Understanding Federal Student Loan Changes

Webinar Transcription

2025-08-06-Understanding Federal Student Loan Changes

Jessica: [00:00:00] Right.

All right. Good evening everyone. Thank you so much for joining our webinar with Juno on “Understanding Federal Student Loan Changes.” We’re excited to have you this evening. My name is Jessica Scott, and I’ll be your moderator today. I’m also a senior advisor here at CollegeAdvisor, where for the past four years I’ve worked with students one-on-one in advising sessions.

Um, I’ve also been involved in higher education since 2012, so a long time in the business. But to orient everyone with our webinar timing, we’re gonna start off with a presentation, then answer your questions and a live q and a. On the sidebar, you can download our slides. Um, so feel free to to go ahead and [00:01:00] download so you have the access, and then you can also start submitting questions in the q and a tab at any time.

Um, so before we get started to our presentation, um, I do want to do a quick poll of the audience to see what grade everyone is in. Um, so if you’re a support person here, guardian educator, please select other. Um, but yeah, we’ll go ahead and get that going. So let me get that started. That should pop up on there.

All right. And then let’s go ahead and have Chris, um, who is the founder of Juno. Um, wanna go ahead and ask you what inspired you to start Juno?

Chris: Uh, great question and thanks everybody for being here. So. Seven years ago, I had to get student loans for business school. And about a month before I started school, one of my classmates and I were comparing rates from different [00:02:00] lenders.

Chris: And we realized that we were getting just wildly different offers from different places, uh, as we were checking. So we realized the market wasn’t as efficient as we thought it would be. So we hatched an idea to see it really is an experiment. Could we ask a few hundred of our classmates to join a group that would all go to the same lender if that lender gave us all discounted rates?

Chris: And we did that. We pulled together a few hundred people. We started pitching a lot of different banks and credit unions, uh, and they responded to us and we were able to select a winning lender for our classmates who gave everybody a much lower rate than their other options. And then a few months later, uh, we decided that it worked so well.

Chris: We wanted to turn it into a business. And that’s where we are.

That is amazing. And as someone who has gone through student student loans in that process, um, and getting a good, a good rate, that’s [00:03:00] pretty amazing. So thank you for doing that. Um, I’m gonna go ahead and close the poll now. Um, so in terms of our audience, we’re pretty heavily, uh, heavily seniors, uh, are going into 12th grade, so about 55%, and then another 44%, um, who are other.

So I’m sure there’s lots of parents in the audience who are eager to hear what you have to say. Um, so without further ado, I’ll turn it over to you, uh, to get us started.

Chris: Thank you very much for the intro, for having me here. So, uh, as was just mentioned, I’m the, the founder and CEO of a company called Juno.

Chris: I’ve become a somewhat reluctant expert on most topics related to student loans, federal aid, FAFSA, student aid index, you name it. I’m more than happy to answer a question about it. Uh, for a little bit of housekeeping tonight, we’re recording the webinar and you will get a copy of the slides that I’m gonna [00:04:00] walk through tonight, as well as a recording of the webinar sent to your inbox at some point tomorrow.

Chris: I’ll also include a handful of links to some useful resources that I’m gonna walk through tonight. If you have any questions as we go through, please feel free to use the q and a box that’s, uh, on this, uh, environment and I’ll stop along the way and try to answer the ones that are relevant to that slide as we go through.

Chris: And I’ll try to save time at the end for questions if we’re able to do so as well. If there’s anything that you don’t feel comfortable asking publicly or something that you, uh, otherwise. Think, uh, may be too specific to ask to the rest of the group. You can respond to the email that I’ll send tomorrow and somebody on my team will get back to you as soon as we can, uh, with it.

Chris: Whatever answer we’re able to come up with, I gave you the, the quick spiel on, on how we started Juno. Uh, and so I won’t go through that again, [00:05:00] but gimme a quick agenda of what we’ll go through for the next roughly one hour. So the purpose of tonight’s presentation is to help you better understand the different options that you have for paying for college.

Chris: There are some things that I’m gonna walk through that are still very relevant for folks who are going to college this fall. Uh, and there’s a lot of things I’ll touch on that will be relevant for future years of school as well. Uh, we’re gonna go and start with just understanding this concept of cost of attendance, which is, in other words, the sticker price the school charges to you.

Chris: We’re gonna break down that cost of attendance for about 10 minutes, uh, going through step by step, the order of funds that you would use in order to pay for that cost of attendance. And then we’re gonna spend a bulk of the conversation, a good 25 or 30 minutes around how federal student loans and private student loans work, the order in which you’d consider using each program that [00:06:00] is available to you.

Chris: And we’re also gonna cover how those things are actually changing starting next year as a result of the big budget bill that was passed last month. Uh, within that, I’m gonna try to leave you with some action items or things to consider that can leave you in better shape for next year, uh, in terms of keeping eligibility for some of the better versions of loan programs that exist today.

Chris: And so we’ll go through all of that in detail. You don’t have to take notes or necessarily remember what we’re going through because I will send everything to you. And with that, let’s, uh, set a little bit of context and then jump in. I always like to start these presentations with just a, a general timeline for thinking through financial aid.

Chris: And I won’t go through this in a lot of detail. Uh, but every single year that you’re in college, you’re gonna have to fill out the FAFSA form, and that is really where this process starts. That’s typically [00:07:00] available in October or November. Uh, and once you fill that out, that data goes to the financial aid office of whatever schools you’re interested in or whatever school you are already attending.

Chris: The financial aid office uses the information you’ve submitted to return a financial aid offer back to you, and that process can take weeks, it can take months. It varies from school to school. Once they return that financial aid offer to you, you do have a chance to appeal it and ask for more. And we’re not gonna go through that in a lot of detail tonight, but I’ll leave you with a link to a presentation that we previously did that talks a lot about the different ways that you could think about asking for more aid, both this year and in future years.

Chris: And then we’re gonna kinda skip all the way to, all right. You’ve got your actual bill that the school has sent. Those bills are typically due in late August, early September. That date [00:08:00] varies quite a bit, depending on what school you’re thinking about. And so really, July and June, July and August is when most people are thinking about how do I actually pull together the funds to pay for the upcoming term?

Chris: And so what we’re gonna talk about tonight is really diving deep into how you think about making those decisions and how some of those decisions might change for next year as a result of some of these changes that are coming to federal legislation. Uh. If you have any questions about some other topics in tomorrow’s email, what I’m also going to include in case it’s helpful, is a link to three other presentations that we’ve done, uh, quite a few times this year.

Chris: The first cover is just some tips and tricks on filling out FAFSA, that form that you have to do every year. Uh, the second is, uh, for anybody who’s curious, a deep dive into how the FAFSA form uses the information that you submit [00:09:00] to calculate what’s called a student aid index. And that’s a number that the financial aid office ends up using to determine in part how much aid they’re able to allocate to you.

