Written By Jake Courtney, CFP®, CSLP®
Updated on September 25, 2026
If you're a dentist on Pay As You Earn (PAYE) or in SAVE forbearance, the recent rule changes probably have you looking at refinance offers. Your plan is going away, and a private loan at around 5% looks like a clean exit. For many dentists, the math points the other way. Two numbers settle most cases: how many qualifying payments you already have and how your income compares to your balance. Below, I'll cover what changed, how to use those two numbers and four example scenarios for common dentist situations.
What changed for dentists' federal student loans?
Four changes matter most for dentists with federal loans, and all of them trace back to the One Big Beautiful Bill Act, signed July 4, 2025:
- PAYE ends in July 2028. Your last PAYE payment is scheduled for June 2028. By then, you'll need to move to Income-Based Repayment (IBR), the new Repayment Assistance Plan (RAP), a fixed plan or a refinance.
- SAVE forbearance is ending. Borrowers will be moved off SAVE between September 30 and March 2027. Months in SAVE forbearance did not count toward forgiveness, and interest continued to accrue.
- RAP opened July 1, 2026. You can now switch into it.
- A temporary 1% autopay discount is available. The usual federal discount is 0.25%.
Why do these hit dentists harder than most borrowers? Balances run high, and few dentists qualify for Public Service Loan Forgiveness (PSLF), so income-driven forgiveness after 20 or 25 years is the main forgiveness route. The Department of Education (ED) is still issuing guidance on these rules, so confirm dates and plan terms with your servicer before you make any changes to your repayment strategy.
Which two numbers decide forgiveness vs. refinancing?
Your qualifying payment count and your income-to-balance ratio decide most cases. PAYE forgives the remaining balance after 240 qualifying payments (20 years). When PAYE ends, your first-loan date sets where you land:
- If your first federal loan was disbursed before July 1, 2014, you'd move to “old IBR,” which charges 15% of discretionary income instead of 10% and takes 300 payments (25 years).
- If your first federal loan came on or after July 1, 2014, “new IBR” matches PAYE at 10% and 240 payments.
Months in SAVE forbearance won't appear in your count. The 42 months of COVID forbearance generally did count, and so did low early-career payments, so some dentists have more time banked than they expect. Check your count on StudentAid.gov before you model anything.
Then compare income to balance. If your income is half your loan balance or more and you have only a few years toward forgiveness, you'll likely pay the loans off before forgiveness arrives. In that case, a lower refinance rate usually saves money.
What if you're on PAYE with 10 years of payments?
With 10 years counted, forgiveness on old IBR usually still beats refinancing. Let's say you have $500,000 in federal loans at 6%, an adjusted gross income (AGI) of $250,000, a family of four and you file as married filing separately to keep your spouse's income out of the calculation. When PAYE ends, you move to old IBR with 15 years left.
When I run this case, staying on the forgiveness path costs about $40,000 less in today's dollars than refinancing to a 10-year loan at 4.5%. Cash flow points the same way. That refinance carries a payment above $5,000 a month, which is hard to fit alongside young kids, a down payment fund and travel.
I tell clients the savings from refinancing need to be substantial before they give up federal protections. In this scenario, the savings favor staying federal.
What if you're on PAYE with only 5 years of payments?
With five years counted, refinancing comes out ahead by a margin small enough that some dentists choose to stay in the federal student loan system. Take the same profile ($500,000 at 6%, $250,000 AGI, family of four), but assume payments started in 2021.
| Path | Total cost in today's dollars |
|---|---|
| Forgiveness on old IBR (payments plus tax on the forgiven balance) | $532,000 |
| Refinance | $504,000 |
| Difference | About $28,000 in favor of refinancing |
The forgiveness figure includes the “tax bomb,” the income tax you owe on the forgiven balance in the year it's forgiven. The comparison also assumes your income grows with inflation at about 2.5% a year. Two things can shift it:
- Practice ownership. In the first years of owning a practice, depreciation on equipment and other deductions can push your AGI below what you reported as an associate. Lower AGI means lower IBR payments.
- Flexibility. On an income-driven plan, your payment drops if your income drops, such as during unpaid leave. A refinanced loan keeps the same payment regardless.
