How Trump’s Big Beautiful Bill Will Change Student Loans

Forbes

Attorney Adam Minsky joins Forbes Talks to discus President Donald Trump's "Big Beautiful Bill” and how it will affect borrowing for higher education.   Minsky explains the phasing out of income-driven repayment plans , the imposition of caps on Parent PLUS loans , and the profound impact on graduate student financing. Minsky also explores the potential for increased reliance on riskier private loans and the long-term consequences these changes could have on the economy and future workforce.  Read the full story on Forbes: https://www.forbes.com/sites/adamminsky/2025/07/15/student-loan-borrowers-do-these-5-things-as-the-big-beautiful-bill-takes-effect/  Subscribe to FORBES: https://www.youtube.com/user/Forbes?sub_confirmation=1  0:00 - Introduction: The "Big Beautiful Bill's" Unprecedented Student Loan Overhaul 3:20 - How This Impacts New Undergraduate Borrowers 5:30 - Major Changes for Graduate Students 8:20 - The Risks of Private Student Loans 9:34 - The One Piece of Good News: Public Service Loan Forgiveness (PSLF) 11:47 - Will Universities Change Their Approach? 12:45 - Advice for Prospective Students 14:02 - Action Items for Current Borrowers  Fuel your success with Forbes. Gain unlimited access to premium journalism, including breaking news, groundbreaking in-depth reported stories, daily digests and more. Plus, members get a front-row seat at members-only events with leading thinkers and doers, access to premium video that can help you get ahead, an ad-light experience, early access to select products including NFT drops and more:  https://account.forbes.com/membership/?utm_source=youtube&utm_medium=display&utm_campaign=growth_non-sub_paid_subscribe_ytdescript  Stay Connected Forbes newsletters: https://newsletters.editorial.forbes.com Forbes on Facebook: http://fb.com/forbes Forbes Video on Twitter: http://www.twitter.com/forbes Forbes Video on Instagram: http://instagram.com/forbes More From Forbes:  http://forbes.com  Forbes covers the intersection of entrepreneurship, wealth, technology, business and lifestyle with a focus on people and success.

Transcript

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.

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