August 3, 2025 • 31 mins
For this Suze School, Suze continues explaining elements of the new “Big Beautiful Bill” and what it will mean for your money. Today's focus is on how the new law affects your income taxes and the major cuts to federal student loans.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Suze (00:29):
August 3rd, 2025. Why do I always chuckle when I
say the date? I don't know. But anyway, welcome everybody
to the Women and Money podcast, as well as everybody
smart enough to listen.
Today is Suze School, and we are going to continue
from last week's going over some of the provisions of
(00:51):
the big beautiful bill that I think you should know about.
But Miss Travis, as we speak, is in British Columbia
catching fish, salmon, with her sister and some friends and
having the time of her life, but she will be
back in time
for KT's Ask Anything Show anyway, that's what she calls it,
(01:17):
by the way. It's the KT asking show when she
talks to me about it. Get out your Suze notebooks
because I am going to talk about three different aspects
of the new big beautiful bill, all right, just so
you know, the first one is all about how there
(01:38):
is a new law
that temporarily, and I want you to underline the word
temporarily increases the state and local tax deduction. Now state
and local tax deduction
it's abbreviated by the initials SALT state and local tax.
(02:01):
All right, so when you hear me say SALT, you'll
know what I'm talking about. So those of you who
live in states with an income tax, you may be
in line for some really serious tax relief.
Now the big new federal tax bill that became law
in early July increases the federal deduction for SALT.
(02:25):
And that will help you on your taxes.
Do you remember how ever since the 2017 tax bill
when that was passed, there has been a $10,000 limit
on SALT that can be deducted from federal taxes. Do
you remember that?
The new law, however, increases the potential deduction to $40,000.
(02:51):
Now this is per household, everybody, not per person, per household.
So if you are a single tax filer, you are
eligible for a $40,000 deduction.
If you are married couples filing a joint tax return,
you are eligible for a $40,000 deduction, not $80,000. And
(03:17):
if you happen to be married finally and separately, the
most you can deduct is $20,000. Now here are the
key rules for claiming the SALT deduction.
The maximum $40,000 SALT deduction is allowed for single filers
(03:37):
with a modified gross income below $250,000 and married couples,
that figure is 500,000.
If your income is above those limits, then your maximum
SALT deduction is reduced by 30% of the amount, your
(03:59):
income exceeds the limit.
But your SALT deduction, everybody, will never be lower than $10,000.
So let me just give you an example. If you
are single and you have $300,000 in income, you are
obviously $50,000 over the limit.
You would multiply that $50,000 excess by 30% for a
(04:24):
reduction of $15,000. Thus your maximum salt deduction would be
$25,000 not $40,000 if you are married finally and separately.
Remember I told you the most you can deduct is
$20,000 and if your income, your AGI exceeds $250,000 the
(04:50):
deduction phases down to like $5000. Now, do you remember
when I started this, I said pay attention to the
word temporary.
The $40,000 SALT deduction is temporary and it can be
claimed for 2025, 2026, 2027, 2028, and 2029. Under the
(05:18):
new law, the SALT deduction is going to revert to
the $10,000 limit for all households in 2030.
So from 2026 through 2029, the $40,000 SALT deduction and
the modified adjusted gross income limits will both increase 1%
(05:44):
a year. So,
if you have a hefty state income tax bill and
property tax bill, let's just say you do, and your
household income is near the deduction limits, it may pay
to do some tax planning to see if you can
push your income just below the limits so you can
(06:08):
claim the highest possible SALT deduction.
So I want you all to sit down with the
tax pro and to consider ways to reduce your income.
Example, I know, I know modifying Roth conversions, you may
not want to do Roth conversions during those years, or
(06:29):
reducing taxable withdrawals from your retirement accounts. That can all
be a very, very smart move. All right, so just
know there are rules you need to know. The next one,
and this one upsets me a little bit, I have
to tell you.
Is the law that makes big changes to federal college loans.
(06:53):
You ready, everybody?
Any student or family planning to take out federal loans
to pay for college, you need to be aware that
there are huge changes to how much can be borrowed
and how repayment will work.
(07:14):
The big federal tax bill signed into law in July
is going to limit parents how much you can borrow
for a child's undergrad degree and how the repayment plans
are going to change. So bottom line is that paying
for college just got more complicated. So are you ready?
(07:38):
Let's start with a list of the new rules, and
then I'll share my advice on how to plan for
college given these new rules undergraduate borrowing beginning July 1st, 2026.
