The Future of College Funding: Student Loans, Policy Shifts & What ParentsMust Know
The landscape of college funding is rapidly evolving, and parents of college-bound students must stay informed to navigate these changes effectively. In this latest episode of our College! Podcast, hosts Matt Carpenter and Peg Keough discuss the current shifts in student loans, policy changes, and what families can do to stay ahead. From federal lo
an uncertainties to the rise of privatized lending, here’s a deep dive into what’s happening and how you can take control of your financial future.
Major Changes in the Department of Education
The Department of Education is experiencing significant restructuring under the Trump administration. This includes staff layoffs and discussions around the potential reduction of its role in higher education. While eliminating the department altogether
would require congressional approval, the push to shrink its influence is already affecting services like FAFSA processing and loan repayment support.
Fewer personnel means longer wait times and reduced assistance for families navigating financial aid. If you’ve relied on the Dept. of Education for FAFSA guidance or loan support in the past, it’s critical to have a backup plan. Seeking guidance from independent financial aid experts can help bridge this gap and ensure you’re making informed decisions.
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The Blocking of Biden’s SAVE Repayment Program
Another major development impacting millions of borrowers is the appeals court’s decision to block the Biden administration’s SAVE program. This program, designed to help borrowers by reducing monthly payments based on income, is now in limbo. Additionally, Income-Driven Repayment (IDR) plans have also been paused, which means that many borrowers could soon see increased monthly payments.
With federal loan repayment programs under threat, parents and students need to carefully assess their repayment options and consider alternative strategies, such as refinancing with private lenders or exploring state-based loan programs.
Want to Hear More? → Click Here to Listen to the Full Episode!
A Shift Toward Private Student Loans
The federal government is signaling a move away from issuing student loans, paving the way for the private sector to take a larger share of the market. While PLUS loans remain an option for parents, the privatization trend means families need to be more diligent in assessing loan terms and interest rates.
A key takeaway? Your credit score matters more than ever. Unlike federal loans, which have fixed rates, private loans vary based on creditworthiness. A difference of just 2% in interest rates on a $100,000 loan can mean paying $40,000 more over the life of the loan. Understanding your credit score and researching lenders is essential before taking on private debt.
State-Based Loan Programs: A Hidden Opportunity
Many families overlook state-based student loan programs, which can offer competitive rates and favorable terms compared to private lenders. In particular, Massachusetts, Rhode Island, and Iowa allow borrowers from any state to access their loan programs.
Unlike many private lenders, some state-based programs provide fixed-rate loans, removing the uncertainty of rising interest rates. These programs often fly under the radar due to minimal marketing but can be an excellent option for families looking for stability in their borrowing plans.
What Parents Can Do Right Now
With all these shifts in play, here are three key action items for parents:
- Assess Your Financial Aid Position Early
Don’t wait until your child’s senior year to think about financial aid. Understanding how much you can expect in aid will allow you to plan strategically and minimize debt. - Know Your Credit Score & Explore Loan Options
Since private lenders use credit scores to determine interest rates, checking and improving your credit can save you thousands. Compare federal, state-based, and private loans to find the best rates and terms. - Start Financial Conversations with Your Student
Whether your child is in middle school or high school, discussing college costs and expectations early can help them make informed decisions. Be transparent about what you’re willing to contribute and explore cost-effective options together.
Ready to Take Control of Your College Planning Journey? → Start Here!
Final Thoughts: Take Control of Your College Funding Plan
While changes in student loans and federal policies can be overwhelming, families are not powerless. By staying informed, planning ahead, and exploring all available options, parents can make confident financial decisions that set their students up for success.
At the College! Podcast, we believe in empowering families with knowledge and strategies to tackle the rising costs of higher education. Tune in to our weekly episodes for the latest updates and expert insights on making college affordable and achievable.
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