Chris: And the third presentation is about, uh, financial aid, appeals and strategies for negotiating specifically your need-based aid awards. I’ll send you links and recordings to all of those if you’re curious And if you have any questions after you review those, uh, you’re more than welcome to reach out to my team and we’re happy to help.

Chris: So let’s start off with tonight’s topic, talking about the cost of attendance. This is a, a number that you will see published on each school’s financial aid website. And the key thing to understand about it is it is meant to represent the fully loaded cost of going to a program for one year at a time.

Chris: In this example, and I’m gonna use a specific example for most of the [00:10:00] presentation tonight, so that we can put actual numbers against the concepts that we’re talking about. And the example we’re gonna use is a UCLA student who is in state going to college this fall. And what you see on the slide is what UCLA publishes is the cost of attendance for this person this year, $15,700 of the total cost is the tuition and fees that you have to pay to UCLA.

Chris: But the rest of the expenses are more so what’s considered living expenses. There’s a $3,600 insurance charge that I’ll talk about in a minute. Uh, $3,200. Additional for personal expenses, $19,000 for food and housing, and a little bit of money for books and supplies. Each school publishes a version of this chart and we’ll talk a little bit more, uh, down the line about some other implications that this chart actually has before we move on.

Chris: But the really quick tip that I wanna [00:11:00] leave you with is your student bill probably starts off with the cost of attendance. You wanna make sure that if you are already covered under health insurance for your parents, or if you’re a parent listening and you know that uh, your children are, uh, covered under your insurance, you have the ability to waive the university’s health insurance plan.

Chris: They likely have already emailed you with information about how to waive coverage. Uh, and that typically involves submitting some proof and the testing that you are already covered, make sure you do that. ’cause in this example, it ends up making up a very significant share of the cost to go to UCLA this year, you’d otherwise have to spend an extra $3,661 for something that you already are paying for.

Chris: And so just the first tip to think about is that university cost of attendance. It’s often inflated a little bit by health insurance coverage that a lot of people already have and can waive wave. [00:12:00] And so let’s move on to how you’d actually pay for UCLA’s cost of attendance this year. And the total number that we’re gonna start off with is that $43,000, $200, uh, number that is the fully loaded cost, the first bucket of funding that you’d use.

Chris: Is scholarships and grants. And I know that this seems obvious, uh, but there’s some important implications here. The reason it’s important to fill out FAFSA every year is that that gets you access to, and I saw a question about CSS profile that I’ll touch on in a moment, but generally speaking, FAFSA is what drives your ability to access federal funds, state funds, and in some cases institutional funds, which is money that the school has that they can give to people who have a high level of financial need.

Chris: Not every school has it, but some do. And if you fill out your FAFSA based on the results of that, [00:13:00] you can get access to some forms of money that don’t have to be paid back. Uh, and those can be up to $7,400 roughly for app Pell Grant and up to a few thousand dollars more of other grants in work study.

Chris: And some states, especially if you go to school in-state, have their own versions of programs that can help reduce the cost of building a college. What’s important about this is you actually have the ability, so the financial aid office is the one who tells you how much scholarships and grants you’re going to get, and you actually have an ability to appeal that and ask for more.

Chris: I’m not saying that you’ll always get a positive response, but there is a presentation that I’ve linked to on this slide and that I will send you tomorrow that I run for several thousand people this year. It goes through about 12 reasons that are more commonly accepted to allow you to appeal and ask for more need-based aid.[00:14:00]

Chris: The general concept here is when you fill out FAFSA, you are providing some information to the financial aid office, but it’s not a complete view of your family’s finances. And there are some things that are left off of that form that you have the opportunity to communicate to the financial aid office.

Chris: And once you’re able to communicate those, there are some reasons that they’re able to consider and when they consider it, they can kind of change the math that they use to allocate scholarships and grants to you. I’m not gonna go into all of those reasons tonight for the sake of time, but if you are curious, this is something that you should do not only for your first year of college, but for every subsequent year that you’re going to school.

Chris: Let’s just assume that the example family that we’re talking about tonight, uh, got about $5,000 of scholarships and grants. What’s left to pay after [00:15:00] that amount is an important concept to understand It’s actually your borrowing limit. So schools are required. To limit the amount that a student or family is allowed to borrow for each year to whatever that cost of attendance number is, minus the scholarships and grants that you’ve received.

Chris: So for this example, family, their borrowing limit is about $38,000. Uh, it’s something that you should just pay attention to in part because if you got external scholarships that then get reported to the school a few weeks or a few months down the line, those are supposed to reduce your borrowing limit dollar for dollar by the amount that you receive for the scholarship.

Chris: So if you are budgeting and thinking through how you’re gonna pay for everything over the course of the next year, uh, let’s say you’ve already reached your borrowing limit and then you’ve got a scholarship afterwards, please don’t go spend all of that money as well because you’re likely going to be asked to either return some money and that you [00:16:00] took out in loans.

Chris: Uh, or otherwise, find a way to make sure that the total amount of aid that you’ve received through loans and scholarships is gonna still come in below your cost of attendance. I see a question here, uh, about new rules and how would divorce families handle applying to FAFSA? Uh, there is no change, uh, that I’m currently aware of to how divorced families would handle applying for FAFSA under the new rules.

Chris: And I’ll, I’ll touch a little bit more on, on that in about 15 minutes or so when we get to a section that covers what those changes actually are. So just moving on, this family has a $38,000 amount that they have left to pay, uh, and let’s just assume that they have about $10,000 of savings that they can put towards it.

Chris: And after they use that $10,000 of savings, whether that’s through a 5 29 plan or some other source of [00:17:00] funds. They’re still left with a $28,000 amount that they need to pay to the school or a cover for the upcoming year. And that’s what we’re going to really go into for a majority of this presentation.

Chris: It’s understanding that if you do still have financial need, after you maximize scholarships and grants, and you’ve used whatever savings you have available for school for this year, uh, your three options left for borrowing money are federal loans that are borrowed by the student, federal loans that are borrowed by the parent, or three, uh, private loans that can be an alternative to the money that the parent borrows.

Chris: And we’re gonna talk about each of those three things in quite a bit of detail right now. And we’re also gonna cover what changes are coming to specifically the Parent Plus Loan program and how you can plan for the impacts down the line. So. [00:18:00] Uh, here’s a good question. Are 5.9 plan, uh, funds considered in accessing financial need?

Chris: Uh, so yes, they, they would be in terms of, they would reduce the, uh, borrowing limit in, in theory. And so, uh, you’re using those 529 plans against the school’s cost of attendance that reduces the outstanding amount that you need to pay. Uh, and so they, they can have an impact. So we’re gonna focus right now just on what the loan landscape looks like for undergraduate students.

Chris: And as I was mentioning, what I’m gonna do, uh, give you a little bit of a heads up. We’re gonna go through, uh, each of the three loan programs or loan options that are on this slide and quite a bit of detail for the next 15 or 20 minutes. And for each one of ’em, I’m gonna give you I slides that you could always refer back to in case you have any questions.