Write this down, everybody. The Parent Plus loan program limits
(07:59):
parental borrowing to $20,000 per year,
per student and a lifetime total per student of $65,000.
Under the old rules you could borrow up to the
full cost of their attendance for your kids' parents, not
(08:21):
any more. So what does that mean? That means if
you're sending your kids and they want to go to
these schools that are $65,000 a year.
Good luck. How are you going to pay for them?
You better start thinking about that right now. Parent Plus
loans taken out after July 1st, 2026. I hate this one,
(08:47):
will no longer be eligible for an income-driven repayment plan.
Parent Plus loans will only be eligible everybody for the
standard repayment plan which sets repayments between 10 and 25
years depending on the balance. So you used to be
(09:10):
able to pay off these loans based on your income.
A standard repayment plan is a whole lot more so parents,
you better think twice before you just take out a loan.
You think you're going to be able to repay it.
You better know the new rules, how much you can
borrow and what it is actually going to cost you,
(09:33):
and you best sit down with your children who want
help from you.
And really go over can you afford it or not
again beginning July 1st, 2026 students, students, listen to me
borrowing for undergrad will have their interest payments during school.
(09:57):
Added to their loan balance, do you remember when you
used to be able to get subsidized loans? Subsidized meaning
that while you were in school, interest didn't accrue to
the money you borrowed, not any more. Now what you're
going to see is that.
The new law makes all undergrad loans unsubsidized, so in
(10:22):
plain English that means that even those students do not
have to make payments on their loans while they are
in school.
The interest on the loan is charged, and if unpaid
while in school, the interest charged is added to the
loan balance. That will mean bigger payments once the student
(10:44):
leaves school and repayment starts. So you might want to
think about it, everybody, that if you're going to take
out a student loan.
The student is going to take it out. You might
want to pay the interest on that loan yearly starting
the very first year, because otherwise it's going to compound.
(11:07):
The annual borrowing limits for federal undergraduate loans is unchanged. Oh, well,
we have one thing unchanged. They start at 5,500 for
the first year, $6,500 for year two, $7,500 for year
three and beyond. Now there is a lifetime limit, listen
(11:30):
to me, of $31,000 for students who are claimed as
a dependent
on a parent's tax return, so limits for independent students
are higher just so you know, but I want you
to think about that. If the Parent Plus loans, you
(11:50):
are limited to what you can borrow.
You now have to pay it back under an unfavorable term.
Interest on these student loans start accumulating right away.
You have to really be careful about how much you
are borrowing now repayment of loans taken out, everybody, after
(12:13):
July 1st, 2026. They will be eligible for two basic
repayment plans, a standard plan that will require the loan
be paid off in 10 to 25 years depending on
the loan size. But however,
there will be just one income driven plan, and it's
(12:35):
going to be called the repayment assistant plan or RAP
that will tie payments to income. Payments will range from 1%
to 10% of your discretionary income.
And there will be no zero payment options. So nowadays
(12:57):
it's possible, depending on your income that you don't have
to pay anything on it and you're not in default
or anything. Under rap, a loan will be forgiven, however,
after 30 years.
Which is five years longer than the old plans. So
what does that mean? For borrowers on an IDR plan
(13:18):
taken out before July 26th, you will need to switch
to one of these two new plans after July 28th.
So don't think if you took out a loan before
this goes into effect that you missed it, no, you didn't.
So beginning July 1, 2027, not 2026.
(13:43):
Deferment of a federal loan due to economic hardship is ended.
Did you just hear me?
Is this a bill that you love that passed?
Are you all excited about it? Are you starting to
understand how this bill works against you if you are
(14:06):
out there and you need to borrow money,
to send your kids to school? Are you understanding this?
So again, I'm going to say this one more time.
Beginning July 1st, 2027, not 2026, deferment of a federal
(14:27):
loan due to economic hardship is ended. There will be
no way to completely defer
principal and interest payments due to hardship. No, you can
still defer payments while in school, but this new rule
applies to once you have left school, you are in
(14:49):
the repayment phase, and there is nothing you can do
to stop that repayment phase. Again, beginning July 1st, 2027,
you will still be able to apply for repayment forbearance.
Which means you can't afford to pay it back, but
if granted, it will only be allowed for 9 months
(15:12):
within any two-year period. Remember, with forbearance you do not
owe any payments, but the interest on the loan continues
to accrue and is added to your loan balance. Why
do they want to be able to allow you to
do that?
