By Dr. Jim Dahle, WCI Founder
By President Donald Trump signed the much-anticipated and discussed One Big Beautiful Bill Act (OBBBA) into law on July 4, 2025. As President Barack Obama famously said, “Elections have consequences,” and when American voters sweep one party into control of the House, the Senate, and the White House, society-changing legislation usually results. Examples include the Patient Protection and Affordable Care Act (PPACA) in 2009 and the Tax Cuts and Jobs Act (TCJA) in 2017.
Your feelings on the legislation are likely highly flavored by your political views, but the truth is that most people are affected both positively and negatively by such extensive legislative change. In this post, we'll outline the ways in which a typical white coat investor will be affected. Jim wrote the majority of the post, but Andrew Paulson, of StudentLoanAdvice.com fame who knows more about managing physician student loans than anybody in the country, wrote the student loan section.
A Caveat
As we write this post, this law has just been passed. Not every detail of how it will be implemented is known, and it is such a large piece of legislation that there might be errors in this post. If you see one, mention it in the comments, and we'll get it fixed ASAP. If there is something important we omitted that will affect WCIer families, mention that too, and we'll get it added.
Too Long, Didn't Read (TL, DR) Version
The tax cuts, both new and extended, are generally going to be good for the finances of white coat investors. Since taxes are mostly paid by high earners, any cut in taxes generally benefits high earners the most. The changes to healthcare will be mostly bad, as they will decrease the incomes of physicians, particularly those who own their own practices with a large Medicaid payor mix and especially emergency physicians, obstetricians, and others to whom EMTALA frequently applies. Just like the PPACA was good news for these docs, this law is bad news.
The student loan changes are close to disastrous for indebted white coat investors, with much less generous IDR programs and less debt that will be eligible for PSLF. There is precious little good news there for WCIers. While many current borrowers will be grandfathered into the changes, student loan refinancing is going to have a much bigger role in student loan management in the future than it has in the last four years.
The OBBBA, along with executive policy changes, is pretty terrible for many immigrants, including lots of students, residents, and physicians. The new law boosts military spending, but this won't have much of an effect on most WCIers. Base Allowance for Housing (BAH) will go up, and there will be more funding for military healthcare, so perhaps there will be a bit of a raise for military docs. There will be significant additional spending in rural areas, on transportation, and for border security. The budget deficit (and thus the federal debt) will be increased significantly, but discussion of that issue is beyond the scope of this article (although it may be discussed in a later post).
Whether the legislation is overall good or bad for the country is a matter of personal opinion, and it will be highly related to your political persuasion. Politics begins when reasonable people can disagree on a given subject. Bear that in mind when making comments on this post.
More information here:
Staying the Course Despite the Trump Tariffs
The Case for Ending PSLF — And What You Should Do
Tax Changes
Perhaps the greatest motivation for this bill was to extend (and often make permanent) the tax cuts implemented in the TCJA, many of which were scheduled to expire at the end of 2025. These include:
- New tax brackets with a top bracket of 37% are now permanent (the corporate rate of 21% was already permanent).
- Section 199A (Qualified Business Income-QBI) Deduction is now permanent (at 20% of QBI) for sole proprietorships, partnerships, and S Corps. High-earning doctors and other specified service businesses are still excluded. There is a new limitation on how itemized deductions affect the 199A deduction, but it's relatively minor.
- Higher estate tax exemption limits were extended and actually increased to $15 million per spouse and still indexed to inflation
- SALT deduction limitations were extended, but they are now less limited—at least until 2030, when it reverts to $10,000 per year for everyone. Now the state and local tax deduction (mostly state/local income but also property) can be as high as $40,000 (and increases by 1% a year through 2029), but it starts phasing out at a MAGI of $500,000 (single and MFJ, but not MFS, which is half that amount) and is mostly down to $10,000 by a MAGI of $600,000.
- Bonus depreciation extended. If you use your NetJets subscription (or other eligible business expense) only for business until the end of the year you buy it, you can basically expense the whole thing that first year. This is now permanent.
- Changes to some international income taxes. There are lots of these, but we think few will affect any WCIers at all. But if you pay tax on international income, it's worth looking at these.
- Opportunity Zone renewal and enhancement. Remember those funds some investors with large capital gains used to invest in real estate in supposedly downtrodden areas in order to reduce taxes? They're back. There might be more rural benefits this time.
These changes are mostly good for WCIers compared to pre-TCJA laws, although it would have been nice to see the discriminatory-feeling, specified service business limitations go away.
There were plenty of new tax changes as well.
- Increased ($15,750 and $31,500 MFJ) standard deduction for 2025.
