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CNBC
7 days ago
- Business
- CNBC
Trump's 'big beautiful bill' caps student loans. Here's what it means for borrowers
President Donald Trump's massive tax and spending package will bring sweeping changes to federal student loans, in part by capping how much money people can borrow from the federal government to pay for college and graduate school. Among other measures, the legislation, which Trump has called the "one big, beautiful bill," sets new limits for students and their families. The following changes go into effect for new borrowers on July 1, 2026: These new limitations "will reshape how students borrow," said Lesley Turner, an associate professor at the University of Chicago Harris School of Public Policy and a research fellow of the National Bureau of Economic Research. "Students are either going to borrow less or make up the difference with private loans, or they will not start or complete a graduate program," Turner said. More from Personal Finance:Trump's 'big beautiful bill' slashes CFPB funding78% say Trump's tariffs will make it harder to deal with debtTax changes under Trump's 'big beautiful bill' — in one chart Aspiring lawyers, doctors and dentists are most likely to be impacted by the new loan limits, Turner said. "It's quite a substantial cut in the loans students have access to." Roughly 9.3% of law students, 27.5% of medical school students and 60% of those in dentistry programs graduated with more debt in 2020 than is allowed under the new loan limits, according to calculations by higher education expert Mark Kantrowitz. In fact, the average cost of medical school already exceeds $200,000. At private institutions, the average cost is closer to $300,000. The new student loan caps "will affect many prospective medical and other health professions students and worsen the nation's persistent doctor shortage," David Skorton, president and CEO of the Association of American Medical Colleges, said in a statement. Other experts say the new loan limits may provide a much-needed check on soaring tuition costs, which have jumped significantly in recent decades — outpacing inflation and other household expenses — leaving some students feeling priced out of higher education. Nearly every year, students and their families borrow more to cover the rising cost of attendance, a trend that has led to a ballooning of total outstanding student debt to more than $1.7 trillion. With new limits on how much people can borrow, high-priced schools might have to lower tuition or increase aid, Turner said. The limits on federal student loans are likely to spur students to find other lenders to bridge the gap. "The new loan limits for Parent PLUS loans and graduate/professional school loans will shift some borrowing from federal loans to private student loans," Kantrowitz said. "This will particularly impact low-income students, who are less likely to qualify for private student loans." Unlike federal loans, private student loan lenders rely on credit scores for the borrower — which could be the student, a parent or even another relative or friend as a cosigner — to determine eligibility and interest rate. "Access is by no means guaranteed," Turner said. As it stands, roughly 90% of student loans come from the federal government, and the remaining 10% are private student loans, according to the College Board. Students often turn to private student loans once they have reached the federal student loan limits and still need additional education financing. Already, private student loan volume is up significantly. Private student loan originations during the 2024-25 academic year jumped 8.63% from a year earlier, according to Enterval Analytics, a student loan data analysis firm. Private loans can also come with fewer safety nets and less flexible repayment options compared to federal loans.
