If you are a father, grandfather or even a student, changes to student loans may soon affect your financial plans. “Women’s and Money” in Podcast, a financial expert Suze Oman Recently, the new Federal Law, the Law on One Big Beautiful Bill, will reorganize the work of federal student loans from 2026.
Here’s what Oman says you need to know and how it could affect families like yours.
One of the biggest changes to Crorman conversations includes the Parent and Loan Program. She emphasizes that according to old rules, parents could borrow all the cost of attendance of their child’s college. However, from 1 July. The maximum borrowing will be reduced by $ 20,000 a year and a lifetime of $ 65,000 per student.
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This means that if you are planning to help you pay for an expensive private college costing $ 65,000 a year or more, you will need to rethink your strategy.
And there are more: parents and plus loans taken after this date will no longer be claimed for income -based repayment plans. “I hate it,” said Oman.
Instead, the return will follow a standard plan, which has been recorded over 10-25 years, regardless of income.
Oman advises parents to be careful before taking these loans. “The standard return plan is much more, so parents, think better again before you start the loan,” she said. In addition to income -based variants, monthly installments can be significantly higher.
Oman also interrupted the impact of the new law on students borrowing loans on minors. Previously, subsidized loans did not raise interest when students were studying at school. Now all bachelor’s federal loans will be uncommon from July 1st.
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What does that mean? Interest will accumulate at school and, if not paid, will be included in the loan balance. This will increase the total debt and increase payments as soon as the refund begins.
“You may want to pay interest for that loan every year starting in the first year, otherwise it will be complicated,” advised Oman.
The draft law also replaces all federal student loan plans after July 1. There will be two options:
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Standard refund plan with fixed payments between 10 and 25 years.
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A new income is a refund plan named a support plan, or RAP, which links payments from 1% to 10% of the discretion revenue.
“However, there will be no zero payments,” explained Oman, explaining that some current income repayment plans allow debtors to make zero payments, taking into account financial needs, this option will no longer be available from next year.
In addition, loan exemption under RAP will only occur after 30 years of payments, five years longer than previous plans. In addition, from 2027. 1 July Economic difficulties will no longer be available, although it may be possible to limit a short period of time.
“Why do they want to let you do it?” Asked Oman. “Because student loans, still in most cases, are not distinguished in bankruptcy, they may come after you. They can decorate your salaries. They can even perform your social security check later, and it is composite and adding, so be careful.”
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Borrowing of graduates will also be limited. The graduate plus loan program ends, replaced by non -existent loans with annual boundaries of $ 20,500 for doctoral students and $ 50,000 for professional degrees, as well as a lifetime.
These stricter boundaries may mean that Grad students need to plan or look for alternative sources of financing.
Oman’s advice? Families need to start planning now. Parents should avoid risking savings for pension by borrowing too much to the college. Children should first borrow federal loans, as student loan interest rates are usually lower than parents plus loans.
More than ever, families should study accessible schools, scholarships and merits. New rules increase the college funding, so it is important for debtors to carefully assess their capabilities.
If you are thinking about the college costs in your family, sit down with your financial advisor and start conversations early with your children. One Big Beautiful Bill Act is changing the game and informing is your best defense.
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