- Bonus deduction for the elderly. It's increased from $1,600 ($2,000 single/deceased spouse) to $7,600 ($8,000 single/deceased spouse) through 2028. This only applies to those with less than $75,000 of income, and it has been billed as “eliminating the tax on Social Security,” although it does no such thing directly. It is just an offsetting age and income-based deduction.
- Child tax credit increased to $2,200 (still $1,700 refundable). It still starts phasing out at a MAGI of $200,000 ($400,000 MFJ).
- Tax-free tips and overtime. It's temporary (through 2028) and phases out at higher incomes (MAGI of $150,000/$300,000), but up to $25,000 in tips and $12,500 in overtime pay get an above-the-line deduction now. I'm not sure most cash tips get reported anyway, but wouldn't it be cool if resident salary structures could be changed so that half of their income is due to working overtime?
- Auto loan interest deduction means up to $10,000 in auto loan interest on newly purchased cars can be deducted through 2028. It's only temporary, and it's limited to cars “whose final assembly was in the USA.” This makes buying brand new cars on credit slightly less stupid.
- Charitable donation deduction for non-itemizers is $1,000 ($2,000 MFJ) per year. This popular previous deduction is back starting in 2026 and permanent.
- 0.5% Floor on itemized charitable deductions, which means that the first 0.5% of your taxable income donated to charity is no longer deductible. The combination of the two changes means that Congress has decided to incentivize small gifts and disincentivize large gifts, but the changes are pretty slight. QCDs (the best way to give after RMD age) are unaffected.
- Trump accounts mean that when you have a new baby, you get a $1,000 credit into a Trump account, and $5,000 more can be contributed. It can apparently be used for school, small business expenses, or a first home. There's no tax deduction for contributions, but taxation will apparently be similar to IRAs. Details are still a little tough to sort out, there will be a post all about these soon. We're not sure the complexity is worth it, but “baby bond accounts” have had bipartisan support for years. If it gets more people saving and investing from birth, we think it's overall a good thing.
- University endowment tax is an increase in excise tax (0%-8% of value) on large (at least related to the number of students) endowments, and it will feel a bit confiscatory to many universities, their professors (including docs), and their donors. Like the prior excise tax established by the TCJA, it applies to net investment income, not assets. It makes us wonder what other types of “unapproved” nonprofit institutions could be targeted next. Churches, perhaps?
- Itemized Deduction Limitation somewhat similar to the “Pease” limitation of the past. Basically if you make a lot, your itemized deductions are only good for a 35% deduction instead of a 37% deduction.
- K-12 529 qualified withdrawals increased to $20,000 per year, up from $10,000.
Few of these will have much effect on the tax burdens of WCIers, but you may see a little bit of benefit or harm depending on your situation.
Healthcare Changes
You might have been feeling pretty good after reading the tax section above. This section will be more depressing.
- Medicaid/CHIP Community Engagement requirement says that if you're 19+ and without a “hardship event,” you'll have to spend 80+ hours a month working, in school, or doing community service, or you'll lose your Medicaid and your children's CHIP. Parents/guardians living with dependent kids can be exempted . . . if their state agrees to do so.
- Certain non-citizens can no longer enroll in Medicaid, CHIP, or Medicare, and they can't get premium subsidies or ACA plans. Undocumented immigrants have never been eligible, but these changes affect many “legal” immigrants, too. That might include a lot of your patients.
- Medicaid/CHIP Eligibility determinations will now have to occur every six months.
- Eliminate Medicaid payments to entities providing family planning, reproductive health, or abortion services.
- Increased cost-sharing means it'll be $35 co-pays for lots of non-primary care or mental health visits. This may reduce the percentage of “four-fers” in the ED.
- Medicaid payments are now capped at Medicare limits. That'll be 110% of Medicare limits for “non-ACA expansion” states (many “red” states). We didn't know Medicaid ever paid more than Medicare, but apparently, it can in some states. Some “Medicaid Direct Payment Programs” can be grandfathered in to higher rates, delaying this cap for three more years.
- State provider tax limitations. Apparently, something like 17% of state Medicaid expenditures are paid for by a “provider tax” on those providing the care. Limiting those taxes seems fair to me. Provider tax is really just a loophole states use to get more money from the Feds for Medicaid. Minimizing it or eliminating it for all states sounds like a good way to reduce fraud, waste, and abuse to me.
- Temporary doc fix with the 2.5% Medicare fee schedule increase for 2026. It's still not indexed to inflation; it's just a one-time “fix.” Just like all the other ones.