Because student loans still in most cases are not dischargeable
(15:34):
in bankruptcy, they can come after you. They can garnish
your wages. They can even go after your Social Security
check later on in life, and it's compounding and compounding,
so you better be careful. Let's talk about graduate borrowing
because this was for undergraduate beginning July 1st, 2026, so
(15:57):
about one year from now.
The graduate plus program ready, everybody is abolished.
Under this program, graduate students have been able to borrow,
you all know this, up to the full cost of attendance.
(16:17):
There are now limits on how much a graduate student
can borrow.
Beginning July 1, 2026, the only remaining program for federal
graduate school borrowing will be unsubsidized loans for graduate school.
(16:39):
The annual limit for master's programs and PhD programs will
be $20,500 a year.
And there will be a lifetime limit of $100,000. So
for professional degrees like doctors, lawyers, federal borrowing will be
(17:02):
limited to $50,000 a year and a $200,000 total.
Where are you all going to get the money to
attend college? Doesn't it kind of feel like we have
a thing going on about higher education with everything that's
going on with many of the universities? I don't know
(17:24):
what you think, but I sure do. So the new
grad school lifetime limits are in addition to any federal
undergraduate borrowing. Now my advice for undergrad debt.
I have long advised you, have I not, parents, you
are not to put their retirement at risk by borrowing
(17:47):
or overborrowing for their children's college costs. You know how
I feel about that, but I also know that has
been a challenge for many families.
These new limits provide some guard rails that can help
nudge more of you to carefully calibrate college borrowing for
(18:08):
your kids, and the same rule applies. Children should always
borrow first before you, parents. The interest rate that they
pay on federal loans is lower than the cost of
parent plus loans.
So they need to do it first before you got that?
(18:30):
More importantly,
do I sound sad to you cause this all makes
me so sad I can't even stand it. The new
borrowing limits should really spark your family to double down
on looking for the best affordable school. So the dream
school for your children and for you is the one.
(18:55):
That is so eager for your child to attend that
it will offer a great merit ad package that reduces
or even eliminates everybody the need for your kid to borrow,
let alone you.
Do you hear me? So you need to start talking
to your kids about this in grammar school in early
(19:16):
years of high school to say, listen, if you want
to go to college, I need you to really have
all the colleges want you to attend. So you have
got to get straight A's. Maybe you should excel in
a sport, but you have got to do everything and
anything you can do.
(19:38):
As for the change in repayment plans, well.
I have to tell you, the big takeaway is that
students and parents really need to think hard about what
they will owe after school is over. Please remember that
the repayment plans now are less generous, forbearance is limited.
(19:59):
You need to be prepared for making on-time payments once
the student leaves school.
And the worst thing you can do is borrow now
without understanding your future repayment commitment. Do you understand me?
Notice I said that the repayment happens as soon as
(20:20):
the student leaves schools. Loans must be repaid regardless of
what the student graduates or not.
So if you have a kid that goes to school
for two years, doesn't graduate, and now you have all
of these loans, you have to start making payments right away.
(20:41):
So that's just another reason to have a serious family
talk long before freshman year about attending college and paying
for college. The worst move is to force a child
into an education they aren't eager for.
And that they and you may still end up paying
for even if they don't complete a degree. I still
(21:06):
don't see anything wrong with community college, just saying. My
advice for grad school is this. All right. The majority
of recent borrowers for a master's degree borrowed less than $100,000.
All right, so I'm not too concerned about this new limit.
But you should be able to fulfill any borrowing needs
(21:29):
by sticking with federal loans. Professional degrees are another matter.
The cost of obtaining a medical degree or a law
degree absolutely exceeds in most cases, $200,000. So under the
new rules, anyone who needs to borrow
(21:51):
more for their graduate degree will need to look for
a private student loan, and that is a big stand
in your truth moment. Do you hear me?
You need to slow down and carefully, and I mean
very carefully, understand the risks and retirements of a private
(22:12):
student loan. Got that for starters, private student loans work
a bit like a car loan, you know what I
think about car loans, but anyway, you need to qualify.
And that means a credit score check, so you better
make sure that your FICO score, your credit score is
(22:32):
as high as it possibly can be, because even if
you are approved, the interest rate you are offered.
On your private loan can be fixed or a variable
rate which will be set by your credit profile. So
another option is for someone else, typically a parent with income,
(22:52):
to cosign.