Chris: Uh, each of these two slides are gonna [00:19:00] cover, uh, quite a bit of information about, uh, if there is an origination fee, what it is, what the interest rate is on those loans, whether that rate is fixed, or whether it’s variable, and how much you’re allowed to borrow through each program. I’ll also cover things like how you qualify for the loan, whose name it’s legally in, when you’re supposed to start making payments, and what happens in case you face any kind of financial hardship.

Chris: And what we’re gonna start with is the federal loan that’s available to the student, which is called the Federal Direct Loan, sometimes referred to as the Stafford Loan. Uh, this is really important because I would bet that anybody you would ask, uh, would say that if you do need to use student loans.

Chris: That the federal direct loan, which is the money that the student is able to borrow, is where you should start. There are a lot of reasons why [00:20:00] some of the key ones are that, uh, of the different federal options that are available. This is the cheapest one, and it has the greatest level of protection for the student.

Chris: So this is something that you get by applying to FAFSA. You probably got a financial aid award that said, uh, for a first year student you had access to up to $5,500, uh, through this program. On the next slide, I’ll go through what those limits look like in a lot more detail. Uh, and all you needed to do was to apply to FAFSA and to have that FAFSA information sent to the school that you are attending.

Chris: There’s no credit check. There’s no co-signer. Uh, there’s no other qualification that is necessary in order to get access to this. As long as you’re going to a school that accepts this. Let’s just go down the, the chart that you see in the middle of the page, and we’re gonna do this [00:21:00] exercise three times.

Chris: So the first time we’re gonna do it is really just for, again, the money that the student is allowed to borrow themselves. So, to start off with this loan, and the other federal loan that I’ll talk to you about in a moment, they both have origination fees, but the origination fee is not, uh, cash. You pay out of pocket.

Chris: Uh, to use an example, the way that it works is let’s pretend that we had to pay, uh, a thousand dollars to UCLA and we, so we need to figure out a way that we can borrow a thousand dollars through this program such that UCLA receives and credits us for a thousand. The way that origination fee works is that we actually have to borrow.

Chris: Uh, a little bit more than a thousand dollars. Uh, and so, uh, roughly, uh, $1,057 in order for UCLA to receive a thousand dollars from us. And so the origination fee just increases the principal balance on the loan [00:22:00] on the day that that loan is created and sent to the school. It’s relatively small on this program.

Chris: It’s quite a bit higher on the next program that I’ll walk you through. The interest rate on the money that the student is allowed to borrow is set to 6.39%, and it’s a fixed rate each year there for new loans that you’re taking out from the government. There is a new set of rates that get established in the middle or end of May.

Chris: Uh, I won’t go into the, the formula, uh, but Congress created a formula over a decade ago that determines what the price is going to be. So for this year, if you’re using the federal direct loan, it’s 6.39%. This is only in the name of the student, by the way. There’s, there’s no co-signers I was mentioning.

Chris: This doesn’t show up under a parent’s credit report. Uh, and you’re not required to make any payments until six months after the student graduates or drops below halftime [00:23:00] enrollment. And so it, it’s made recognize that you are likely not able to make full payments or any payments on these loans until you graduate.

Chris: Uh, and the key things that are attractive about this program are if you do end up going into certain career paths, then public service loan forgiveness is available through a federal direct limb. Uh, and starting next year, there are new repayment plans that are gonna be available to you. One of those repayment plans, uh, is relatively flexible.

Chris: Uh, and so. Uh, it is called the repayment, uh, assistance plan. Uh, I’m happy to talk about it at the end if we have time. Uh, but what it ultimately means is if you have a federal loan for the direct program and you’re graduating in a few years and are unable to make payments, uh, you’re, you, you actually owe.

Chris: Monthly is set to a very low [00:24:00] amount, uh, and it, as long as you pay whatever the very low amount is, uh, you won’t be accruing more interest than the payments that you’ve made. So, in another way, it’s a plan that’s meant to recognize that if you can’t make payments, we need to find a way to make sure that the interest that you owe doesn’t balloon out of control.

Chris: And this, in a large part, solves for that.

Chris: Uh, here’s a good question. If the student continues, uh, their education, does the payment still apply six months after graduation? Uh, so the deferment of payments, if you’re going from undergrad to medical school or law school or some other program that can continue to the next program that you’re doing.

Chris: And one more question here about prepayment penalties. So the question is, let’s say you’re the parent. Are you allowed to begin paying your students’ federal direct [00:25:00] loan early? And, and the short answer is yes on all of the loan types that I’m gonna speak to you about tonight. You’re allowed to make payments early without any penalty.

Chris: So if you’re gonna Google around, the term is typically a prepayment penalty. And currently those don’t exist, not on the federal loan options that I’ll talk to you about, nor on the private loan options that, uh, that I’m aware of. And I’m pretty sure I’m aware of all of them. The only downside to a federal direct loan is that the amount that you’re able to access through it is relatively low, and these amounts haven’t been changed in years.

Chris: And so what you’ll see in the middle of this slide, it’s a, think of it as a two by two matrix that determines the amount of money that you’re allowed to borrow through this program each year. And on one axis, the amount that you can borrow changes by what year it is that you’re in school. On the other axis, it’s are you [00:26:00] classified by the Department of Education as a dependent student or an independent student?

Chris: And that’s a very specific legal definition that has nothing to do with whether the student is over or under 18 or, uh, claimed as a dependent on their parents’ taxes. The definition that you’ll see is on the right hand side of this slide. And so slightly, there’s a more comprehensive one that you can find published online.

Chris: But in general, uh, most students do end up being classified as dependent students. And if they’re dependent, then they’re allowed to borrow for their first year of college up to $5,500 for their second year of college, up to 6,500 and for their third and fourth year up to $7,500 per year. And if they are independent, which some people are, those numbers just go up a little bit each year.

Chris: So most people don’t end up being [00:27:00] able to cover the entirety of what they need for college through the direct loan program. Uh, and that’s where the Congress created the Parent Plus program, which is, think of it as just another option that is available for funding college through the federal government, but only available to the parents.

Chris: And so what I’m gonna, I’m gonna call this current Parent Plus because a few slides from now I’m gonna talk about how this program is changing. Current Parent Plus is meant to allow you to borrow all the way up to whatever is needed to fill the gap between your student bill and what the student was able to borrow through the direct program.

Chris: And so currently there is no, the limitation on how much you’re allowed to borrow is the same as the borrowing limit that I showed you a few slides ago. It’s whatever the cost of attendance is for the program, minus the other eight that [00:28:00] you’ve received. Uh, and so for those who are attending very expensive programs, they can still typically use Parent Plus to meet the need for attending that program.

Chris: Uh, some of the key things to understand about this are, this is only in the name of the parent. The student can’t be legally added onto this loan. It doesn’t show up on their credit report. Uh, and everybody who qualifies gets the same rate. And so whether you have perfect credit or uh, lower credit, you’re gonna get the same rate, gonna be charged the same fee.