- Exemption of orphan drugs from Medicare negotiation. Drugs that are used to treat rare diseases can still be so expensive that your Medicare patients won't be able to afford them.
- Rural Health Transformation Program is the first good news for healthcare with $50 billion being set aside to help rural hospitals and providers.
- Biden-era healthcare rules delayed until 2034. These include such rules as minimum staffing in LTC facilities.
- Direct Primary Care (DPC) payments are now an eligible HSA expense. It's bonkers that they weren't before.
- Telehealth can also be paid for even before an HDHP deductible is met.
Overall, these changes might help some docs a little, but the decreased eligibility for Medicaid and CHIP will probably outweigh all of those changes. Estimates are that 10-17 million of the 72 million people on Medicaid will lose it. That will increase the number of “self-pay” patients by about 50%
Student Loan Changes
The OBBBA alters student loan repayment for all borrowers, with a more significant impact on current and future medical students.
Lower Borrowing Caps for Higher Education
Starting July 1, 2026, the OBBBA is introducing lower federal loan limits that will significantly impact medical and professional students. The Graduate Plus loan program created in 2006, will be discontinued as well.
New federal borrowing caps:
- $100,000 for graduate school ($20,500 per year)
- $200,000 for professional school ($50,000 per year)
- $65,000 (per child) for parent plus loans ($20,000 per year)
Please note: students still in school who borrowed before July 1, 2026, will have three additional years of borrowing under the older standard, allowing borrowing up to the cost of attendance.
Lower federal loan caps will force many students to rely on private loans to finance their education. Private student loans have less favorable terms and stricter underwriting requirements, and they commonly require a co-signer to receive them. This shift could disproportionately impact first-generation or low-income students, potentially limiting access to medical education.
There's a DO program in our home state of Utah called Rocky Vista University. For the 2025-2026 academic year, the cost of attendance (COA) is $120,098. A medical student can only borrow up to $50,000 per year federally in the future. The overall $200,000 loan doesn't quite cover half of this student's education over four years. Assuming the COA increases 5% per year, this student borrows $517,637 in student loans overall with $317,637 of that with private loans
That's a steep debt mountain to climb, regardless of specialty. And we aren't even factoring in interest growth while the student is in school, which could be nearly $100,000. This reliance on private loans that are ineligible for federal programs like Income Driven Repayment (IDR) or Public Service Loan Forgiveness (PSLF)—and often at higher interest rates (like 11%)—may dramatically increase costs for students. Schools may face pressure to curb tuition increases, but for now, students must plan strategically to manage this new reality.
PSLF Could Become Less Common
Over 1 million public servants have had their loans discharged through the Public Service Loan Forgiveness Program (PSLF). PSLF has become a lifeline for doctors and other public servants who work in nonprofits or academia. While earlier OBBBA drafts excluded medical residencies from PSLF eligibility, the final bill restored this key provision. However, with new federal loan caps now lowered for medical and professional school, PSLF becomes less attractive for future borrowers as they'll have less federal debt eligible for forgiveness.
Here's an example of two psychiatrists pursuing PSLF:
Doc A = $400,000 at 7%
Doc B = $200,000 at 7% (new federal limit)
Both earn $65,000 during their four-year residencies and $350,000 as attendings. They are in the newly proposed Repayment Assistance Plan (RAP = 10% of adjusted gross income).
Doc A benefits significantly from the original PSLF with more than $360,000 forgiven. Doc B would also benefit, but it would result in far less forgiven since they had a lower federal balance. Doc B may find private refinancing combined with higher-paying private practice jobs more appealing than PSLF-eligible employers. PSLF will still work out for those in lower-earning specialities or extended training periods (5+ years). But it's going to be far less of a factor for future doctors.
Repayment Plan Overhaul
OBBBA simplifies federal loan repayment options for new borrowers (loans on or after July 1, 2026) to two plans. Existing repayment options such as Income Based Repayment (IBR), Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE), and Income-Contingent Repayment (ICR) will be eliminated for new borrowers. Existing borrowers must transition to one of three plans by July 1, 2028: Standard Repayment, Repayment Assistance Plan (RAP), or modified Income Based Repayment (IBR).
New Borrower (Post-July 1, 2026) Repayment Options
- Standard Repayment or
- Repayment Assistance Plan (RAP)
The new standard repayment plan term and payments are based on your loan balance.
- 10-year payoff for balances of $1-$24,999
- 15-year payoff for balances of $25,000-$49,999
- 20-year payoff for balances of $50,000-$99,999
- 25-year payoff for balances of $100,000 or greater
Standard repayment would not qualify for the PSLF program.