Are you kidding me?
For the parents right now listening to me, please do
not tell me and more importantly yourself, that cosigning is
no big deal given it is for such a worthy endeavor.
What if your child doesn't finish the degree or if
(23:14):
the child's income is not sufficient to cover the hefty repayments? You,
my dear parents, will be on the hook to make
payments if that in any way interferes with your retirement security.
You get a hard denied from me. I'm serious. It's
also important to understand that private loans do not offer
(23:37):
the same repayment and protection plans as federal loans. That
doesn't mean that your child can become a doctor or
a lawyer. It does mean that they should look for
programs that will subsidize the cost. I'm going to repeat this.
The best school, whether we are talking about someone pursuing
an undergrad, master's, or professional degree is the program that
(24:03):
offers the best financial aid. Ideally, you would never need
to take out private loans, and in a minimum, if
you need private loans, it should be for the smallest
amount possible.
I'm sure there are millions of you out there that are saying, but Suze, what about me? I already have student loans. How much of this applies to me? The first thing I wanna say to all of you is stop going on all these boards. And freaking out because you're reading about, oh my God, my payments are immediately gonna go up 600%. I don't know how to do it. It's crazy. So I've always said the only way to conquer fear is through action. When you take action, however, you have to have the correct information so you know how to act. The first thing you better all get. Is that anybody who has an existing, subsidized or non-subsidized staff for loan that's gonna be dispersed before July 1st, 2026, you need to know nothing has changed for you all the rules and repayment terms that you're under. You're still under them, but only until July 1st, 2028. So you have a lot of time to figure this out or to put more money towards your student loan, but you have time. So what happens on July 1st, 2028? Well, that's when you gotta switch to the new available options. And if you don't switch yourself, oh, you will be auto-enrolled in the standard repayment plan. Remember, those are fixed monthly payments or the new repayment assistant plan known as Rap, which is income driven. Those will be your only two choices now. Existing Parent Plus borrowers, you can still consolidate and access some income driven repayment plans or the IDR. Options. But after July 1st, 2026, new Parent Plus loans must be repaid under this standard repayment plan and will not be eligible for wrap or IDR. So to maintain flexibility, everybody. If you have a current Parent Plus loan, you should think about consolidating and enrolling in an IDR plan before July 1st, 2026. Got that. After that cutoff date, you lose the ability to use any IDR option for any new Parent plus loan. Now, for those of you under. Public student loan forgiveness. Oh, it still exists, but with some changes. Hopefully all of you are up to date. I've tried educating you on this, that the Save program that maybe you've been using to make repayments, it doesn't exist anymore and all of you had to change by August 1st, a few days ago. You had to change it to something else. 'cause if you're still under Save. Those payments are not going to count towards your repayments. All right? So what must you do? What is the something else you must do? You should use now an IBR method and then consider switching to wrap when it launches. Just that simple. But remember, by July 1st, 2028. Oh, you will be enrolled in Rap or a qualifying plan, and if you don't do it yourself, you're going to be auto-enrolled. The one thing I want you to watch carefully if you're in the PSLF plans is that while in 2025. You will have forgiveness. Let's say you've paid it off and you're forgiven, you are not gonna pay taxes on that. Starting in 2026, unless something changes, that forgiveness most likely is going to be considered taxable. So those are the main things you need to know If you have a current student loan. Now I had one
more law that I wanted to talk to you about,
(24:25):
which is about the law that kills one's car buying
tax credit and creates a new one, but I have
to tell you the one about student loans dined me in.
That's about all I can take about this bill right now.
So that concludes this podcast, but listen to me.
On August 10th I'm gonna continue with the other things
(24:46):
about the BBB that you should know, and there's some
really great things, by the way, especially if you work
for tips or you do overtime or you have a
car loan or whatever it may be. Don't miss it
because again it's everything you need to know.
So with that we'll all look forward to Miss Travis
(25:09):
joining us again. I've missed her so much. I can't
even stand it. But anyway, there's only one thing that
I want you to remember when it comes to your money.
You have got to understand how this big beautiful bill
really affects you.
When does it allow you to make more out of
the money that you make, and when does it allow
(25:31):
you to make less out of the money that you
already make? You better understand it, and I hope that
this podcast today did a whole lot, especially on student loans,
to explaining that to you. So until Thursday, there's only
one thing that I want you to remember when it
comes to your money, and it is this.