Time of India
15-07-2025
- Business
- Time of India
Trump's Big Beautiful Bill reshapes Federal Student Loans. See whole process, new borrowing limits, repayment options
President Donald Trump's administration has passed the Big Beautiful Bill , marking a major shift in federal student loan policies. This new legislation reverses many Biden-era loan forgiveness efforts. It introduces strict borrowing limits, ends deferment options for future borrowers, reduces repayment plan choices and redirects support to workforce training over traditional college paths. Borrowing Limits for Parents and Graduate Students The Big Beautiful Bill introduces strict new limits on how much families and students can borrow from the federal government. For the Parent PLUS program, the cap will be $20,000 per year, with a total maximum of $65,000 per child. These changes take effect July 1, 2026. Previously, parents could borrow up to the full cost of tuition. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like New Container Houses Indonesia (Prices May Surprise You) Container House | Search ads Search Now Undo Graduate students will also see limits under the Grad PLUS program. Beginning in July 2026, general master's degrees will have a cap of $20,500 annually and $100,000 total. For professional degrees like law or medicine, the cap will be $50,000 annually and $200,000 total. These programs also previously allowed borrowing up to full tuition. Also Read: Harry Potter HBO Series: Will original lead actors from films return? See release window, filming, cast, plot, how to watch Live Events Unemployment Deferment Elimination Under current law, borrowers who are unemployed or earning below minimum wage can pause their student loan payments. However, the new bill will eliminate deferment options for federal loans taken out after July 2027. This change will affect new borrowers who may face hardships but still be required to continue repayment. Repayment Options The bill also reduces the number of federal repayment plans from seven to two. Borrowers will now have to choose between a fixed-term repayment plan of 10 to 25 years or an income-based Repayment Assistance Program. The income-based plan requires borrowers to pay between 1% and 10% of their monthly income over a period of up to 30 years. After 30 years, any remaining debt may be forgiven. This extends the forgiveness timeline from 20–25 years to 30 years. All current federal loan holders must choose one of the two new plans by July 1, 2028. Also Read: MLB Home Run Derby 2025: What is it? Here's start time, how to watch on TV and stream online, participants, format, predictions and odds End of SAVE Program and Role of Private Lenders The SAVE program, which paused interest for around 8 million borrowers, will end on August 1. Interest on those loans will resume. As federal options decrease, private lenders like SoFi expect an increase in demand. SoFi CEO Anthony Noto said the company is ready to step in where federal loans are reduced. Private student loans generally come with higher interest rates and stricter credit requirements. Some may require co-signers. This shift may limit access for many families. Focus on Technical and Career-Based Education The White House said the new law is meant to reduce costs for taxpayers and encourage lower tuition from schools. However, critics say it may lead more students to drop out or avoid college altogether. The bill encourages technical education by expanding Pell Grant eligibility to those in workforce training programs. At the same time, it limits Pell Grants for students receiving full scholarships at traditional colleges. Betsy Mayotte, head of the Institute of Student Loan Advisors, told The Wall Street Journal that these changes are historic. 'Congress has never removed benefits from existing borrowers like this,' she said. She also added that families must now look for more affordable education options due to funding limits. FAQs When do the new federal loan caps start under the Big Beautiful Bill? The new loan caps for Parent PLUS and Grad PLUS programs begin on July 1, 2026, and apply only to future loans. What happens to deferment options for unemployed borrowers? Unemployment deferment will be eliminated for federal loans taken out after July 2027 under the Big Beautiful Bill.
New York Post
14-07-2025
- Business
- New York Post
New gov't student-loan restrictions explained: Everything you need to know about the changes
President Trump's Big Beautiful Bill is massively rolling back federal student-loan programs in a nearly complete-180-degree turnaround from the Biden-era debt-forgiveness movement. The newly passed legislation imposes stark caps on how much some students and their families will be able to borrow from the federal government — and also slashes repayment options and flexibility. Experts think the changes — some of which begin Aug. 1 — will force the students to look toward private lenders to fill in the gaps. That will likely mean higher interest rates and equally unforgiving repayment plans for things such as hardship deferment. 3 President Trump's newly passed One Big Beautiful Bill is stripping away federal student loan options. AFP via Getty Images The White House has characterized the approach as a way to protect taxpayers from a climbing national loan bill while also making colleges and universities lower their prices, which have more than doubled in the past three decades. But critics fear the new policies will drive too many students to drop out of school or forgo college altogether in favor of more affordable technical career training. 