The Repayment Assistance Plan (RAP) is an income-based repayment plan similar to previous programs. However, RAP bases payments on Adjusted Gross Income (AGI) rather than discretionary income. Dual-earning couples can exclude spousal income by filing taxes as Married Filing Separately. Some of the previous bill texts had discussed INCLUDING spousal income regardless of tax filing (so it's nice to see this wasn't included in the final bill). RAP deducts $50 per monthly payment per child (two children = $100 monthly deduction).
Here's how they calculate your payment based on AGI.
A noteworthy difference with RAP vs. previous IDR plans is the payment cliff. Here's an example.
- AGI: $99,999 * 9% / 12 = $750 monthly payment
- AGI: $100,000 * 10% / 12 = $833 monthly payment
Making $1 extra in this case would bump up your payments $83 per month and $1,000 for the year!
RAP qualifies for PSLF and has an IDR forgiveness track over 30 years of payments. That's 5-10 years longer in repayment than other IDR plans. The minimum payment is $10 per month, so there won't be any more months of zero dollar payments. Similar to the previous Revised Pay As You Earn (REPAYE) and Saving on a Valuable Education (SAVE) is the interest subsidy with RAP. If your monthly payment does not cover the monthly accrued interest, the government would waive 100% of the unpaid interest. This prevents your loan from growing higher when you move into repayment. In addition, the government will provide up to a $50 monthly subsidy to ensure your principal balance decreases by at least that amount monthly.
Existing Borrowers (Pre-July 1, 2026) Repayment Options
Existing borrowers will need to move into one of these three repayment plans by July 1, 2028.
- Standard Repayment,
- Repayment Assistance Plan (RAP) or
- Modified Income Based Repayment (IBR)
The modified Income Based Repayment (IBR) plan is quite similar to what IBR was previously. The modified IBR has two versions.
- Pre-2014: Loan originating prior to July 1, 2014 (15% of discretionary income), 25-year IDR forgiveness
- Post-2014: Loan originating on July 1, 2014, to June 30, 2026 (10% of discretionary income), 20-year IDR forgiveness
The only change to the IBR plan is that it drops the partial financial hardship requirement to enroll in it. It'll be easier to switch into now.
Selecting the optimal repayment plan amidst all this change can be tricky for your student loan strategy. Run the numbers or get professional advice now to ensure you're on the right track.
More Noteworthy Student Loan Updates
- Stricter deferment and forbearance rules: Forbearance is now limited to no more than nine months during any 24-month period. It also eliminates economic hardship and unemployment deferments.
- Increased reliance on private loans: With lower federal borrowing caps, more borrowers will require private student loans to finance their education. You'll need to shop around to find the best rate.
- Parent Plus Loan challenges: Parent Plus Loan borrowers need to consolidate their loans and enroll in the ICR plan by June 30, 2026, to be eligible for IDR plans.
The One Big Beautiful Bill Act affects many aspects of the lives of most Americans. We'll continue to explore its implications on the personal finance and investments of white coat investors in future posts.
What do you think? What did we miss that is important in your financial life? Try to minimize your political commentary in the comment section below, or you may find your comment being edited or even deleted.
“The changes to healthcare will be mostly bad…especially emergency physicians…to whom EMTALA frequently applies”
Correct me if I’m wrong, but ” emergency physicians” are salaried employees, so why will anything at all change for them?
Regarding the extensive discussion of loan forgiveness programs, in my humble opinion, any such “forgiveness” is immoral, as there is no free lunch, and somebody will have to pay…
“Undocumented immigrants have never been eligible, but these changes affect many “legal” immigrants, too.”
The official language (laws, etc) is “illegal alien”, please. And I’m not sure why the word legal is in quotation marks?
This emergency physician is not a salaried employee. And the money to pay any employee must come out of revenue for the business. Less revenue, potentially less pay.
Thanks for sharing your political views.
Thanks for putting this together asap after the bill, unfortunately, passed.
Do you have any more info on the basic W2 income tax treatment? It seems like preserving TJCA things (37% top bracket especially) is a key point perhaps? What about the actual tax brackets – are they significantly changed? I thought I had seen suggestion that this would work out quite favorably for seven figure compensated employees.
Also do you have any explanation of what “permanent” means on some of the change? Does it just mean “indefinitely but always subject to change”? Or is there somehow a true permanence ?
Exactly, preserving TJCA (37% is top bracket still, which was set to expire at end of year).
Permanent means there is no set expiration date, like there was with the TJCA. So indefinitely but subject to change by an Act of Congress.