(25:53):
You have to know everything so that you really can
make your money make more money. All right, everybody stay safe,
stay healthy, and once again know how much we love you.
Bye bye.
August 3rd, 2025. Why do I always chuckle when I
say the date? I don't know. But anyway, welcome everybody
to the Women and Money podcast, as well as everybody
smart enough to listen.
Today is Suze School, and we are going to continue
from last week's going over some of the provisions of
(00:51):
the big beautiful bill that I think you should know about.
But Miss Travis, as we speak, is in British Columbia
catching fish, salmon, with her sister and some friends and
having the time of her life, but she will be
back in time
for KT's Ask Anything Show anyway, that's what she calls it,
(01:17):
by the way. It's the KT asking show when she
talks to me about it. Get out your Suze notebooks
because I am going to talk about three different aspects
of the new big beautiful bill, all right, just so
you know, the first one is all about how there
(01:38):
is a new law
that temporarily, and I want you to underline the word
temporarily increases the state and local tax deduction. Now state
and local tax deduction
it's abbreviated by the initials SALT state and local tax.
(02:01):
All right, so when you hear me say SALT, you'll
know what I'm talking about. So those of you who
live in states with an income tax, you may be
in line for some really serious tax relief.
Now the big new federal tax bill that became law
in early July increases the federal deduction for SALT.
(02:25):
And that will help you on your taxes.
Do you remember how ever since the 2017 tax bill
when that was passed, there has been a $10,000 limit
on SALT that can be deducted from federal taxes. Do
you remember that?
The new law, however, increases the potential deduction to $40,000.
(02:51):
Now this is per household, everybody, not per person, per household.
So if you are a single tax filer, you are
eligible for a $40,000 deduction.
If you are married couples filing a joint tax return,
you are eligible for a $40,000 deduction, not $80,000. And
(03:17):
if you happen to be married finally and separately, the
most you can deduct is $20,000. Now here are the
key rules for claiming the SALT deduction.
The maximum $40,000 SALT deduction is allowed for single filers
(03:37):
with a modified gross income below $250,000 and married couples,
that figure is 500,000.
If your income is above those limits, then your maximum
SALT deduction is reduced by 30% of the amount, your
(03:59):
income exceeds the limit.
But your SALT deduction, everybody, will never be lower than $10,000.
So let me just give you an example. If you
are single and you have $300,000 in income, you are
obviously $50,000 over the limit.
You would multiply that $50,000 excess by 30% for a
(04:24):
reduction of $15,000. Thus your maximum salt deduction would be
$25,000 not $40,000 if you are married finally and separately.
Remember I told you the most you can deduct is
$20,000 and if your income, your AGI exceeds $250,000 the
(04:50):
deduction phases down to like $5000. Now, do you remember
when I started this, I said pay attention to the
word temporary.
The $40,000 SALT deduction is temporary and it can be
claimed for 2025, 2026, 2027, 2028, and 2029. Under the
(05:18):
new law, the SALT deduction is going to revert to
the $10,000 limit for all households in 2030.
So from 2026 through 2029, the $40,000 SALT deduction and
the modified adjusted gross income limits will both increase 1%
(05:44):
a year. So,
if you have a hefty state income tax bill and
property tax bill, let's just say you do, and your
household income is near the deduction limits, it may pay
to do some tax planning to see if you can
push your income just below the limits so you can
(06:08):
claim the highest possible SALT deduction.
So I want you all to sit down with the
tax pro and to consider ways to reduce your income.
Example, I know, I know modifying Roth conversions, you may
not want to do Roth conversions during those years, or
(06:29):
reducing taxable withdrawals from your retirement accounts. That can all
be a very, very smart move. All right, so just
know there are rules you need to know. The next one,
and this one upsets me a little bit, I have
to tell you.
Is the law that makes big changes to federal college loans.
(06:53):
You ready, everybody?
Any student or family planning to take out federal loans
to pay for college, you need to be aware that
there are huge changes to how much can be borrowed
and how repayment will work.
(07:14):
The big federal tax bill signed into law in July
is going to limit parents how much you can borrow
for a child's undergrad degree and how the repayment plans
are going to change. So bottom line is that paying
for college just got more complicated. So are you ready?
(07:38):
Let's start with a list of the new rules, and
then I'll share my advice on how to plan for
college given these new rules undergraduate borrowing beginning July 1st, 2026.
Write this down, everybody. The Parent Plus loan program limits
(07:59):
parental borrowing to $20,000 per year,
per student and a lifetime total per student of $65,000.
