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00:00Hi, everybody. I'm Brittany Lewis, a breaking news reporter here at Forbes. Joining me now

00:07is Adam Minsky, a Forbes senior contributor and an attorney who specializes in student loans.

00:13Adam, thanks so much for joining me.

00:16Thanks for having me, Brittany.

00:17On the 4th of July, President Donald Trump signed his nearly 1,000-page domestic policy

00:23legislation, the big, beautiful bill, into law. And he wrote for Forbes that in this package,

00:27we are seeing an unprecedented student loan overhaul. So it doesn't really sound so beautiful

00:33for all of those student loan borrowers out there. So big picture here, what are some of

00:38your takeaways? What exactly does this mean for borrowers?

00:41Yeah, so there's a lot of major changes. You know, we're talking some of the biggest changes

00:46to student loan programs that we've seen in a generation. The bill would limit repayment options,

00:52including for current borrowers. It would repeal several popular affordable income-driven repayment

00:58plans, including the pay-as-you-earn plan and save and limit borrowers to just a few options.

01:04It would also restrict borrowing for new borrowers and new students going forward and provide even

01:10more limited availability of affordable payment plans for new borrowers as well. So big changes,

01:16both for people already in repayment and for students who are going back to school in the coming

01:21years. So let's talk about a little bit, those changes to income-driven repayment plans,

01:27because they're phasing out most of the options by, I believe, July of 2026. And they are replacing

01:33them. One of the options introduced in the legislation is called the repayment assistance

01:37plan. What is that? How is that different to other income-driven repayment plans that people were using

01:44before? Yeah, so I mean, all income-driven plans operate at a basic level in a similar way.

01:50They use a formula based on someone's income, payments are recalculated periodically, and if

01:55you don't pay off your loans in full, you can eventually receive loan forgiveness. But of course,

01:59the differences between all these plans are important. What the bill does is it repeals the

02:05save plan, pay-as-you-earn, and ICR, which stands for income contingent repayment. Current borrowers who

02:12are in repayment now would still be able to access the income-based repayment plan, but that means that

02:17they might have higher payments than what they were paying under those other plans that are getting

02:21repealed. The bill, as you mentioned, also creates a new plan called the repayment assistance plan,

02:27or RAP for short. RAP may have lower payments for some borrowers than IBR, but it may also have higher

02:35payments for other borrowers, particularly those with very low incomes. And RAP also would force people

02:41to be in repayment for longer, up to 30 years, before they could qualify for loan forgiveness. So

02:48even though you might have somewhat lower payments, you would have more years in repayment, which could

02:53drive up the overall cost of that plan. And let's say I'm in college right now, I'm getting an undergrad

02:59degree. What are some of the differences I'm going to see when I took out some loans, maybe last year,

03:05maybe this past year, and then next year? What are some of those biggest differences? Well, so first of

03:11all, any borrower who takes out a new loan after July 1st, 2026 will be limited only to two repayment

03:19plans, either a standard plan, which will have a different length of a term depending on how big

03:24your overall balance is, or RAP. New borrowers who take out new loans starting next year will only have

03:30access to those two plans. There are also some new borrowing limits that are, you know, coming into

03:36place. There are new Stafford loan limits. In addition to that, they are tapping Parent PLUS loans as well,

03:45which is a type of loan issued to parent borrowers to help pay for an undergraduate child's education. They're

03:51tapping Parent PLUS borrowing at $65,000 in total. And just how drastic of a difference that is, because as you

03:59said, it's not even just impacting students, it's impacting the parents as well. So there's a cap on

04:05those Parent PLUS loans. What does that mean for a parent, really? Well, so what it means for families

04:13in general is that there's just fewer options to fund the cost of higher education. With Stafford loans

04:19capped and Parent PLUS loans capped, you know, those limits are probably not high enough to cover the entire

04:25cost of attendance. And so that means that families are going to face some tough choices. If you can't

04:31pay out of pocket, do you turn to riskier, often costier private student loans? Do you go to a

04:36different institution altogether? It's going to put people in a bind, unfortunately.

04:42And so now let's turn to graduate students. What changes are they seeing when it comes to student

04:47loans because of the big, beautiful bill?

04:49Yeah, so some significant changes there. So the bill eliminates entirely a federal program called

04:56the Graduate PLUS program, which is a type of issue to graduate and professional students,

05:01where historically borrowers have been able to borrow up to the total cost of attendance.