Partner and I are both residents on the SAVE plan with ~200k loans for them and ~350k in loans for me. I’ll start earning around ~300-400k in 2026 and partner will earn probably 400-500k starting in 2027. Is it unreasonable to stay on the SAVE plan for now, and either aggressively pay off our loans after graduation and/or refinance to a private loan company and if interest is competitive focus on putting money in the market? Not pursuing PSLF.
It seems to me that switching to IBR/RAP is going to be harder while finishing up residency and also could be more expensive in the long run, no?
If you’re not going for PSLF and you’ll be making a million bucks I’d just refinance after finishing training and throw $20K+ a month at them to make them go away very quickly. 1-2 years should do it.
Reading the comments where many are discussing their mid six-figure incomes and complaining about having to pay money back which was loaned them to attend medical school was interesting. This is basic premise of any loan to anyone, I think you will all be fine with the income you will be earning. Perhaps limiting the amount of money available-conditions for repayment of such money, will rein the price of attending medical or dental school?
Seems unlikely given there are plenty of people with enough money to pay the current high prices without loans at all. A more likely effect is that those who don’t come from money will either choose not to come or end up paying off debt for longer afterward.
I just want to say thank you for laying out the options for PSLF now. I’ve been so confused but know I have to make a move since SAVE is no longer. Now I actually have an idea of what I’m doing. Thank you!
Michelle,
You’re welcome. Best of luck to you.
Andrew SLA
Re University Endowment Tax … “It makes us wonder what other types of “unapproved” nonprofit institutions could be targeted next. Churches, perhaps?” I am incredulous that you added this comment. Literally. The IRS just said “it will allow houses of worship to endorse candidates for political office without losing their tax-exempt status,” which is explicitly not allowed since 1954, when a provision in the tax code called the Johnson Amendment was enacted. (It said that churches and other nonprofit organizations could lose their tax-exempt status if they participate in, or intervene in “any political campaign on behalf of (or in opposition to) any candidate for public office.” ).
https://www.reuters.com/legal/government/churches-can-endorse-political-candidates-congregations-irs-says-2025-07-08/
Thanks for sharing!
Excellent article and seemed just factual. Two comments
1. Our nation is $36T+ in debt and whatever we have to do will be painful, if not to us then very painful to our children. We have to do something. Hopeful business profit and taxes collected by higher wages will significantly increase collections and can be used to lower the debt…..I doubt congress will ‘increase their debt payments’ above the minimal.
2. I am opposed to free healthcare for illegals…but the problem is, as an ER doc, we and the hospital are both legally and morally bound to see the patient. So again, it becomes an ‘unfunded mandate’ to treat the uninsured. I am not for socialized medicine as it will have even more controls but again, we are morally and legally bound to care for anyone presenting to the ED with an emergency..but our hospital won’t be reimburse…
Elected officials love to be ‘compassionate’ with other people’s money….for votes. For power.
Thanks for the great article.
KTKMD
How are medical schools (and for that matter colleges generally) ever going to be incentivized to make their tuitions realistic unless easy loan money from the federal taxpayers stops flowing? Why not a big effort to encourage private charitable sources to help deserving low income individuals? That would be much more efficient and appropriately targeted.
Can you clarify what we know/don’t know regarding the potential of ‘PSLF buyback.’ Also wondering if you have any recent stories/firsthand anecdotes to shed light on what we may expect from the Department of Education in terms of working with those of us who have been affected by SAVE & diligently pursuing PSLF going forward.
For context I’m 8 years into PSLF with close to $500k in all federal loans (med school debt + interest accrued). Did 6 years of low paid post graduate training (PSLF elibigle institution) and then took a PSLF eligible attending job. My loans have been caught up in SAVE. I’ve been a diligent and loyal follower of WCI since my second year of med school (2014) and up until now the logical pursuit has been to holdfast for PSLF. Despite multiple calls with hour plus waits to MOHELA over the last 18 months, plus filing an application to switch out of SAVE to a different income based repayment program 6 months ago.. I’ve heard nothing. My suspicion is with backlogs and poor staffing many of us may expect long waits to process switching before we can actually get the ball rolling forward (if you’ve heard otherwise please share!). Given the impacts of this bill (the eventual need to recertify my income at attending level increasing payments) the current political climate around PSLF and the reality that my PSLF 10y mark is just 2 years away.. a date that happens to fall under the current administration’s reign, I’m trying to gauge the likelihood that this works out. More specifically, that the current administration prioritizes making the department of education actually work for rule following citizens like myself to help us make meaningful progress forward on our loans and PSLF. Then, the likelihood that they will actually process PSLF applications in 2027 (election cycle year; when I’m eligible). While we may not want to talk about politics on this thread, it no doubt has affected many young doctors in my situation who played by the rules WCI taught us and are now stuck and confused trying to pick up the pieces and move forward.