Under the old rules you could borrow up to the
full cost of their attendance for your kids' parents, not
(08:21):
any more. So what does that mean? That means if
you're sending your kids and they want to go to
these schools that are $65,000 a year.
Good luck. How are you going to pay for them?
You better start thinking about that right now. Parent Plus
loans taken out after July 1st, 2026. I hate this one,
(08:47):
will no longer be eligible for an income-driven repayment plan.
Parent Plus loans will only be eligible everybody for the
standard repayment plan which sets repayments between 10 and 25
years depending on the balance. So you used to be
(09:10):
able to pay off these loans based on your income.
A standard repayment plan is a whole lot more so parents,
you better think twice before you just take out a loan.
You think you're going to be able to repay it.
You better know the new rules, how much you can
borrow and what it is actually going to cost you,
(09:33):
and you best sit down with your children who want
help from you.
And really go over can you afford it or not
again beginning July 1st, 2026 students, students, listen to me
borrowing for undergrad will have their interest payments during school.
(09:57):
Added to their loan balance, do you remember when you
used to be able to get subsidized loans? Subsidized meaning
that while you were in school, interest didn't accrue to
the money you borrowed, not any more. Now what you're
going to see is that.
The new law makes all undergrad loans unsubsidized, so in
(10:22):
plain English that means that even those students do not
have to make payments on their loans while they are
in school.
The interest on the loan is charged, and if unpaid
while in school, the interest charged is added to the
loan balance. That will mean bigger payments once the student
(10:44):
leaves school and repayment starts. So you might want to
think about it, everybody, that if you're going to take
out a student loan.
The student is going to take it out. You might
want to pay the interest on that loan yearly starting
the very first year, because otherwise it's going to compound.
(11:07):
The annual borrowing limits for federal undergraduate loans is unchanged. Oh, well,
we have one thing unchanged. They start at 5,500 for
the first year, $6,500 for year two, $7,500 for year
three and beyond. Now there is a lifetime limit, listen
(11:30):
to me, of $31,000 for students who are claimed as
a dependent
on a parent's tax return, so limits for independent students
are higher just so you know, but I want you
to think about that. If the Parent Plus loans, you
(11:50):
are limited to what you can borrow.
You now have to pay it back under an unfavorable term.
Interest on these student loans start accumulating right away.
You have to really be careful about how much you
are borrowing now repayment of loans taken out, everybody, after
(12:13):
July 1st, 2026. They will be eligible for two basic
repayment plans, a standard plan that will require the loan
be paid off in 10 to 25 years depending on
the loan size. But however,
there will be just one income driven plan, and it's
(12:35):
going to be called the repayment assistant plan or RAP
that will tie payments to income. Payments will range from 1%
to 10% of your discretionary income.
And there will be no zero payment options. So nowadays
(12:57):
it's possible, depending on your income that you don't have
to pay anything on it and you're not in default
or anything. Under rap, a loan will be forgiven, however,
after 30 years.
Which is five years longer than the old plans. So
what does that mean? For borrowers on an IDR plan
(13:18):
taken out before July 26th, you will need to switch
to one of these two new plans after July 28th.
So don't think if you took out a loan before
this goes into effect that you missed it, no, you didn't.
So beginning July 1, 2027, not 2026.
(13:43):
Deferment of a federal loan due to economic hardship is ended.
Did you just hear me?
Is this a bill that you love that passed?
Are you all excited about it? Are you starting to
understand how this bill works against you if you are
(14:06):
out there and you need to borrow money,
to send your kids to school? Are you understanding this?
So again, I'm going to say this one more time.
Beginning July 1st, 2027, not 2026, deferment of a federal
(14:27):
loan due to economic hardship is ended. There will be
no way to completely defer
principal and interest payments due to hardship. No, you can
still defer payments while in school, but this new rule
applies to once you have left school, you are in
(14:49):
the repayment phase, and there is nothing you can do
to stop that repayment phase. Again, beginning July 1st, 2027,
you will still be able to apply for repayment forbearance.
Which means you can't afford to pay it back, but
if granted, it will only be allowed for 9 months
(15:12):
within any two-year period. Remember, with forbearance you do not
owe any payments, but the interest on the loan continues
to accrue and is added to your loan balance. Why
do they want to be able to allow you to
do that?