Chris: For some people, this ends up being the best option that’s available to them. And for some other people, they’re able to qualify for lower rates or lower fees through the private market. Uh, it very much depends on the person, but for a lot of people, this ends up being the best product that is available to help them pay for college.

Chris: So let’s just talk through a little [00:29:00] bit more of, of how this actually works. Uh, I’ll cover some of the key questions that I often hear about Parent Plus in the next slide, and then I’ll talk to you a little bit more about how the Parent Plus Program is going to change starting next year. So. For the federal direct loan.

Chris: Let’s start off with the origination fee For the last loan program I showed you, which again was the money that the student was allowed to borrow. There was a roughly 1% origination fee for the Parent plus loan. That’s a 4.2% origination fee. To use the same example as before, uh, in order to, uh, send, let’s just say $10,000 to to UCLA, we actually have to, our balance is gonna increase by 4% more than that.

Chris: So we’ll end up at $10,423 as our balance on day one. Uh, but UCLA will only be able to credit $10,000 towards our student bill. [00:30:00] This is a much higher origination fee than what you saw on the other program, but again, it’s just set by Congress and it hasn’t been changed in over a decade. The interest rate is also a lot higher on a Parent plus loan than what was available to the, through the direct loan for the student.

Chris: And so for this, it’s gonna be an 8.94% fixed rate this year. Uh, and again, the, the cost of attendance minus your other aid received, that’s your current borrowing cap, uh, how you qualify. Uh, we’re gonna talk a little bit more about this on the next slide, but it’s just something important to note is just filling out FAFSA by itself is not enough to get Parent Plus, there is a separate application for Parent Plus on the student aid.gov website that you need to fill out in order to get access to the program.

Chris: I’m gonna send you a link to that application tomorrow, but if you [00:31:00] just Googled Parent Plus application, you should find that as well. Make sure you ignore any of the ads that you’d see before you find the p student aid.gov link. But click this ate.gov link and that will take you where you need to go.

Chris: There’s no credit score cutoff, uh, and there’s no income cutoff, uh, on the low end or the high end for getting access to Parent Plus, uh, there’s only some, uh, rules that the Department of Education publish. It publishes called not having Adverse Credit history. And so we’re gonna talk more about that on the next slide.

Chris: But I, I do see there’s a question. There was a question briefly about, uh, is there a maximum income for parent Plus? The answer is no. There’s also no minimum income for Parent Plus. Uh, so you have a quick question here on what was the old interest rate for Parent Plus? Uh, and I, I believe last year it was roughly 9.08%, and this year it’s down by about 0.14% to [00:32:00] get to 8.94%.

Chris: Uh. So only the parent’s name is legally on this loan. And you are able, if you choose to defer, making any payments on a parent plus loan until six months after graduation. So you don’t have to make payments while the student is in school. Uh, however you are allowed to, there is no prepayment penalty, uh, if you wanted to make any payment towards this loan.

Chris: If you are able to, while the student is still in school, you are allowed to do so. Uh, I often hear from people who say, I kind of wanna start paying off at least the interest that’s accruing every month so that the balance of graduation isn’t larger than the balance that we’re taking out. That’s perfectly fine to do.

Chris: Uh, there are fewer hardship protections that come with a Parent plus loan and, and I’d say less, uh, helpful repayment plans, [00:33:00] especially starting next year than what is available to the student. Uh, happy to touch on those at the end if we have questions about them.

Chris: Uh, okay. I see a question here on if only one parent is on the FAFSA. Can both parents borrow? Uh, yes. So, uh, the way to think about it though is you only one parent is gonna be on a parent plus loan for a student for a given year. But a strategy that people sometimes use is, let’s say you’re using the Parent Plus loan, uh, maybe year one.

Chris: There’s one parent who uses the, the Parent Plus loan, and the next year another parent uses the Parent Plus loan and you switch off each year so that the distribution of that debt is a little bit more even. Uh, I think maybe if I’m now [00:34:00] reading the question again. Uh. Another answer here that could be helpful is the parent who’s using the Parent plus loan doesn’t have to be the one who helps complete the FAFSA form.

Chris: It could be either parent. Some of the common questions that we’ll get about this are, uh, who’s eligible for a Parent plus loan. And it, it’s actually exactly as it sounds in the name. It has to be the parent of an undergraduate student who’s enrolled at least halftime, uh, a grandparent or an uncle or an aunt or another family member.

Chris: They’re not able to get this loan. Uh, if you want to apply, the link is in the middle of this slide, and I will also send you the direct link to the student aid.gov page and your inbox tomorrow. It takes about 15 minutes to submit that application. And the reasons why you could get denied are also partially listed on this page, [00:35:00] but I have a longer list that, uh, you can click on as well.

Chris: So the Department of Education says, uh, as long as you, if you have adverse credit history, they might deny you access to this program. And what is adverse credit history? It’s things like having defaulted on previous student loans or having recent bankruptcies or large debts that are more than 90 days late, or wage garnishments or tax liens.

Chris: And as long as those things don’t exist on your credit report, then you should generally be eligible for a parent plus loan regardless of what your income or your credit score would be.

Chris: There’s a lot of setup to start talking about what the actual changes are. So thanks for bearing with me. Uh, but there’s some really important things to, to consider now for the next five minutes of this conversation that. If you are enrolled in college this fall, or if you’re a parent, if your child is [00:36:00] enrolled in college this fall, then you have the ability to keep the current Parent Plus Loan program, the version that allows you to borrow up to the cost of attendance.

Chris: If you are starting college for the first time in the fall of 2026 or after, then you can’t keep the current set of Parent Plus rules and a new set of rules will apply. And the key change that would impact things is that the amount you’re limited to borrow is a lot lower per year starting for anybody who is starting college for the first time in the fall of 2026, uh, a parent plus loan would be limited to $20,000, and over the lifetime of that student’s college career, the parent would be limited to borrowing $65,000.

Chris: I I have a few more slides where we’re gonna get into the implications of this and some examples. Uh, but that’s the big dividing line. [00:37:00] Uh, so that dividing line, the way to think of it is if you’re enrolled in college this fall, uh, there are some actions that we’re gonna talk about in just one minute that you should take, even if you might not need student loans this year, just to preserve the option of being grandfathered into the better version of Parent Plus.

Chris: And if you’re starting college next fall or later, you should be aware of what the funding limitations are so that you can either negotiate harder for your student aid package, choose a cheaper school, or otherwise prepare to find other ways to fill the funding gap if there is one. Uh, before I move on, I gotta see one question here on when do you apply for the Parent Plus loan?

Chris: Uh. I would recommend doing it, uh, on somewhat on the earlier side before your tuition due date. If you can do it 30 days before your tuition due date, that’s great. If it’s closer to your tuition due date than that, [00:38:00] uh, you’ll likely still be okay to do so. But it might be helpful to reach out to your financial aid office and just ask, if I apply for a parent plus loan today, uh, will, uh, I still have time for the funds to reach the school in time?