Sincerely,
A millennial doctor looking for hope, following the rules, and feeling like I got PLAYED as a pawn by politicians
P.s. Wondering if other young doctors have had similar experiences? Personal anecdotes appreciated.
Yes, people are having similar experiences. You’re in a boat with a lot of people. We’re all kind of waiting to see whether it was best to stay in SAVE or to have gone to IBR ASAP. I don’t think we truly know yet, but Andrew’s opinion is worth listening to as you make your decision. Hopefully the right thing to do will become clear soon and people won’t be penalized for crummy policy, but someone HAS to be “penalized”, either those who went to IBR too early or those who went to IBR too late.
Andrew, the prevailing sentiment with the new bill is that if we are in the SAVE forbearance (loans are 2020-2024), and we PLAN ON PAYING THEM BACK IN FULL, we should get on IBR.
But my argument is, the bill currently says the old plans like SAVE are phased out by July 1, 2028. So what’s stopping me from staying where I am, on SAVE for the next 3 years, or until they kick me off forcefully, then I get on IBR? Or RAP when available.
Sam,
You can stay put if you’d like until you are compelled to move payment programs (no way this lasts three years). If you aren’t going for PSLF, why continue to pay the high interest rates of 5-9% when you could refi now to the 3s and 4s? I’d refi a lower rate if I were you. You’ll pay less on your loans once you do.
Andrew SLA
Bottom Line: Future doctors will have more expensive debt, fewer forgiveness options, and higher reliance on private loans. High-earning physicians benefit from tax cuts but face lower reimbursements and fewer insured patients.
Hello, thank you for the detailed summary. I have a few questions for you. I am not pursuing PSLF but I am interested in loan forgiveness for making 20+years of payments. Do you know if all the repayment plans qualify for loan forgiveness with the primary difference being the number of years in repayment before loan is forgiven? When does the clock start ticking – i.e. is it when you start residency or when you actually make your first payment for the loan? Thank you for your help.
It’s 25 (IBR) -30 (RAP) years now, not 20 (PAYE).
It’s 25-30 years of payments, so no ticking clock until you make one and if you miss a payment, it goes back that much further.
Rob K,
Your clock starts when you enter repayment post med school. IDR forgiveness is taxable, unlike PSLF that is tax free.
IDR forgiveness years
New IBR = 20
Old IBR = 25
PAYE = 20 (phasing out)
REPAYE/SAVE = 25 (phasing out)
ICR = 25 (phasing out)
RAP = 30 (new plan in summer 2026)
Andrew SLA
Good point that New IBR is still 20 years, like PAYE.
Do you know how payments made under other payment plans are counted toward forgiveness if I were to switch into any of the payment plans that have a forgiveness pathway?
I think they all count the same whether IBR, PAYE etc.
The limit on provider taxes has a disproportionate effect on provider service lines that are less profitable (OB, geriatrics, behavioral health etc). The amount of monetary effect (specific to provider taxes) on each hospital provider/system is currently being worked through but it’s in the millions for many hospital systems in the mid Atlantic region. It will be interesting to watch 2026 hospital budgets (likely unfortunate) and how this will decrease available inpatient beds/service lines.
I have always been told that if my CME allowance except what my employer covered, it can not be duducted as an expense. Now I am working less than 20 hours a week without any CME allowance or licenses and professional fee reimbursement, does anyone know it I can claim that. I will be getting a W2 from this job and also working prn that pays me as 1099 this year. How does this bill affect someone in my situation?
Yes, you can claim legitimate business expenses like CME against your 1099 self-employment income. A very conservative CPA would say you should pro-rate them, but I suspect most docs do not. But none of that has anything to do with this bill really. Same before as after. Which part of the bill did you think was relevant to this particular issue?
For Andrew, regarding changes in the student loan repayment programs, I have a few questions.
I’m an old borrower and my federal loans were put into the ICR repayment plan in 2024 when I applied to be put on IDR loan forgiveness. I was put into a forbearance at that time while SAVE plan loan forgiveness was put on pause. When they did the IDR payment count adjustment, I ended up having 27+ years of payment count toward IDR loan forgiveness. However, at that time, they stopped processing loan forgiveness for the ICR payment plan, unfortunately! So now I feel stuck!
I was told back in January that I wasn’t eligible for the IBR plan because I didn’t have a financial hardship and I guess also because of my income.