Some dentists are simply worn out by servicer problems, including the back-and-forth many borrowers have had with MOHELA. That's a fair reason to refinance, as long as your financial plan can carry the higher fixed payment.
Leaving SAVE forbearance: Why your first-loan date matters
If you're coming out of SAVE forbearance, your first-loan date largely decides whether forgiveness is still realistic. Timing comes first, though.
ED has sent notices about SAVE ending, and the wording can make it sound like you must switch plans right away. Under current guidance, your servicer will send a separate notice when you're formally moved off SAVE, and you'll have 90 days from that notice to choose a plan. Read every notice closely and confirm your actual deadline with your servicer. I've seen dentists refinance months early after an ED notice alarmed them and give up federal options they still had.
Now the numbers. We’ll use the same profile for this example ($500,000 at 6%, $250,000 AGI, family of four) with zero qualifying payments.
| First federal loan | Plan | Monthly payment | Likely outcome |
|---|---|---|---|
| July 1, 2014 or later | New IBR | About $1,671 | Forgiveness after 20 years stays viable |
| Before July 1, 2014 | Old IBR | 15% of discretionary income | Loans paid off in about 23 years; refinancing likely cheaper |
With old IBR and no payment count, the plan can still serve as a temporary landing spot that keeps payments reasonable while you prepare to refinance. A borrower who already has 10 years counted may still be a good forgiveness candidate, even on old IBR.
Married? File a separate return as early as you can if you want your payment based on your income alone. Until your servicer has that return, it will use your most recent joint return, which may result in a much higher payment.
Most SAVE borrowers haven't made a payment in years, and household costs have likely grown since. Run the IBR, RAP and refinance payments through your budget now so you know which one fits.
Where does RAP fit for dentists?
RAP fits two groups of dentists and rarely suits the typical profile. RAP subsidizes unpaid interest, so your balance doesn't grow: if your monthly interest is $2,000 and your RAP payment is $1,000, the other $1,000 is covered. The tradeoff is time. RAP forgiveness takes 360 payments (30 years), compared with 300 for old IBR and 240 for new IBR and PAYE.
- Residents. A dentist entering a specialty who still has low-income tax returns from school or training can temporarily switch to RAP, pay as little as $10 a month and let the subsidy keep the balance flat. Once income rises and the low-income returns run out, refinancing and paying off the loans usually makes sense.
- Balances of $800,000+. The wider the gap between debt and income, the more interest RAP covers. That keeps the balance and the tax bomb at forgiveness roughly constant.
For a dentist with $400,000 to $500,000 in loans and $250,000 in income, RAP isn’t likely to reach forgiveness before the loans are paid off, so it doesn't change the decision.
Check your effective rate before you refinance
Your effective interest rate on federal loans may already match or beat today's refinance rates. Federal loans charge interest only on principal. Unpaid accrued interest sits on your balance but doesn't generate more interest of its own.
Say your balance is $500,000: $400,000 of principal and $100,000 of accrued interest from years of forbearance and low payments. Your servicer shows a 7% rate, but a 1% discount for setting up autopay is available for a short time.
| Without autopay discount | With 1% autopay discount | |
|---|---|---|
| Stated rate | 7% | 6% |
| Annual interest on $400,000 principal | $28,000 | $24,000 |
| Effective rate on $500,000 balance | 5.6% | 4.8% |
Refinance rates in July 2026 sit around 5%, or closer to 4.5% for short terms. At a 4.8% effective rate, you'd pay about the same by staying federal and keep federal protections. The autopay discount applies to the standard and extended plans too, so you don't need an income-driven plan to get it.
This advantage shrinks over time. As you pay down the accrued interest, your effective rate climbs back toward the stated rate.
Make your student loan decision part of your financial plan
Your choice between forgiveness and refinancing sets your cash flow for years. A refinance payment above $5,000 a month competes with retirement savings, a home down payment and a future practice. Before you decide, confirm your payment count, first-loan date and effective rate, then test each payment against your budget.
The dental planning team at SLP Wealth runs these numbers with dentists as part of a full financial plan. That way, your loan strategy aligns with your investments, taxes and goals, such as buying a home or a practice, and we update it as the rules change.