Chris: In most cases, the answer is yes, but giving them a heads up on that can’t be helpful.

Chris: Uh, okay, let’s see here. Uh, good question from Jeff. Are, are these limits per child? They are, yes. Uh, and so let’s say you have twins or you have, you have two children, the limits will take effect for each student. And so if the twins are gonna college at the same time. Starting fall of 2026, then you’d be able to borrow $20,000 through Parent Plus in the first year for each of them.

Chris: So let’s just go through [00:39:00] maybe just a really quick example using the same numbers that we were talking about before. Uh, and then I’ll, I’ll give you a, a quick rundown on, uh, just my advice for how to increase the likelihood that you could get grandfathered into the program. And I see some more questions that I, I promise I’ll answer.

Chris: So I’m gonna show you a lot of numbers right now. Um, but I’m gonna try to keep it simple. I’m just using the same example we used before, which was the UCLA student whose cost of attendance was $43,000, who got $5,000 of scholarships and who was whose family was able to contribute $10,000 per year towards the cost of college.

Chris: And so just for simplicity, let’s assume the cost of attendance stays the same for year one through year four, and let’s just look at what would happen to this student if the new Parent plus loans were in place. So what would happen [00:40:00] is we start off with that $43,000 cost. We subtract $15,000 for scholarships and savings, which leaves us with the $28,000 amount that we’ve been trying to figure out how to most effectively borrow for the first year of school.

Chris: The student would use the maximum direct loan that’s available to them, and for the first year, they’re able to borrow 5,500. Through that program, uh, the parent would then borrow the maximum $20,000 that’s available to them through Parent Plus, which would still leave a $2,700 unmet amount of need that you’d need to figure out some way to pay.

Chris: For the second year of school, same logic. Uh, but the only change now is the students allowed to borrow an extra thousand dollars through the direct loan program. And so there is a, a slightly smaller $1,700, uh, amount that’s left to fill [00:41:00] same logic again for their third year of school, where now the student is able to borrow 7,500 for the year.

Chris: And so, uh, for this student, you get pretty close to the Parent Plus and direct loan cover, the full cost of college. Now this is where things get, uh, a little bit more difficult because in the fourth year of school, the lifetime limit for Parent plus borrowing kicks in. Uh, I was mentioning before that there’s a $65,000 lifetime limit on Parent Plus for anybody who is starting college for the first time in fall of 2026 or later.

Chris: And that means that for their fourth year at UCLA. That parents would be limited to, uh, just $5,000 of borrowing through Parent Plus because they’ve already borrowed $60,000 in the previous three years combined. And for that final year of school, that leaves a $15,700 amount of unmet need. Uh, I mentioned this so that [00:42:00] people can just plan appropriately so that you can make sure that as you do a budget for a four year window, uh, if you’re not gonna be grandfathered into the current version of parent, plus you’re aware of what your remaining need would be, uh, and have the appropriate amount of time to get ahead of that.

Chris: Uh, so I’m gonna answer a handful of questions and then I’ll go through the, uh, grandfathering rules as best as anybody understands ’em today. So. I see a question here on for the 20 27, 20 28 academic year that, uh, is it possible to keep the higher version of parent plus borrowing? And the short answer is no.

Chris: You cannot avoid the lower parent plus borrowing limits if the student is starting college after that [00:43:00] fall, from fall of 2026 and on that. And so unfortunately in that situation, you cannot avoid those borrowing limits. I see a really good question here on if the student begins in the summer, are you still grandfathered two current limits?

Chris: Uh, so let me answer, uh, let me walk through how you should actually prepare for these changes and then I’ll, I’ll answer that question as best I. Yeah. The way the law is written, it says that if you have a federal loan that has been dispersed, meaning sent to the school before June 30th, 2026, then you can be grandfathered into the current version of Parent plus loan limits, which are set to the cost of attendance.

Chris: To put it more simply, you have to have had money sent to the school from a federal loan program [00:44:00] before July 1st and next year. That’s the cutoff that they’re using. Uh, there are some interesting ramifications of that. So, uh, first there’s a little bit of a disconnect between how things are written and how they might ultimately get implemented.

Chris: Uh, to be on the safe side, uh, it could take 15, 20 minutes to go through all the versions of what could happen to be on the safest side. My strong recommendation is that everybody who can. Should borrow at least the minimum amount through Parent Plus for this year before June 30th, 2026. Uh, the minimum amount is not, uh, it’s typically set by the school, and so some schools they’ll process a dollars worth of Parent plus loan.

Chris: Some schools that are researched will, uh, they won’t process anything below $200 for a Parent Plus loan. Uh, but at some point before June 30th, 2026, as long as your children are already enrolled in [00:45:00] college, uh, for this upcoming academic year, just make sure that you take out that Minimum Parent Plus loan, even if you aren’t using loans at all, or even if you’ve found a private loan rate that is much cheaper than Parent Plus, because that, at the very least, gives you the option to use the better version of the program for three more years after this year.

Chris: Uh, and the other thing to consider here is. I often get questions from people who say, okay, I don’t, I wasn’t going to use a parent plus loan this year, but maybe now I will. Can I just take out the loan tomorrow and then pay it back in a few days? Uh, you could, and it’s possible that that would still grandfather you into the program, but we don’t know for sure.

Chris: So, just to be on the safe side, I would still recommend leaving an outstanding balance of at least a dollar at through July [00:46:00] 1st, 2026 in case the way this gets implemented might be somebody who’s sitting at the Department of Education who looks at a data set and says, these are all of the names that have an outstanding parent plus loan balance for this school, and I’m gonna tag every one of these names as somebody who is grandfathered into the current version of the program.

Chris: We don’t know how it’s gonna ultimately happen. So to be on the safe side, I would follow those steps. If you. Aren’t gonna be starting college, uh, until next year for the first time. Then the unfortunate reality is that these new lower limits are going to kick in. And as they do kick in, you either need to find a way to increase the amount of scholarships and grants are gonna receive to cover the gap, uh, to find a way to increase your savings towards school, to cover the gap, or to understand what your private loan options would be to borrow above the cap of what you could get to the federal government.[00:47:00]

Chris: I’m gonna turn over to the handful of these questions. Um,

Chris: ah, interesting question. Could you borrow more than the total of $65,000 through four years if you’ve paid some back? Uh, I believe the answer is no. Uh, it’s. Very likely the answer is no. Uh, there are some aspects of what is written in law being implemented differently over the next few months, uh, that hasn’t been explicitly hashed out, but it’s quite likely that the answer is no.

Chris: Uh, this is a common question I’ve gotten. What if you start school in the summer of 2026? Uh, are you able to be grandfathered into the current limits? Uh, again, this is another one of these gray areas that nobody has a perfect answer for. The way that I read the law, as long as the summer session [00:48:00] for that program is, uh, basically starting before June 30th, 2026, and you’re able to, uh, send money that is received by the school before June 30th, 2026, you should theoretically be grandfathered into the current version of Parent Plus.