I don’t know if they’ll ever restart processing loan forgiveness for those on the ICR repayment plan. So this week I applied to change my IDR plan from ICR to IBR, in hopes that any new changes with this new bill that maybe I’ll be eligible now to get into the IBR plan. And then they can process my student loan forgiveness. I’m not sure how long they’ll take to process my application to find out if I am eligible to move to the IBR plan and to see what the monthly payments will be. I don’t want to switch to a standard repayment plan since I’m this close to student loan forgiveness. But the monthly payments on the ICR plan, and potentially for the IBR plan may be too high for me if I need to make payments and not have my loans forgiven soon.
So my questions are…
1. With the new bill and new rules for the IBR plan, it was mentioned that the financial hardship portion is no longer a part of it, do you think it’s possible I may be able to get into the IBR plan?
2. Since my recent IDR change application is processing, what criteria will be used for IBR and when do the new IBR plan eligibility rules go into effect?
3. Should I just stay put in the ICR plan to see what happens?
4. I had a little over 27 years of qualifying payments toward IDR loan forgiveness. Do you know if with the new bill they are doing a recount for the previous payment counts adjusted for qualifying for IDR loan forgiveness? Just wondering if my payment counts could change and I end up having to pay more months or even years before getting forgiveness.
Thanks!
It seems your complicated situation is well worth the one-time fee Andrew/Student Loan Advice charges. I wouldn’t be surprised if you are already eligible for forgiveness if the paperwork can just be done right.
Hi Andrew, I’m definitely eligible for forgiveness as I have well over the number of years of repayment history for the previous IDR plans (as long as they don’t re-do the payment counts they did with the one time count adjustments for IDR. The problem is that forgiveness is paused for the ICR plan and I’m trying to understand the rules for the modified IBR plan with the new bill changes.
Do you know when the new/modified IBR eligibility rules take effect?
And do you know if they are re-doing the one time payment adjustments for the payment counts for forgiveness?
Feeling Stuck,
1.) Not sure. Could take a year
2.) Haven’t heard about it in awhile. Most of my clients who met the criteria for the one-time adjustment have had their update and loans forgiven. The delays on forgiveness could be tied into the injunction on SAVE.
Andrew SLA
The loan caps are really stupid. Rich kids generally are going into finance, and not medicine. The idea that everyone wants to go to medical school and become a doctor is really old fashioned. Someone commented about a shortage, and common sense would dictate that there should be more opportunities for those wanting to go to med school. I was able to pay for undergrad, but I had to borrow to go to med school, and I’m still paying it back 20 years later. I don’t understand why they did those loan caps because most people who go to grad school esp med school can pay back those loans.
You’re still paying on loans 20 years later but also arguing that most people who go to med school can easily pay back their loans. There’s a bit of a disconnect there.
Hi all, A recent experience I had with FedStudLoan consolidation may contradict one of the statements in this blog post and I was wondering if a section of the OBBBA will specifically change the language that currently seems to be in the consolidation contract… I am 10y post-graduation from medical school and qualify for PSLF except that the recent forbearance and FSA/servicer delays to convert to a qualifying IBR plan have prevented me from completing my last 5 payments. In trying to work through the process, the FSA Loan Simulator advised me to consolidate my loans and indicated that I would qualify for a PSLF pay-off later this year (which makes sense based on the remaining payments I have)
However, when I went through the FSA application to consolidate, the last signatory page was a legal contract, which contained a sub-section J. that states “Any payments I made on the loans I am consolidating (including any Direct Loans) before the date of consolidation will not count toward the number of years of qualifying repayment required for loan forgiveness under the PAYE Plan, the IBR Plan, or the ICR Plan (see BRR item 11), or the 120 qualifying payments required for Public Service Loan Forgiveness (see BRR item 15).”
This single statement prevented me from going through with consolidation for obvious reasons. Any insight into this language that seems to contradict others’ experience that qualifying payments made before consolidation are not affected by the date of consolidation? Thank you WCI and SLA for your expertise in this area.
-Ray
Ray,
I don’t really cover anything about a direct federal consolidation in this blog post. Don’t consolidate your loans. This could drop you back to zero payments. Not worth it at all. There was a temporary period of time you could consolidate and it wouldn’t erase prior payment history. However, that time is now gone and it won’t help you at all at this point.
Go back into repayment for five months and apply for PSLF.
Andrew SLA
Any clarification of this:
“ Eliminate Medicaid payments to entities providing family planning, reproductive health, or abortion services.”