'Congress has never removed benefits from existing borrowers like this,' said Betsy Mayotte, president of the Institute of Student Loan Advisors, to the Wall Street Journal. 'This is really unprecedented.' Below is everything you need to know about the new rules: Borrowing limits Federal loans taken out by parents for their children under the Parent PLUS program will be capped at $20,000 annually, with a total cap of $65,000 per child. Those changes begin July 1, 2026. That is a massive change from the previous Parent PLUS program, which allowed parents to take out federal loans covering the complete cost of their child's tuition. The changes also affect graduate student Grad PLUS loans, which beginning July 2026 will be limited to $20,500 annually for students applying for them and $100,000 total for those seeking general master's degrees, according to CBS News. For career-path degrees such as medicine or law, annual caps will be $50,000 annually and $200,000 total. As with the old Parent PLUS parameters, Grad PLUS loans previously covered the full cost of a students' tuition. 3 The White House says the loan changes are intended to encourage colleges and universities to lower tuitions. AP Unemployment deferment Borrows can currently pause student-loan payments if they become unemployed or if they earn under minimum wage. But the new laws completely eliminate those deferment options for anyone taking out federal loans after July 2027. Repayment plans There are currently seven different repayment plans for federal loans. Going forward under the One Big Beautiful Bill, there will be just two. The new plans will be either a fixed repayment option spanning between 10 and 25 years or the income-driven Repayment Assistance Program, which allows borrowers to put between 1% and 10% of their monthly income toward loan repayment for up to 30 years. After 30 years, loans can be completely forgiven under the new plan. But the time to land debt forgiveness, three decades, is a substantial increase from the previous federal forgiveness options, which eliminated remaining loans between 20 or 25 years. All current federal borrowers will be affected by this change and have until July 1, 2028, to pick one of the new plans. On a more pressing front, the Biden-era SAVE program, which halted interest for nearly 8 million student borrowers, will end Aug. 1, and interest will resume. 3 Some experts think more people will simply stop going to college and attend trade schools instead. REUTERS Private lenders and higher-education alternatives The Big Beautiful Bill has no sway over private lenders but is likely to send students into their hands. Some of the lenders, such as SoFi, are already gearing up for the move. 'If the government backs away from providing in-school loans, Grad PLUS, etc., we'll absolutely capture that opportunity,' said SoFi CEO Anthony Noto in April. 'We'd be very happy to step in for the government.' Private loans typically have higher interest rates and are also more difficult to obtain — often requiring co-signers with good credit. Some experts told the Journal they wouldn't be surprised to see students drop out or stop following the traditional college path altogether and instead seek alternative paths such as trade school or affordable community colleges. The federal government also appears to be encouraging that through its low-income student Pell Grants. Eligibility for Pell Grants is reduced under the Big Beautiful Bill — with students who receive full scholarships now being barred from receiving the extra grants. But Pell Grant eligibility has been expanded for people in workforce-training programs under Trump's plan, which allows them 'to be used for short-term, high-quality workforce training programs to support Americans who choose a career or technical education path for career advancement,' the White House said. Mayotte of the Institute of Student Loan Advisors told the Journal the changes mean 'the days of education for education's sake are gone. 'Knowing that there's not unlimited funds for repayment, families need to be looking at lower-cost alternatives,' she said.
New York Times
12-07-2025
- Business
- New York Times
Parents and Graduate Students Have New Loan Limits. Who Will Fill the Gap?
The road map for families paying for higher education used to read something like this: Step one, save if you can. Step two, apply for aid and hope the schools will help. Step three, borrow money from the federal government, up to the total cost of attending, if you're sure that is prudent and can't pay the cost out of current income. Now, step three is changing, thanks to President Trump's domestic policy bill. Starting July 1, 2026, the federal government will add new limits to what many people can borrow for college and graduate school. Parents will be able to borrow only $20,000 per year, or $65,000 total per student, from the federal Parent PLUS program. Graduate students will have a $20,500 annual cap on their federal loans and a $100,000 total limit in most instances, not including their undergraduate debt. And professional schools — medical, law and the like — will generally have a cap of $50,000 per year and a $200,000 total limit. High-priced professional schools, particularly those training doctors, veterinarians and dentists, can cost much more than the $200,000 cap. Even at some undergraduate institutions, the average PLUS-loan debt is currently higher than $65,000. That creates an opportunity for so-called private student loan lenders that could add up to billions of dollars. The question is whether they will jump in — and do so fairly, with interest rates and terms that are not outrageous. Want all of The Times? Subscribe.