Because student loans still in most cases are not dischargeable
(15:34):
in bankruptcy, they can come after you. They can garnish
your wages. They can even go after your Social Security
check later on in life, and it's compounding and compounding,
so you better be careful. Let's talk about graduate borrowing
because this was for undergraduate beginning July 1st, 2026, so
(15:57):
about one year from now.
The graduate plus program ready, everybody is abolished.
Under this program, graduate students have been able to borrow,
you all know this, up to the full cost of attendance.
(16:17):
There are now limits on how much a graduate student
can borrow.
Beginning July 1, 2026, the only remaining program for federal
graduate school borrowing will be unsubsidized loans for graduate school.
(16:39):
The annual limit for master's programs and PhD programs will
be $20,500 a year.
And there will be a lifetime limit of $100,000. So
for professional degrees like doctors, lawyers, federal borrowing will be
(17:02):
limited to $50,000 a year and a $200,000 total.
Where are you all going to get the money to
attend college? Doesn't it kind of feel like we have
a thing going on about higher education with everything that's
going on with many of the universities? I don't know
(17:24):
what you think, but I sure do. So the new
grad school lifetime limits are in addition to any federal
undergraduate borrowing. Now my advice for undergrad debt.
I have long advised you, have I not, parents, you
are not to put their retirement at risk by borrowing
(17:47):
or overborrowing for their children's college costs. You know how
I feel about that, but I also know that has
been a challenge for many families.
These new limits provide some guard rails that can help
nudge more of you to carefully calibrate college borrowing for
(18:08):
your kids, and the same rule applies. Children should always
borrow first before you, parents. The interest rate that they
pay on federal loans is lower than the cost of
parent plus loans.
So they need to do it first before you got that?
(18:30):
More importantly,
do I sound sad to you cause this all makes
me so sad I can't even stand it. The new
borrowing limits should really spark your family to double down
on looking for the best affordable school. So the dream
school for your children and for you is the one.
(18:55):
That is so eager for your child to attend that
it will offer a great merit ad package that reduces
or even eliminates everybody the need for your kid to borrow,
let alone you.
Do you hear me? So you need to start talking
to your kids about this in grammar school in early
(19:16):
years of high school to say, listen, if you want
to go to college, I need you to really have
all the colleges want you to attend. So you have
got to get straight A's. Maybe you should excel in
a sport, but you have got to do everything and
anything you can do.
(19:38):
As for the change in repayment plans, well.
I have to tell you, the big takeaway is that
students and parents really need to think hard about what
they will owe after school is over. Please remember that
the repayment plans now are less generous, forbearance is limited.
(19:59):
You need to be prepared for making on-time payments once
the student leaves school.
And the worst thing you can do is borrow now
without understanding your future repayment commitment. Do you understand me?
Notice I said that the repayment happens as soon as
(20:20):
the student leaves schools. Loans must be repaid regardless of
what the student graduates or not.
So if you have a kid that goes to school
for two years, doesn't graduate, and now you have all
of these loans, you have to start making payments right away.
(20:41):
So that's just another reason to have a serious family
talk long before freshman year about attending college and paying
for college. The worst move is to force a child
into an education they aren't eager for.
And that they and you may still end up paying
for even if they don't complete a degree. I still
(21:06):
don't see anything wrong with community college, just saying. My
advice for grad school is this. All right. The majority
of recent borrowers for a master's degree borrowed less than $100,000.
All right, so I'm not too concerned about this new limit.
But you should be able to fulfill any borrowing needs
(21:29):
by sticking with federal loans. Professional degrees are another matter.
The cost of obtaining a medical degree or a law
degree absolutely exceeds in most cases, $200,000. So under the
new rules, anyone who needs to borrow
(21:51):
more for their graduate degree will need to look for
a private student loan, and that is a big stand
in your truth moment. Do you hear me?
You need to slow down and carefully, and I mean
very carefully, understand the risks and retirements of a private
(22:12):
student loan. Got that for starters, private student loans work
a bit like a car loan, you know what I
think about car loans, but anyway, you need to qualify.
And that means a credit score check, so you better
make sure that your FICO score, your credit score is
(22:32):
as high as it possibly can be, because even if
you are approved, the interest rate you are offered.
On your private loan can be fixed or a variable
rate which will be set by your credit profile. So
another option is for someone else, typically a parent with income,
(22:52):
to cosign.
Are you kidding me?
For the parents right now listening to me, please do
not tell me and more importantly yourself, that cosigning is
no big deal given it is for such a worthy endeavor.