Does that mean any and all Medicaid payments to any individual, practice, or health system whose docs provide any of these services, even if legal in their state? This seems wild, if read literally. Every primary care office provides at least some form of “family planning” and “reproductive health services”. Is it really just about abortion, which is bad enough? Most of our local OB docs provide abortion services—will Medicaid no longer pay them for any services if they continue to do so? Will Medicaid no longer even cover birth control? That’s can’t be true…
Good question. I share your skepticism of how this will be applied. I think the intent is not to pay for abortion etc. with federal dollars, not to financially punish those who offer that service, but I suppose that is a possible goal of the administration.
The issues facing doctors today have become so numerous and onerous that it’s a wonder anyone applies to medical school in the first place! Adding restrictions to federal student loans is another hardship for would-be physicians. Medicine in our country has become so fractured it’s hard to know where to begin to fix things. Prior authorizations, step edits, ICD 10 coding, loss of trust by patients who would rather use “Doctor Google”, HIPAA, MIPS, EMRs, Vaccine skeptics, malpractice insurance rates, recertification exams, CME requirements, diminishing reimbursements, and other state and federal laws are just a few of the hurdles facing us every day. I am fearful and cry for those who wish to become physicians today in the United States.
We have seen this calamity in the making since the 1980s. IMO, this is the most accurate and comprehensive view of the current healthcare mess, and the clear path out of it: https://youtu.be/cFa8t3SPgNw?si=mQAT-X_zYtdw_3YO
Want to share a TLDW version for that Youtube video?
Granularity in these conversations very tempting and seductive, elections have consequences, but there are elections every 4 years….most important thing is a clear head then time work attention money student loans can all be tackled easily but overall what a fall from grandeur the house of medicine has had
529 Accounts can now be used for CME, licensing, etc. I opened one for me (physician) and my wife (teacher) and am reimbursing/paying all of our expenses from that account.
You can’t pay for your medical license with 529 money. That’s nuts. I’m not even sure you can use it for CME but at least one could make a plausible argument for that.
Per this page:
https://www.savingforcollege.com/article/using-a-529-plan-to-pay-for-continuing-education
I don’t know of any CME programs that are Title IV eligible. I know ours aren’t. Maybe if it’s put out by a university.
https://fsapartners.ed.gov/title-iv-program-eligibility/title-iv-participation-application
I just finished a big Kitces webinar on OBBA and was surprised to learn that 529 money can now be used for Continuing Eduction.
It’s unclear to me if these means one of the new things you can put on the list for “what do I do with my kids unused 529 money?” is – use it to pay for your own CME going forward.
Article for reference:
https://www.savingforcollege.com/article/trump-budget-bill-529-plan-credentials-continuing-education
Quoting the Kitces recap below:
POSTSECONDARY CREDENTIAL EXPENSES
Along with the expanded list of K–12 expenses, Section 70414 of OBBBA allows 529 funds to be used for qualified postsecondary credentialing expenses. The new law includes three types of eligible costs:
Tuition, fees, books, and any other expenses required for enrolling in a postsecondary credential program;
Fees for exams required to obtain or maintain the credential; and
Fees for continuing education necessary to maintain the credential.
Eligible credentials include those that are industry-recognized and accredited by major credentialing organizations, apprenticeships registered with the Department of Labor, occupational licenses issued or recognized by a state or the Federal government, and other postsecondary credentials as defined under Section 3 of the Workforce Innovation and Opportunity Act.
I think the rules are a lot tighter than most docs will imagine for CME unless I missed something. I don’t think most CME will qualify as I understand the rules. Basically, the education would have to qualify to use federal loans for it in order to use 529 money for it. Correct me if I’m wrong.
Many EU countries and the UK have tuition free medical schools. I think in Australia and New Zealand that is also true. It is competitive to be admitted but so is it in America. Grenada also has a medical school as does Guadalajara. So medical school debt can be reduced by going to one of these places and some have internship opportunities as well. In the long run we have to restructure the cost of medical education and training so it can take care of patients not lenders
Would love some feedback or clarification on the effect of the bill on medicaid. All partisan issues aside, my understanding was that it was much more nuanced than “15 million people are going to lose their benefits…etc”. For example, some of those people are not losing the benefits but will simply have to qualify for them a little more stringently. In other cases various states have gotten a generous matching program from the federal government on the cost of medicaid and they will now have to shoulder more of the burden. In many cases it appears as if millions of medicaid recipients were registered in more than one state and therefore states received federal monies on people who were not even in that state any longer. In one or two states undocumented migrants were receiving medicaid benefits. I’m sure that the situation is far more complex and nuanced than simply assuming that 15 million will lose benefits. In other words, could it be that in many cases states will pay more towards medicaid without all of those people losing their benefits?
It could be, but the likely outcome is that some 8 figure amount of people who had some type of insurance a month ago won’t next year.