly income-based payment does not fully cover gets waived. This prevents monthly unpaid interest to accrue for the full repayment term. In addition, if a borrower’s monthly payment lowers their principal balance by less than $50, RAP provides a matching principal payment to ensure the borrower’s payment goes down by at least $50 per month. For married borrowers, RAP allows those with a tax status of married filing separately to exclude their spouse from both the borrower’s household income and family size.
On May 1, 2026, regarding the final rule issued by the Department of Education (ED) detailing changes to the federal student loan programs under OBBBA, the National Association of Student Financial Aid Distributors wrote: “One of the more significant clarifications in the final rule concerns the new lifetime maximum loan limit. ED amended the proposed rule text to explicitly state that the lifetime maximum aggregate amount of loans made, insured, or guaranteed … that a student may borrow shall be $257,500, excluding Federal Direct PLUS or Federal PLUS loans made to that student as a parent on behalf of another dependent undergraduate student.”
This change also made clear that Graduate PLUS loans are to be counted against the lifetime maximum limit, which reflected a recent change in the position from the department, which had communicated previously that Graduate PLUS was excluded from the lifetime borrowing cap. Starting on July 1, 2026, Grad PLUS loans will be discontinued, and the Department of Education will no longer offer them. However, if a borrower is enrolled in a program and has had a Grad PLUS loan disbursed before July 1, 2026, they may continue borrowing for that program under the old rules for up to three years.
In Summary
Veterinary students entering veterinary school in 2026 will face strict limits on the total amount they can borrow. Federal loan amounts for professional programs such as medical and veterinary will be limited to $50,000 per year and $200,000 lifetime. Bartels suggests prospective students utilize the VIN “Apply Smarter” resource (https://vinfoundation.org/for-the-aspiring-veterinarian-apply-smarter/) to evaluate the most economical schools to apply to. Because these loans will no longer be available up to the cost of attendance, many borrowers might find themselves with a shortfall and need to depend on more expensive private loan sources.
The changes to educational loans for students are challenging to understand and navigate. As veterinarians, we are fortunate to have such dedicated people at the VIN who have created a group of resources to address these complex financial questions—from helping pre-veterinary students plan their financial journey to giving graduates direction as they enter their careers with heavy debt burdens.
Related Reading
- The Business of Practice: Navigating Educational Loan Policy Changes
- Equine Veterinary Sustainability: Supporting Equine-Track Students
- Do You Want to Become an Equine Veterinarian? Start Here
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