Step 5: PSLF, residency and your first three years

Where you work, and what you do in the first months after graduation, can be worth tens of thousands of dollars.

What you need to know

Public Service Loan Forgiveness (PSLF) forgives your remaining federal balance tax-free after 120 qualifying payments while you work full time for a qualifying employer — a nonprofit hospital, an FQHC or community health center, public health, the VA or military, or a dental school faculty. Private practices and most DSOs don't qualify. Check your employer's EIN at studentaid.gov/pslf.

A paid residency at a nonprofit hospital can count toward PSLF, and because your income is low, your RAP payment is small. Unpaid, student-status residencies can usually stay in deferment instead.

You get a 6-month grace period after graduation, but interest keeps building during it. With a $0 student-year AGI, ending grace early and enrolling in RAP right away usually costs about $10 a month, gets most of that interest waived, and starts your PSLF clock six months sooner.

Enroll in autopay: it takes 1% off your federal rate through June 30, 2028 if you're enrolled by September 30, 2026.

Employer and timing

Employer & timing

Public-service work and when you start paying.

I work (or will work) for a PSLF-qualifying employerNonprofit hospital, FQHC, public health, VA/military, dental school faculty. Check your employer's EIN at studentaid.gov/pslf.Skip the 6-month grace period and enroll in RAP right awayYour $0 student-year AGI means ~$10/mo with unpaid interest waived — instead of interest piling up during grace.

Your first three years out

Year 1 — uses your student-year return

$10/mo on RAP

AGI $0

Year 2 — uses your graduation-year return

$557/mo on RAP

AGI $83,500

Year 3 — first full-salary return

$1,434/mo on RAP

AGI $172,075

You recertify income every year. RAP always looks back at your latest tax return, so payments ramp up a year or two after your salary does. Standard 10-year would be $3,632/mo from day one.

Autopay is cutting your rate to 7.20% for 20 more months

The Department of Education added a temporary extra 0.75% on top of the usual 0.25% autopay discount, so automatic payments are worth a full 1% through 2028-06-30. You have to be enrolled by 2026-09-30 to get it, and stay enrolled to keep it. It applies to Direct Loans made after July 2012. After the window it drops back to 0.25%. Set it up with your servicer — it also means you never miss a payment, which matters on RAP, where a late payment costs you that month's interest waiver.

Grace period vs. RAP right away

Taking the 6-month grace period lets about $12,300 of interest build up. Ending grace early and enrolling in RAP costs about $60 for those six months ($10/mo) — the rest of the interest is waived, and the government's principal match still nudges your balance down. You'd also get 6 extra qualifying months toward PSLF. Over the life of the RAP plan, the government waives about $75,150 of your interest.

Estimates only — not financial, tax, or legal advice. Rules reflect the One Big Beautiful Bill Act as implemented by the Department of Education (last reviewed September 2026). Confirm with your servicer, StudentAid.gov, and a CPA or planner who works with dentists.