Chris: But that only works for that school. So if you tried, we don’t, this is the most likely scenario. I don’t wanna speak too definitively because again, some of this stuff is a little bit gray. If you are going to school a, uh, let’s say today or over the summer of next year, and you use a Parent plus loan for that, you are only grandfathered into being able to use the Parent Plus loan for school A with the higher limits.

Chris: If you then transfer to a different school the following year, it’s unlikely that the higher limits on Parent Plus would live or basically move [00:49:00] with you to the new institution.

Chris: Um, okay. So the question you have is for those with kids entering in the fall, does it make more sense to investigate private loans instead? Uh. If for this fall specifically, uh, the framework that I would use is, look, if I qualify for a lower rate from a private lender than what I can get through Parent Plus, then I would consider using the private loan.

Chris: But I wouldn’t use it for 100% of my borrowed capacity. Even in that case where I had a private option that was even a lot cheaper than Parent Plus, I would still take out whatever the minimum amount was through the Parent Plus loan program that my school was willing to process. And so in theory, let’s say that you have $20,200 of borrowing cap left.[00:50:00]

Chris: Uh, and if I was gonna borrow all of that, I would do $20,000 through a private loan if it was cheaper and $200 through the Parent Plus Loan program just to maintain, uh, the option of using Parent Plus to. Cost of attendance for the future, and, uh, yes to you are allowed to take out more than one type of loan.

Chris: The only limitation that exists is the borrowing cap. Uh, once that borrowing cap, you know what that number is, uh, which again, it’s that cost of attendance minus the other eight that you’ve received. Uh, you’re allowed to mix and match loans within there, uh, to fit your needs. And so you are absolutely allowed to stack the direct loan the student can take out, plus a parent plus loan, plus a private loan, which I know can sound daunting to [00:51:00] have so many different loans in different places.

Chris: Uh, but specifically for this year, for those folks who are in coll, uh, whose children will be in college for this fall, I think it’s worth it to maintain the option of keeping current parent plus.

Chris: I’m gonna give you five or six minutes on just understanding the basics of how private loans work. Uh, and then about five more minutes of content after that. And I’ll flip back to questions. So this is a bit truncated ’cause uh, just for the sake of time, but the way to think of private loans is that today, for this year, uh, I think of them as a potential alternative to Parent plus loans for people whose credit is good enough to qualify them for lower rates than what they could otherwise get from the Parent Plus Program.

Chris: Uh, next year private loans are [00:52:00] gonna turn into more of a need-based source of funding for a larger share of people who otherwise hit the cap on what they can get through Parent Plus, if they have not yet been grandfathered in. And so this may not apply to a, a lot of people right now, but it’s important to understand how these work, what drives the rates, what to watch out for, and some tips on how to shop around without impacting your credit.

Chris: So let’s just go through the same chart that we’ve gone through before. Uh, origination fee. Let’s start there. At the moment, I have not been able to find origination fees on any private student loan that I have looked at from any of the national lenders that I’ve looked at, uh, and I’m quite confident that I’ve looked at all.

Chris: So, short answer here is that typically I would expect a private student loan to not have an origination fee. However, the interest rate that would be [00:53:00] available to you in a private loan is going to change based on your credit, and sometimes also based on your income. So this is quite different than the Parent plus loan program that we were just discussing.

Chris: Remember that for the federal loans, as long as you meet the eligibility criteria, it doesn’t matter what your financial situation is, you get the same rate for private loans. That changes significantly for from one person to the next and sometimes for the same person from one lender to the next. And so you do need to shop around to get a sense for what could be available to you.

Chris: Typically, you actually need a six 50 or higher credit score. Uh, at least that’s the minimum published by go on most of the private lenders websites and FAQs in order to qualify. Uh, and most of these loans are co-signed by both the student and the parent. And so, uh, there are two [00:54:00] types of private loans that are typically available to people.

Chris: Some lenders have what’s called a private parent loan. Which is, uh, only the parent name is on that loan. And more commonly, uh, people choose a private co-signed loan where both the name of the student and the parent is on the loan. Uh, and the biggest difference between this and the new version of Parent Plus is that you’re still allowed to even next year borrow up to the cost of attendance minus the other eight received.

Chris: And so for a lot of people, this will end up being the source of funding that is left to access after they hit Parent plus caps if they need more funding.

Chris: Let’s see,

Chris: see a handful of questions that I promise I will come back to in just a few [00:55:00] minutes. Uh.

Chris: For the next five minutes, I’m gonna show you a few examples of why it’s important to shop around and see where you could get the lowest rates. And there’s three things that are going to impact the rates that you’re presented with when you, uh, are shopping around. And so, uh, let’s just put aside credit and income for a moment because let’s say you run a soft credit check on a couple of different websites.

Chris: You are presented with a grid, and that grid includes a lot of different rate options, and those rate options are gonna be different based on three factors. The first factor is, is it a fixed rate or a variable rate? And for a lot of reasons, I would gravitate towards fixed rates that won’t change over the life of the loan.

Chris: The second option is typically the term length. So the number of years over which you agree [00:56:00] to pay back that loan. Some lenders go as low as five years that you can select from, and some go as high as 20 years that you can select from. But you often will see options that show five years, seven year, 10 year, 15 year, uh, and obviously the, the longer the duration, the lower the required monthly payment after graduation should be.

Chris: But it’s something you want to pay a lot of attention to, and I’ll get into that in just a second. The third thing that you’re able to choose is when you are obligated to start making payments on one. What I’m showing you, the bottom right hand side of this slide is the four most common repayment options that are available.

Chris: Not every lender has all four of these options, but most do on what extreme there are. Uh. At, at this point, I think every private lender has an option that allows you to defer making any payments until after the student graduates, uh, which is similar to [00:57:00] how the federal programs work. Uh, there also have a few other repayment options that you can select the most aggressive of, which is typically called immediate repayment or principal and interest repayment, which means, in other words, if you chose a a five year immediate repayment loan, uh, the money goes to the school September 1st, roughly five years after September 1st, you should be done paying it off.

Chris: Uh, there is no reduced payment while the student is in school. You should be making the same fixed payment for all five of those years. And there are some other options in between that you can choose, uh, where that have lower payments while the student is in school, and then a higher payments after they graduate.

Chris: What’s important to understand about all this is. You are able to pay loans off faster than what you have obligated yourself to do, but you generally cannot do it slower than you have otherwise obligated yourself to do. [00:58:00] And so if you are shopping around, you might be enticed by what looks like an extremely low rate that might be on the screen, but in some cases that very low rate might be associated with a five-year term and immediate repayments.

Chris: Uh, and so just be very careful before you potentially select a loan option that might result in a monthly payment that would stretch your budget or otherwise just not be comfortable to make right now. And very candidly, there are not hardship protections on private loans, uh, and especially nothing like the federal loan protections that are available in the money that the student themselves is able to borrow from the government.