05:06Now to kind of offset the elimination of that program, the bill does increase the cap or limit on

05:13Stafford loan borrowing for graduate students. But that cap is unlikely to be able to cover the total

05:20cost of higher education associated with programs like a law degree or a medical degree. And so again,

05:27you're going to be putting people in a position where if they can't pay out of pocket and federal

05:32student loans aren't sufficient to cover the total cost of education, they might have to turn to

05:37costly, risky private student loans or not get that degree at all. And some professional groups have

05:45warned that this could aggravate or worsen existing shortages in certain areas, like doctors working

05:51in rural areas or public defenders or prosecutors as well. So let's talk about that. I mean, point blank,

05:58should people be going to graduate school right now? I mean, how much is this going to burden them?

06:03How much is this going to change their life, this type of student loan overhaul from last year going

06:10to graduate school to now the future? Yeah, it's a great question. And obviously, you know, I think

06:15a lot of people are going to be making very difficult choices. You know, I'm hoping it doesn't drive

06:19people away from getting that advanced degree, in many cases, you know, degrees that we need people

06:25to get to fill doctor shortages and public defender shortages and prosecutor shortages. But the reality is

06:31if people don't think they're going to be able to repay their student loans, they're not going to go get

06:34that degree. They're not going to take out those loans. And so I think, you know, for people who

06:38are considering going, you know, back to school for an advanced degree, we really have to figure out,

06:44you know, how are you going to cover that cost? Are federal student loans going to be sufficient?

06:47If not, is it worth it? Because private student loans don't qualify for programs like income-driven

06:53repayment. They don't qualify for programs like public service loan forgiveness. And so relying on private

06:58student loans can be a really risky thing for people to do. I want to talk about that a little

07:04bit more because when you're thinking about funding your higher education journey, it's really an

07:10investment. You're paying a lot of money in hopes that down the line, you're going to have a career

07:14that can pay that off. Now that investment just got a lot more expensive for a lot of borrowers.

07:21You're saying there are some options now people could turn to more costly, more risky private loans.

07:27Why are they much more riskier than a federal student loan?

07:31Well, private student loans typically have higher interest rates than federal student loans. They

07:36also have fewer repayment plan options. There's typically no such thing as a long-term income-driven

07:42option. Those types of loans also generally don't qualify for loan forgiveness programs, including for

07:47public service loan forgiveness. And there's just less flexibility when things go wrong. If you lose your

07:52job, if you get sick, there's less flexibility to lower the payments or postpone the payments or get

07:58rid of the debt entirely. And that means it's easier to default on those loans. And that can

08:03really wreck someone's life in terms of credit damage and collections. So turning to private

08:09student loans is truly a risky thing for a lot of folks to do. And many people, understandably,

08:15I think just may not want to take that risk. And you said in one of your pieces for Forbes on the

08:20student loan impact in the big, beautiful bill, there is some good news for borrowers when it comes

08:25to public service loan forgiveness program. What's the good news there? So the good news is that the

08:31bill leaves the public service loan forgiveness program. So in other words, it doesn't repeal it,

08:37doesn't really change it. Borrowers can continue to maintain access to that program. However, the Department

08:43of Education separately is pursuing changes to relations in part to implement President Trump's

08:49executive order to limit PSLF to certain organizations. That process is separately moving

08:56forward, even though the bill itself leaves PSLF intact. I know at the beginning of the conversation

09:03here, I said that you said that these changes really are unprecedented when it comes to student

09:09loans. Do you think there are any unintended consequences in the long term when it comes to

09:15these actions against student loans? Are we going to see less people pursue a degree? Are we going to

09:20see less doctors, less lawyers in this country? Because people might second guess, hey, you know, can I

09:27really afford to do that right now when I have less options to pay that loan back? What do you think

09:31that looks like? A and B, does this change the landscape of higher education in this country

09:37forever? I don't know if it'll change it forever. But I think it is going to do a lot of what you just

09:43suggested in terms of driving people away from higher education and the advanced degrees. If people

09:49think that they aren't going to be able to afford, you know, the costs and the risks, you know, I do think

09:57we're going to see fewer doctors. I do think we're going to see fewer professionals as people, you

10:02know, decide, you know, maybe, maybe this, this isn't worth it. You know, I also think we're going

10:07to see, you know, spikes in defaults, you know, for current borrowers, if they're not able to access