Yahoo
11-07-2025
- Business
- Yahoo
Dave Ramsey Encourages Parents To Get Honest About What They Can Afford For Their Children's College Education: 'No Student Loans'
Financial radio host Dave Ramsey recently had a caller describe a messy situation. The caller says that her father blames his three daughters for being broke. Shortly after this admission, she shared the details. Ramsey took some time toward the end of the show to encourage parents to set realistic boundaries for their children. College is expensive, and if you can't cover your kid's tuition, you should set the record straight. "No student loans," Ramsey said near the end of the show when explaining what you can say to your kids if you can't afford their college education. The caller's situation is pretty detailed, and Ramsey left no room for doubt on whose fault it is. Don't Miss: Maximize saving for your retirement and cut down on taxes: Named a TIME Best Invention and Backed by 5,000+ Users, Kara's Air-to-Water Pod Cuts Plastic and Costs — The tension mainly stems from a Parent PLUS loan that the father took out to pay for the three children's college educations. The father said that he could cover the loan payments until the children graduated from college, and then they would have to help out. However, that plan went off the rails when the oldest daughter got married shortly after graduating from college, and the parents decided she wouldn't have to make the payments. Then, since one daughter didn't have to make the payments, the other two daughters wouldn't have to make payments either. The caller was the youngest of the three daughters, so by the time she graduated, she didn't have to make any payments toward the Parent PLUS loan. The father constantly guilt-trips the three daughters since he believes this loan has set him back on retirement. The caller believes there is about $40,000 left on the loan. Trending: Invest early in CancerVax's breakthrough tech aiming to disrupt a $231B market. Ramsey wanted to know all of the facts before assigning blame. Basically, if the daughters agreed to pay off the loan and failed to do so, it would be their fault. However, the father let the first daughter off the hook when she started a family, and that resulted in the other two daughters not paying it back. Ramsey proceeded to use a lot of words to basically tell the father to man up instead of dumping his shortcomings on his kids. He also bemoaned the masculinity crisis that has gripped America. "He's playing victim for a trip he signed up for," Ramsey said during the rant. The daughter isn't in a financial position to help her father. She's married and earns $50,000 per year working at two jobs. She also has a mortgage, owes money on her car, and has a third baby on the way. She only has $3,000 in savings. Ramsey said that she does not have a legal or moral obligation to pay the Parent PLUS loan. It's more important for the daughter to address her money needs first before she even considers paying the father for something she's not obligated to said that if he were the father in this scenario, he would have sat his 17-year-old daughters down and told them that they can't afford college. He would have advocated that the daughters go to a community college and then enroll in a state university after completing community college. Ramsey went further, saying that he'd tell the daughters to apply for scholarships in high school and get jobs while they are in college to make ends meet. He would have steered the daughters away from student loans and not taken out the Parent PLUS loan. It's a better alternative than taking out the Parent PLUS loan and blaming your kids for it for the rest of your life. This situation would be different if the father said each of the kids had to repay the loan and didn't back away from that commitment. Ramsey also alluded that there were likely other mistakes the father made along the way that resulted in this financial situation, and that he's likely blaming everyone but himself. Read Next: The average American couple has saved this much money for retirement —? Image: Shutterstock UNLOCKED: 5 NEW TRADES EVERY WEEK. Click now to get top trade ideas daily, plus unlimited access to cutting-edge tools and strategies to gain an edge in the markets. Get the latest stock analysis from Benzinga? APPLE (AAPL): Free Stock Analysis Report TESLA (TSLA): Free Stock Analysis Report This article Dave Ramsey Encourages Parents To Get Honest About What They Can Afford For Their Children's College Education: 'No Student Loans' originally appeared on © 2025 Benzinga does not provide investment advice. All rights reserved. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