Chris: So when would you consider this? Uh, I would personally consider it after the student has used the federal direct loan [00:59:00] themselves, which is that up to 5,500 that they can borrow from the government as a first year dependent student. Uh, and why would you use one? Well, really three reasons that, uh, are, are worth thinking through.

Chris: The first is, uh, if it’s important to have the loan, the name of both the student and the parent, uh, or the co-signer, whoever that may be, the co-signer does not actually have to be a parent. Uh, the second is, and this is a more common reason, if based on your financial circumstances you are able to qualify for better rates through a private loan, then you could, for a parent plus loan.

Chris: Uh, then it can make sense to take that as an alternative to Parent Plus today. And finally, if next year you unfortunately hit the cap on what you’re able to borrow through Parent Plus, but still have remaining need to pay for the year, at that [01:00:00] point you would likely be shopping around for private loans.

Chris: And it’s important to remember that everything we walked through on the last slide and finally to remember that you are able to shop around at quite a few different places and see what rates may be available to you without doing a hard pull on your credit. And that’s really important to understand, uh, these soft check tools that are available.

Chris: And you can check your rates with two lenders in the Juno site and lenders at a couple of different places that we are more than happy to point you towards. Uh, what that lets you do is. Get a very good sense for the set of options that are available to you from different places. Uh, and you can check multiple times throughout the year, even if you’re curious right now what you would otherwise be charged.

Chris: And you don’t need money until fall of 2026. It’s worth it to just check and see what might be available to you.[01:01:00]

Chris: I’m gonna bring some of these numbers to a close. I have two or three more minutes of slides and then I’m gonna actually, just for the sake of time, I see some really good questions and so I wanna just give you, skip through a few of this. So I may be a little bit biased, but I think that using Juno is a great way if you do end up needing a private loan to increase the likelihood that you’ll find the lowest rates.

Chris: I was mentioning earlier that the way we started the business was by aggregating demand amongst a few hundred MBA students who needed loans at the same time, and asking lenders if they would help us do something better, get a lower rate, or get cash back on the loan or something else. Many of them said yes.

Chris: We’ve grown that to a little bit over 200,000 people now, and the end result of that [01:02:00] for undergrad is I am encouraging you to shop around to not trust me or anyone if they say that they would have the lowest rates for you. So the way that we’ve set up our process is that you’re able to check your rates in less than three minutes, that you’re able to check your rates without doing a hard credit check.

Chris: And if you like what you see and move forward with it, we’re able to give you 2% back on whatever loan amount it is that you ultimately use. And if you. Are, uh, shopping around and you find a lower rate from a very long list of eligible competitors, we’re able to increase that to, we’re able to first match that lower rate and increase that to 3% cash back.

Chris: So this is us putting our money where our mouth is and saying that we want you to shop around and we encourage you to shop around. Uh, and if you give us a chance after you shop around, we’d love to match a lower rate if you found [01:03:00] one, and to compensate you for the effort that it took to do so.

Chris: I’m gonna just end it with four promises from me to you and then turn back over to questions. And so the first is, there’s no cost to sign up to or to use Juno. Uh, there’s not now. There never has been. There’s no hard credit check required to see what rates you would be eligible for it. It’s, and. Of the lenders that we allow into the marketplace, uh, we promise that they don’t have application fees.

Chris: They don’t have origination fees, and they don’t have prepayment penalties. And they also will have a repayment option to defer making payments while you’re in school. And finally, and most importantly, and I really mean this, whether you use Juno or not, or uh, it doesn’t really matter to us, we are available all [01:04:00] year round for free, one-on-one support, whether that’s preferred over email or phone or Zoom.

Chris: We were looking at the data last week, and I think we spoke to several thousand people so far this year. Uh, if we can be helpful, we will be helpful. We won’t charge you for it. Uh, but hopefully somewhere down the line we would find a way to work together or you would be happy enough, uh, that you might tell somebody else that we existed.

Chris: With that, let me flip back over to some of the questions that we’ve got with the remaining time that we have left.

Chris: So, uh, it’s a good, good question here again on, uh, the premise is, let’s say next year, uh, your child is going to school for the first time. So you’re covered under the new lower Parent [01:05:00] plus annual loan limit. If the parents are divorced, could each parent borrow $20,000 for that year on behalf of that student?

Chris: And the answer is, unfortunately no. The Parent Plus loan limit is based on the student and so on behalf of the student, there may only be $20,000 worth of Parent Plus loans taken out each year. Or $65,000 for the entirety of their undergraduate career.

Chris: Uh, really good question here on, uh, do you have to apply for private loans each year or should you estimate the total cost for all four years and then take out a loan for the full amount? Uh, and so it’s the former, you would do this once each year. That is, uh, probably the best way to approach it. [01:06:00] Uh, first the school is not, if you estimated the total cost for four years and you wanted to borrow that upfront, the school would not be allowed to let you do that.

Chris: They still have to limit the amount you borrow to the cost of attendance minus other age received for this year only. And so you wouldn’t be able to, in most cases, uh, and even if you could. I would still recommend against doing that because the, you would be accruing interest on that loan for a long period of time for money that you don’t otherwise need.

Chris: And so, uh, in case it wasn’t clear earlier, you’re only accruing interests on the loan once the money is actually sent to the school. Uh, and an interesting implication here, uh, for a question I often get is, does it make more sense for a private loan or even a federal loan to do this one semester at a time or for the full year?[01:07:00]

Chris: Uh, and just the, the thing to remember here is if you’re applying for a full year loan of $20,000 and a semester system, $10,000 of that loan gets sent in the fall and $10,000 of that loan gets sent in the spring, and you only accrue interest on the outstanding sum that has been sent to the school already.

Chris: Uh, and so just kind of keep that in mind, uh, in case it does change some of you’re planning.

Chris: Uh, quick answer. Can you get financial aid from FAFSA for summer classes? Uh, short answer, yes, you can. Uh, the I’d recommend reaching out to your financial aid office specifically, uh, about that well ahead of time because some of those processes are a little bit different, but yes, you generally can.[01:08:00]

Chris: This is, uh, let’s see. One more question here, a quick answer. Yes, this recording will be available. I’ll send a recording to your inboxes at some point tomorrow as well as the copy of the slides. And links to the Parent plus application and Parent plus eligibility criteria and recordings of the previous webinars that we did on some of the other topics that I touched on at the top of the call.

Chris: Uh, question here on where can we find the list of private loan lenders? Uh, good question. So you can check some through join juno.com. You can check, uh, some others through credible.com, which is C-R-E-D-I-B-L-E. They have a great product and a great tool. Uh, you, my recommendation would be to kind of [01:09:00] start there, uh, and that will give you coverage of a majority of the lenders that exist.

Chris: Uh, and if you have any questions, please feel free to reply to the, uh, the email that I’ll send tomorrow, and I’ll make sure that somebody gets back to you the same day. Uh, can a grandparent take out a private student loan? Yes, they may. So, uh, a private loan that is co-signed does not have to be co-signed by the student and their parent.