10:12affordable payment plans. Many people, including a lot of parent plus borrowers, I think are going to

10:17not be able to afford their payments. Doesn't mean that this is going to be this way forever. We could

10:22see more legislation in the future that makes positive changes. But I think, you know, the big takeaway

10:26here is that this really is the first time in history, as far as I'm aware, that we've seen

10:32such a wholesale, you know, taking away, you know, benefits from people and programs from people

10:39who otherwise would have relied on them. You know, and I think that that is going to impact,

10:44you know, schools, that's going to impact families, that's going to impact these professions,

10:49and frankly, all of us as a result. To that point, then, do you think universities are going to do

10:55anything differently to navigate this time? Do you think they might bring down the cost of tuition?

11:00Do you think they might provide more scholarships? How do you think they'll go about this?

11:07Yeah, that's a great question. The short answer is, you know, we just don't know. I think, you know,

11:12different schools might handle things differently. I think it depends in part on what, you know,

11:17each individual school's underlying, you know, financial situation is. I think that, you know,

11:22we might see, you know, a dip in enrollment, you know, across the board, and I think that that could

11:27hit smaller schools or schools that are on shakier finances a little bit harder. You know,

11:33I think one of the arguments in favor of some of the changes in the bill is that, you know,

11:37maybe it will bring down, you know, the cost of tuition, the cost of higher education. Maybe that's

11:42true, but I think it might also limit the options borrowers have or students have in terms of the

11:47schools that they attempt. Adam, I know that when you're 18, the price tag of college doesn't even

11:54seem real, right? And you're taking out these loans. You think, you know what, I will pay this

11:58back later. I'm going to have that flashy job. I'll be able to pay it back month by month. Then

12:04you graduate college and, you know, that number becomes really real. And then it's a different

12:08story. I'm curious what you would tell people as an attorney who really works with student loans,

12:15right? If they are going to college now, whether it be undergraduate or graduate,

12:20they haven't gone yet. What is your advice to those borrowers now in light of these big,

12:25beautiful bill changes? Well, you know, as an attorney who works with, you know, students and

12:32families after they've graduated, after they've taken on this debt and after they often encounter

12:36problems with it, you know, I can tell you that, you know, no school is going to be worth,

12:43you know, destroying your, your future or your, your financial wellbeing. I think that, you know,

12:49there's no shame in going to a local school, state school, a community college to keep your costs low.

12:56There's, there's no shame in living at home for the first year or two. You know, I, I think that,

13:02you know, at least my generation, you know, was brought up to, you know, you go to the best school

13:06that you can get into. It'll be worth it in the end that I think, you know, younger people are

13:11starting to rethink that mentality and certainly think the passage of that bill will amplify that

13:17even further. And so then on the flip side, let's say you're a borrower right now, you've already

13:22borrowed your student loans and now you're paying them back. What are some of the action items right

13:27now? Because as you and I have discussed some of the student loan overhaul and the big, beautiful bill,

13:32that's not coming down until July of 2026 and beyond. So what should you be doing right now?

13:37Yeah. I mean, I think now is a really good time for people to assess their situation. What repayment

13:43plan are you on right now? Is that plan going to stick around? You know, several plans are being

13:48phased out sometime between 2026 and 2028. Other borrowers may have to take action before that.

13:54For instance, some parent plus borrowers might need to consolidate their loans prior to 20 to July,

14:012026 in order to essentially be grandfathered into any income driven repayment option. So I think,

14:06you know, now is the time to take a look at what plan are you on? Is that plan preserved? Basically,

14:12if it's not income based repayment or standard plan, it might be going away. What does this new

14:19RAP plan look like for you? Is that something worth, you know, possibly considering once it's

14:23officially launched? And, you know, are you done with your school or are you going to be going back

14:29to school or taking out new loans next year or beyond? In which case, you got to be really careful

14:34because doing that could further limit and restrict your options. So I think the good news out of all

14:39of this is that a lot of the changes are not necessarily immediate. Borrowers have time to

14:44kind of look into things. And I would strongly recommend that people do that before they're

14:49put in a situation where they have to make a decision under pressure.

14:53Adam, you certainly gave a lot of good information here for borrowers. I always appreciate your expertise

14:59on this subject. Thank you so much for joining me. And until the next time, Adam Minsky.

15:04Thanks for having me.

How Trump’s Big Beautiful Bill Will Change Student Loans

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