Broadcast Retirement Network’s Jeffrey Snyder discusses important student loan program changes that become effective July 1, 2026 with The Institute of Student Loan Advisors’ Betsy Mayotte.
Jeffrey Snyder, Broadcast Retirement Network
Joining me now is Betsy Mayotte from the Institute of Student Loan Advisors. Betsy, always great to see you.
Thanks for joining us again this morning.
Betsy Mayotte, The Institute for Student Loan Advisors
It is nice to be back.
Jeffrey Snyder, Broadcast Retirement Network
And I see you’ve changed locations. No longer in Florida, I see. Are you back in Massachusetts?
Betsy Mayotte, The Institute for Student Loan Advisors
I am back in Plymouth, America’s hometown.
Jeffrey Snyder, Broadcast Retirement Network
Very, very nice. Well, I hope the weather is beautiful. It starts to, I’m in Charlotte, as you know, and the weather started warming up, and I hope it is the same where you are.
Let’s talk about these new student loan, I’m gonna call them rules. You know the better terminology. Effective July 1st, we’ve got a lot of changes coming up, Betsy.
Betsy Mayotte, The Institute for Student Loan Advisors
We do. So HR1, which is the budget bill that passed last summer, made probably some of the most significant changes to higher education financing policy that we’ve seen in 10 or 15 years, at least. There are changes, the biggest changes affect how much people can borrow to go to school in the first place.
So especially for graduate students or students attending like medical school or someone, they’ve significantly, so there used to really be no limit to how much you could borrow for federal loans. And now there’s a limit. For graduate students, that limit is gonna be 20,500 a year, no more than 100,000 for that graduate degree.
And for like say a very, so for a very limited amount of what we call professional programs, so your med school, your law school, that they have a slightly increased limit of 50,000 a year, no more than 200,000 total. So that’s one of the really big changes.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, that’s significant. And I guess we have to go back to the debates around the who, how, and the why. But we’ve talked about this for years, you and I, and I’m sure you’ve done it with others.
The cost of college has just been expansive. It’s just gone up. Is this designed to maybe help people limit their financial exposure?
Is that why they capped it at 100,000 for graduate level courses?
Betsy Mayotte, The Institute for Student Loan Advisors
You know, I’m not sure what Congress is thinking. I have a feeling that- Neither am I, neither am I. I have a feeling that Congress thinks that reducing the loan limit will force the colleges to reduce the cost.
And I’m not so sure that that is really gonna be the outcome, but time will tell.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, absolutely. Okay, so you’ve got this curtailment. I’m gonna call it curtailment.
There’s probably a much better term, cap. You used the word cap. Let me ask you about parent borrowers.
Yeah, the parent borrowers- Go ahead, I’m sorry.
Betsy Mayotte, The Institute for Student Loan Advisors
Parent borrowers really got the short end of the stick. I would say way more than everybody else in that same piece of legislation. So for one, they are also reducing the amount that parent borrowers can borrow on behalf of their undergraduate student.
That used to be unlimited. Now it’s 20,000 a year, no more than 65 grand per dependent undergraduate student. But here’s the part that really worries me, Jeff.
They also essentially get rid of all the lower payment options for parents who borrow on or after July 1st. So if you think about it, sure, they reduce the amount they can borrow, but let’s look at a family of four, right? They put both children through school.
They take the new maximum. They still owe 130 grand in parent plus loans. They won’t have any lower payment options.
So I have real concerns for parents being able to afford to put their kids through school. And if they do manage to do that, being able to afford the payments after that.
Jeffrey Snyder, Broadcast Retirement Network
So can each parent file separately or it’s a collective combined amount between- It’s a combined amount per dependent student. Okay, okay. So they could have multiple students and be at that cap, but it still presents a challenge in terms of further borrowing.
And what other alternatives would they have to get loans? Would they go to the private loan marketplace or what?
Betsy Mayotte, The Institute for Student Loan Advisors
Right. So if they hit the cap and they still need funding, their only alternative they do have are private or state loans. And those very rarely have any lower payment options themselves.
And often, it’s very common for me to see in the TSLA inbox people with private loans with 12 and 14% interest rates.
Jeffrey Snyder, Broadcast Retirement Network
Oh, that’s a lot. I mean, think about that. You think I grew up, you grew up in the, well, I’ll out myself.
I grew up in the 70s and 80s with double digit interest rates. I won’t out you in terms of your age. But so I kind of remember that, but you don’t want that.
That interest really adds up. I’m assuming you mentioned your inbox. You’re probably getting a litany of questions to the TSLA email box.