What if your child doesn't finish the degree or if
(23:14):
the child's income is not sufficient to cover the hefty repayments? You,
my dear parents, will be on the hook to make
payments if that in any way interferes with your retirement security.
You get a hard denied from me. I'm serious. It's
also important to understand that private loans do not offer
(23:37):
the same repayment and protection plans as federal loans. That
doesn't mean that your child can become a doctor or
a lawyer. It does mean that they should look for
programs that will subsidize the cost. I'm going to repeat this.
The best school, whether we are talking about someone pursuing
an undergrad, master's, or professional degree is the program that
(24:03):
offers the best financial aid. Ideally, you would never need
to take out private loans, and in a minimum, if
you need private loans, it should be for the smallest
amount possible.
I'm sure there are millions of you out there that are saying, but Suze, what about me? I already have student loans. How much of this applies to me? The first thing I wanna say to all of you is stop going on all these boards. And freaking out because you're reading about, oh my God, my payments are immediately gonna go up 600%. I don't know how to do it. It's crazy. So I've always said the only way to conquer fear is through action. When you take action, however, you have to have the correct information so you know how to act. The first thing you better all get. Is that anybody who has an existing, subsidized or non-subsidized staff for loan that's gonna be dispersed before July 1st, 2026, you need to know nothing has changed for you all the rules and repayment terms that you're under. You're still under them, but only until July 1st, 2028. So you have a lot of time to figure this out or to put more money towards your student loan, but you have time. So what happens on July 1st, 2028? Well, that's when you gotta switch to the new available options. And if you don't switch yourself, oh, you will be auto-enrolled in the standard repayment plan. Remember, those are fixed monthly payments or the new repayment assistant plan known as Rap, which is income driven. Those will be your only two choices now. Existing Parent Plus borrowers, you can still consolidate and access some income driven repayment plans or the IDR. Options. But after July 1st, 2026, new Parent Plus loans must be repaid under this standard repayment plan and will not be eligible for wrap or IDR. So to maintain flexibility, everybody. If you have a current Parent Plus loan, you should think about consolidating and enrolling in an IDR plan before July 1st, 2026. Got that. After that cutoff date, you lose the ability to use any IDR option for any new Parent plus loan. Now, for those of you under. Public student loan forgiveness. Oh, it still exists, but with some changes. Hopefully all of you are up to date. I've tried educating you on this, that the Save program that maybe you've been using to make repayments, it doesn't exist anymore and all of you had to change by August 1st, a few days ago. You had to change it to something else. 'cause if you're still under Save. Those payments are not going to count towards your repayments. All right? So what must you do? What is the something else you must do? You should use now an IBR method and then consider switching to wrap when it launches. Just that simple. But remember, by July 1st, 2028. Oh, you will be enrolled in Rap or a qualifying plan, and if you don't do it yourself, you're going to be auto-enrolled. The one thing I want you to watch carefully if you're in the PSLF plans is that while in 2025. You will have forgiveness. Let's say you've paid it off and you're forgiven, you are not gonna pay taxes on that. Starting in 2026, unless something changes, that forgiveness most likely is going to be considered taxable. So those are the main things you need to know If you have a current student loan. Now I had one
more law that I wanted to talk to you about,
(24:25):
which is about the law that kills one's car buying
tax credit and creates a new one, but I have
to tell you the one about student loans dined me in.
That's about all I can take about this bill right now.
So that concludes this podcast, but listen to me.
On August 10th I'm gonna continue with the other things
(24:46):
about the BBB that you should know, and there's some
really great things, by the way, especially if you work
for tips or you do overtime or you have a
car loan or whatever it may be. Don't miss it
because again it's everything you need to know.
So with that we'll all look forward to Miss Travis
(25:09):
joining us again. I've missed her so much. I can't
even stand it. But anyway, there's only one thing that
I want you to remember when it comes to your money.
You have got to understand how this big beautiful bill
really affects you.
When does it allow you to make more out of
the money that you make, and when does it allow
(25:31):
you to make less out of the money that you
already make? You better understand it, and I hope that
this podcast today did a whole lot, especially on student loans,
to explaining that to you. So until Thursday, there's only
one thing that I want you to remember when it
comes to your money, and it is this.
(25:53):
You have to know everything so that you really can
make your money make more money. All right, everybody stay safe,
stay healthy, and once again know how much we love you.
Bye bye.
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