Major student loan changes on the way | KTVU

for federal student loan borrowers. President Trump's budget bill that was signed into law earlier this month introduces new borrowing limits, fewer repayment options, and brings an end to the Biden administration's safe plan. With more than 43 million Americans carrying student debt, the impact will be widespread. Let's get some insight by turning to Lauren Williams, a senior advisor at Student Loan Planner. Thanks for being with us. Thanks for having me guys. How are you today? I am good. I'm good and I'm super glad that I'm way out of college and don't have student loan debt. But for the 8 million people who do and who are on the safe repayment plan, their heads are likely spinning because they've had some multiple updates here in just the past week. What's most important for people on the safe plan to know this morning? I would say the number one thing to know is that while interest is going to start to accrue on August the 1st, you don't actually have to make a payment and I think that's what's sending people into a tailspin. They feel like, oh my goodness, something big is happening and interest is a big deal. They've been on this safe forbearance for a while with just like a complete pause. They haven't had to do anything but also no interest is accruing. Now you're going to start to see your student loan balance go up if you decide to stay on this safe forbearance because you don't have to start making payments just yet but it's probably better to choose a different payment plan and start getting ready to pay your student loans. So how do people figure out if they should switch to something other than the safe plan? Well we all know that the safe plan is going to be ending sooner or later. It could be as late as July of 2028 or it could be at any point that the Trump administration says, hey we're done with this and we're moving on. So it's better to start looking at your budget and start understanding what other payment options are out there. There are still other income driven repayment plans. They will calculate to be a higher payment than a safe plan. It was the one that was calculating the lowest payment. So get ready. You have a bigger line item in your budget and you might have no line item in your budget right now because you haven't been making payments. So the big thing people need to know is realize, hey we're gonna have to start making a payment and it's gonna be higher than the one that they told me it was gonna be on safe. Yeah and Lauren so many people when it comes to money are uncomfortable. They're like I'm not gonna open the envelope, I'm not gonna click to see my balance. This is probably something you're gonna tell us to get going on now. Yes now is the time. We've got to pull our head out of the sand and get financially responsible because the impact is that you're not earning any credit toward forgiveness. By sitting on the safe forbearance you're doing the equivalent of nothing and that nothing is actually accruing interest and you're not doing anything that's gonna help your overall financial situation. So let's get going. We've got to do something to take care of this student loan debt. I agree. All right so backing up even before 2028, in 2026 new loans will be subject to new borrowing limits. Can you break down what that'll mean? Absolutely. So you're not going to be able to take out as much debt as we've been able to take out in the past and we're wondering if this is going to have an impact on the way that universities are charging. But for those graduate school programs where you've been able to borrow unlimited, you will now have some borrowing limits and so you're gonna need to be thinking about how can I best afford to pay for college and am I going to be willing to take out private student loan debt which has traditionally been a lot more restrictive and a lot higher interest rate than federal student loan debt. I know a lot of families might be sending one member off to college but it really is the whole family who could be impacted. How do you hope that families talk about let's say you have a high school junior who is looking at college how do you talk about that decision of where's your child going to go is it the whole you know we'll we'll send you wherever you can manage to get in or look we have this much these are your best options. I think that we have this much these are your best options is the conversation that a lot more families should be having because they get really excited a lot of big school that's really expensive and they say by any means necessary because of the prestige related to the school but that comes at a cost and we've seen a lot of people at Parent Plus borrowers with sometimes half a million dollars of debt they borrowed on behalf of their child. Well there's also limits for that as well now and you're not going to be able to do that so you're gonna have to start thinking outside the box. And you know so often when you're about to send your child to college you should be saving for retirement or at least ramping that up so it's a really hard push-pull I know most parents say I'd never say no to my child but sometimes you might have to. Lauren I feel like we could talk forever about this I do have a kid is gonna be a junior next year which is one of the reasons why we'll have to leave it here the Lauren Williams bringing us good help from Student Loan Planner thanks again. Thank you. Thank you all right coming up here on the 9 it is