Chris: It can be the student and any credit worthy adult who otherwise meets the eligibility criteria for that letter. Those eligibility criteria are not in any way limited to somebody being the parent of the student. Uh, can you use a home equity loan to finance education? Yes, you generally can. My recommendation is to check what rates are available to you from private loan, uh, sources with the rates that are available to you for your, your heloc.

Chris: Uh, I haven’t [01:10:00] done a lot of HELOC shopping over the last few weeks, but I’ve spoken to many people who have, and, uh, I’d say a large share of these people I have spoken to about that have found. Private loan rates that were in many cases similar to or cheaper than their HELOC right now. Uh, and so I would just check and see and make sure that you’re choosing whatever ends up being the cheapest source of financing for you.

Chris: Uh, okay. Good question here. I’ve seen a few times it’s about 529 plans and just a general strategy of, uh, let’s say you have some money in the 529 plan, but it’s not enough to pay for all of someone’s education. Would you use it upfront or would you use it over a several year window? Uh, so there’s two scenarios where I, I want to answer this question and I apologize ’cause this might take a bulk of the remaining time we have left.[01:11:00]

Chris: Scenario one is that you have one child for which this question applies. Uh, and if they are going to be in college this year. And you know that your 529 plan can only cover some and not all of their education. I would recommend, uh, using this is personal preference. I would probably try to use as a largest share of the 529 plan for that student this year, just so I can avoid taking out loans for longer.

Chris: But I would still make sure that I have some capacity left to use whatever minimum parent plus loan I want to take out for this year. And so if school costs $20,000, uh, I would use 19,800 from my 529 plan and still take out $200 from the Parent Plus loan. So I get grandfathered into the better version of the program just to have it as an option for future [01:12:00] years.

Chris: Scenario two is, let’s say that you have multiple children, uh, and if you have, let’s say you have one child who is starting college. This fall and another child who is starting college next fall, then it’s important to remember that for one child you’re gonna have a lot more parent plus borrowing capacity than the other child.

Chris: And there are scenarios in which it might make sense here to transfer some of the 529 plan funds that are, you have set aside for both children from the one for whom you know that you’ll have the higher parent plus borrowing limit to the one for whom you know that you will not, uh, I’m not saying that you have to do this or that, it’s always the right thing to do, but the key thing is to remember, uh, that the, your ability to borrow from the federal government will be different for each child.

Chris: And maybe it makes sense to reallocate some of your 529 plans so that you [01:13:00] will have cash to pay for the second student’s final year of school. If they hit that lifetime limit on what they can get through Parent Plus, uh, if they’re not grandfathered in.

Chris: Uh, you, so the question here is, uh, can you apply for a Parent plus loan before June 30th, 2026 if the student starts in the fall of 2026? Unfortunately, the answer to that is no. Uh, the only gray area here might be if your student is starting college in fall of 2026, but attends a summer program at that same school.

Chris: And that summer program, uh, accepts a federal student loan early enough that, such that you can have a loan dispersed for that program before June 30th, 2026. This is speculative. I, I would expect that some [01:14:00] schools will. Realize that this is probably an option that’s available and maybe start creating earlier summer programs that could help grandfather you into the better version of Parent Plus.

Chris: Uh, but in most cases, if the student is starting college in just the fall of 2026 and you, uh, even if you apply for a Parent plus loan many months earlier than that, uh, that money is still likely not going to be received by the school until their fall tuition due date and their fall tuition due date is typically gonna be long after the date that the government has set for grandfather you to the current version of the Parent Plus Loan Program.

Chris: I wish I had a better answer on that, but that’s likely how it’s gonna play out.[01:15:00]

Chris: Uh, that’s a quick question here on, would a home equity loan count against your borrow limit? Uh, and it would kind of depend on the source of what you’d used those funds for. And so, uh, the, in theory, a home, luckily a loan should not count against your borrowing limit, uh, if you’re using that source of funds towards paying for living expenses.

Chris: Uh, but if you are taking a home equity loan and paying the tuition and fees portion. Then the school has to reduce your borrowing limit by the payments that you’ve already made towards the cost of attendance for that academic year. Tuition fees are, in some schools, the only funds that the school is directly accepting and processing and keeping.

Chris: Uh, and so that’s, that’s what I [01:16:00] would, how I would think about it.

Chris: Uh, if one parent is a public servant, will a loan forgiveness still apply for new loans that are taken out starting next year? Uh, it is,

Chris: it’s a really good question. Uh, I was just having a debate with somebody about that this morning. If you wouldn’t mind sending me an email, uh, or just replying to my email, uh, that I’ll send tomorrow with that same question, I’ll send you that, the slightly more nuanced. Version of this answer with the open questions that, uh, I and a fee people are still trying to get answers on.

Chris: The key changes to the income driven repayment plans for people who are taking loans for the first time, starting, uh, let’s say starting next [01:17:00] year and after who are not grandfathered in, or you’d have the two plans now. One is the standard repayment plan and it’s called Standard Repayment Plan based on the loan balance that you have outstanding.

Chris: Uh, the standard repayment plan calculates the number of years over which you have to make fixed payments. Uh, the second plan, which is more interesting is called the Repayment Assistance Program. And so that limits your monthly payment to a percentage of your AGI. And it’s, uh, it scales up. So the way it works is.

Chris: If you’re below a certain income, you’re only obligated to make $10 monthly payments. If you’re at the next rung of income, you pay 1% of your annual HEI, so you’re divided by 12. That’s your monthly payment, and that goes up by a little bit until you hit the top income tier. And then you’re supposed to pay 10% of your income annually towards your [01:18:00] student loan, under that repayment assistance program, otherwise called wrap.

Chris: Uh, as long as you’re making the minimum required payment, then you won’t have interest accruing, uh, beyond that. And so, uh, it’s really kind of meant to say, okay, you don’t have a job right now. Your minimum payment is $10, let’s say in theory. Uh, as long as you paid that $10. We’re gonna stop the interest from accruing beyond the point that it’s at right now.

Chris: Uh, and so if the way that that program calculates your payment results in a payment that is less than the interest that is accruing each month, uh, then it caps the loan where it’s at, and there are cases in which it would still force some minimal amount to apply towards principle every single month.

Chris: Uh, I actually think that it is, that there’s some elegance to that program, and it does a, a decent job at [01:19:00] helping that. The key thing to remember here is that applies to the money that the student is allowed to borrow from the government, not to the Parent Plus loan program.

Chris: Okay. I. I think we’re roughly at time. Uh, and I do unfortunately have to run. But

yes, I know we have so many great questions, lots of great engagement from the audience. Um, and you’re so knowledgeable, so we appreciate, um, all of your expertise and the answers to your questions again. Um, yes, this will be, um, recording will be emailed, the access to the decks and um, the previous presentations.

Um, but just wanna thank you again, Chris, for your time, your expertise. Um, and thank you everyone for joining us this evening. Um, we hope you have a great night and thank you again for coming.

Chris: Thank you very much. Really appreciate [01:20:00] it.