Betsy Mayotte, The Institute for Student Loan Advisors
Our volume has doubled in the past two months.
Jeffrey Snyder, Broadcast Retirement Network
Just because of this provision or because of the cap or just in general?
Betsy Mayotte, The Institute for Student Loan Advisors
Probably half the volume is attributed to all the changes. And we’ve just scratched the surface here, Jeff, because I know we have limited time. Half the changes for July 1st and the other half is because of people that are on the SAVE plan, which of course has been challenged in the courts and that whole process has finally ended.
So those borrowers saying, all right, now what do I do?
Jeffrey Snyder, Broadcast Retirement Network
So Betsy, what do they do? I mean, they’re coming to you. What’s the general advice?
SAVE plan’s been X-nayed. What do they do?
Betsy Mayotte, The Institute for Student Loan Advisors
So starting July 1st, those borrowers that are in that SAVE limbo, and there’s over 7 million of them, are going to get a notice giving them 90 days to switch plans. Now, not everyone’s gonna get the notice on July 1st. They’re gonna stagger it.
But by the end of the year, everybody on the SAVE plan is going to have to have switched plans. And so at this point, they need to see what the next plan is that fits their long-term student loan strategy. And that could be another income-driven plan, like income-based repayment.
Maybe the new RAP plan that’s gonna be effective on July 1st is gonna be the best fit for them. But what I’m seeing is a lot of borrowers are saying they can’t afford the next lowest plan for them. So I have, I mean, the default rates have already shot through the roof, and I have a feeling that because of all the things we’ve already talked about today, Jeff, that that’s gonna continue.
Jeffrey Snyder, Broadcast Retirement Network
You know, it’s almost analogous in some ways. I had to re-enroll on the Affordable Care Act website, healthcare.gov. And I don’t know if you remember this, I don’t know how you get your insurance, but I mean, the premiums almost went up by a third. And it seems almost similar, analogous to that.
You know, that it’s another area where people are getting kind of squeezed, or are getting squeezed.
Betsy Mayotte, The Institute for Student Loan Advisors
I’m glad you brought that up, because not only are people on the SAVE plan, they’re seeing most likely a very much increased payment. But all this stuff is hitting at once. The healthcare premium, gas prices, housing prices, these especially low and middle-class borrowers are getting hit with all these really big increases all at the same time.
Jeffrey Snyder, Broadcast Retirement Network
So do you think that’s gonna change the thinking about where, like really, you know, again, going back to the, is college appropriate for everyone? And I know there’s been some expansions with 529 plans to things like the trades. You know, the other thing is, you know, two-year schools, commonly called community college.
Do you think that this squeeze, and we’re all facing it, but certainly middle-income, lower-income people are feeling it more. Do you think that maybe they’re gonna curtail or change their buying process, and maybe look at some of these other alternatives? And then that actually may work out better for their children and themselves longer term?
Betsy Mayotte, The Institute for Student Loan Advisors
Yeah, I’ve always agreed that college isn’t for everybody. I think everybody should get some form of higher education, but that’s a four-year undergraduate degree is not the solution, the best bet for everybody. It could be a trade, it could be an apprenticeship.
But I do think that families are going to be forced to start looking at alternative pathways, whether it be attending a lower-priced school like a community college for the first two years and then transferring in, which I’ve always been a fan of doing that.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, likewise, I mean, just, you know, hindsight’s always 20-20, and I’ve been out of school for a long time. But had I, you know, I didn’t know what I wanted to be, and someone arguing my wife would tell you I don’t know what I wanna be now. But I think it takes time.
You gotta go through that maturation process and figure out what you like, what you don’t like. Spending money at a four-year school can be very expensive for a lot of people. That two-year alternative is a good alternative.
You learn a lot, and you kind of hone your skills. Betsy, real quick, I wanna give a shout-out to TSLA. Do you do regular webinars?
I mean, people can reach out to you directly. I’ll put your email in the lower third, not your personal email, but the directions to reach TSLA. But are you doing regular webinars and seminars on these types of things every week and month?
Betsy Mayotte, The Institute for Student Loan Advisors
We are. We work with employers, associations, other organizations that bring us in to do webinars for their particular constituency. We do them all the time.
So my face is out there.
Jeffrey Snyder, Broadcast Retirement Network
Yeah, well, your face is out there for a very good reason, but they can reach out to you directly. If someone’s watching this, and they need Betsy and her team to come in, she’s the, as far as I know, the aforementioned expert. Betsy, we’re gonna have to leave it there.
Thanks for the deep dive. And look, we look forward to having you back on the program again very soon.
Betsy Mayotte, The Institute for Student Loan Advisors
Thank you.