Repayment Plans and Future Forgiveness

It's considered this, where every day we go deep on one big news story . Today, the end of an era for student loans. On july first , big changes are coming from more than forty three million student borrowers in the US as part of the Republicans One big beautiful bill act . I was paying under the SAVE program before and it was affordable enough for me to handle. That's a listener who called into the NPR program one A last year. At this point, I don't know how much they're going to ask, and I don't know how they're calculating that, and that's a really scary thing. In a matter of weeks, President Biden's save repayment plan will end . There will also be changes to student loan forgiveness and new limits on the amount of money the federal government will lend. We got to get out of it. We tried to do it in the big beautiful bill . I was able to get half of the student loans cut for master's degrees. I couldn't get any more than that cut. Republican Senator Tommy Tubberville of Alabama speaking to Fox Business in April. It'll save us millions of dollars, but we could cut it all out all of it out at one time and say go back to your bank. If you want a student loan, go back to your bank. Consider this, major changes are coming to student loans. How will they affect borrowers across the US From NPR, I'm Mary Louise Kelly . This message comes from MIDI health, a virtual care platform for women in paramenopause and menopause. Chief Medical Officer Dr. Kathleen Jordan shares the wide range of symptoms they work to address for women in midlife. There's dry eyes, dry hair, dry skin, there's dry mouth, trouble sleeping, panic and anxiety attacks. When we ask patients about common symptoms, on average, they report six . MIDI health committed to helping women in midlife with paramenopause and menopause care , accessible via telehealth visits at join m d . com This message comes from Progressive Insurance. 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If you are one of them or planning to be one of them, you should know big changes are coming in July. Next month, those changes include new loan limits for grad students and parents and a total overhaul of repayment plans. Here to walk us through it and PR Education correspondent Corey Turner, hello Corey. Hey Mary Louise. Start with new student loan limits? What should we know? Yeah, well one of the few things that's not changing is undergraduate student loan limits. What is changing are limits for graduate students. Up to now, grad students could borrow essentially as much as they needed , right? Your program costs forty grand a year. You could borrow forty thousand dollars year after year after year. After july first though, grad students will be limited to twenty thousand five hundred dollars a year. That is a big change that many economists worry is going to drive some borrowers into the private student loan market . And maybe some lower income borrowers away from grad school altogether. There are a few exceptions here for students who are enrolled in a program by the end of this month, Mary Louise, they get grandfathered in. Also, the Education Department says borrowers pursuing what it calls a professional degree in fields like dentistry, law, medicine , they can qualify for fifty thousand dollars a year in loans. Okay , back to the undergrad college side. Up to now parents have been able to take out unlimited loans to help their kid pay for college. That is changing. It is. The loan program known as parent plus, it's not ending, but it is being scaled back . I've spoken in the past with families who because of its unlimited nature really found themselves buried in debt and unable to retire in some cases. In July, Parent Plus is getting new limits. It'll be capped at twenty thousand dollars dependent per year . One more big change, parents will no longer qualify for any repayment plan that takes their income into account. Now that might feel like some sort of fine print wonkery really important Mary Louise because it means number one, parents will no longer have a pathway toward loan forgiveness. And number two, it means month ly payments are going to be fixed and probably considerably higher than they would have been on an income based plan. Okay, I want to jump to another set of people, people who already have loans, they may be out of school , now they have to repay those loans. There was this Biden era save repayment plan that has proven short lived. What do borrowers need to do now? It's time for them to switch plans, essentially . Save was the most generous repayment plan available . Low monthly payments, also notably for the lowest income borrowers, it offered a zero dollar monthly payment , but Save is over and the seven million or so borrowers who are still enrolled in it need to know it is time for them to switch plans. And if they don't, this is really important. Their loans will be moved into one of the least flexible standard repayment plans . Their monthly payments are going to be fixed and they will be relatively high compared to the save plan. The good news though is for these save borrowers, if they act now or soon , they have lots of choices, lots of plans to choose from. Okay, so get on it, save borrowers sounds like the takeaway there. What about for new borrowers? Different story, right? What do they need to know? Yeah, for new borrowers, we're really at the end of an era. For years , borrowers have been able to choose from many different repayment plans, but Republicans voted last year to essentially get rid of all of them for new borrowers and replace them with just two . And these are both brand new plans. I'm going to talk about one of them briefly. It's called the Repayment Assistance Plan or the Wrap. And like save, it bases your monthly payment on your income. Now, it's not going to be as generous or as flexible as Save, but it does come with a few interesting perks. One, if there is any monthly interest left over after you've made your monthly payment , the plan just waves that leftover interest so your loan won't grow . And two, parents and caregivers get to slash fifty bucks a month off their monthly payment for every dependent in their household . What about student loan forgiveness? That's been a thing. Is that still gonna be a thing after July? Sort of. There's this kind of a dividing line where there will be between older legacy borrowers and then brand new borrowers. So for new borrowers , loan forgiveness is going to be scaled back considerably They will be able to qualify for the WAP plan, which I mentioned. And it technically offers loan forgiveness, but it's after thirty years, Mary Louise. And so most of the experts that I've talked to say, like the vast majority of borrowers on the WAP plan, they're going to pay off their debts long before they approach forgiveness after thirty years. For current borrowers though , there are still some options. The plan known as Income Based Repayment or IBR , it's still available and it offers forgiveness after twenty five or even twenty years , depending on how old your loans are . And then for everybody , in spite of the headlines that have suggested the Trump administration is trying to push and pull at the program , public service loan forgiveness is still a thing . It is still available . It offers loan forgiveness after ten years of public service as a teacher, police officer, nurse . Lots of different jobs qualify. It is still available and you can find more at Department's website One more thing to highlight, which is this, we've been talking a lot about programs being scaled back or eliminated. Changes Republicans have made in that direction. They have expanded the Pellgrant program, federal program aimed at low income students. Yeah, and this was a move that actually had some bipartisan support. The Pellgrant program is essentially free, you know, we've been talking about loans, Pelgrants are free money intended to help the lowest income students pay for college . So last year, Republicans expanded the Pelgrant program to include pretty short workforce training courses or programs between roughly eight and fifteen weeks. So