Why Americans Will Get Less Help Paying for College

**SPEAKER_1** (0:00)
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**Rachel Abrams** (0:30)
From The New York Times, I'm Rachel Abrams, and this is The Daily.
Today, as the cost of higher education has soared in recent decades, universities have attracted more scrutiny about the value of a four-year degree. Now, the Trump administration is taking those questions to the next level with a new set of policies that scale back the federal government student loan program. Today, I talked to my colleague Ron Lieber, who writes about personal finance, about what these new changes are and how they might reshape higher education in America.
It's Wednesday, July 1st. So Ron, we have talked a lot on the show about how the administration has really focused on higher education. There have been concerns about anti-Semitism on campus. The administration has accused a lot of different schools of being, as it describes, too woke. But you cover personal finance, and you have been following a very different set of developments when it comes to higher education, which go into effect today, July 1st. So tell us what has been going on.

**Ron Lieber** (1:49)
Sure. So the federal government put into place some changes to the way it lends money for higher education. I mean, there's $1.7 trillion in student loan debt, and that's more than credit card debt, it's more than auto loans. And you'll probably remember that there was this giant pause in the repayment of student loans. It happened at the beginning of the pandemic, but it went on for years. And since then, the Trump administration has been trying to revise the federal government's repayment plans to make them a bit stricter. And some of those changes went into effect today.
So that's going to be a big change for families who are in the process of paying off student loans. But there's an even bigger change that the administration also put into place, which is that instead of focusing solely on canceling student debt or changing up the repayment plans, they are also trying to reduce the amount of loans that are given out in the first place.

**Rachel Abrams** (2:56)
So what specifically is the government doing to try to achieve that goal?

**Ron Lieber** (3:00)
So two things are happening that just went into effect. The first thing is that there are going to be caps on certain kinds of federal loans. First of all, there's this thing called the PLUS loan. Parents take that one out on behalf of their undergraduate students. Grandparents sometimes do it, too.
And they do it when that student's financial aid package, if any, is not enough to cover the cost. And then there are the loans for graduate students. And up until this point, there have been very few limits on the amount of money that you can borrow.

**Rachel Abrams** (3:39)
You can borrow whatever you want.

**Ron Lieber** (3:40)
Up to the cost of attendance, which includes room and board. It can be over $100,000 per year, right? And now parents are only going to be able to borrow a certain amount of money per year and a certain amount of money over time through the entire process of completing a degree.
And then graduate students, who are borrowing for themselves, are gonna have a different set of caps.

**Rachel Abrams** (4:09)
And I know that there are probably a lot of nuances here, but just really generally speaking, can you give us a rough idea of what the caps are for grad students and from the parents borrowing for their undergrad children?

**Ron Lieber** (4:19)
Yeah, so let's start with those parents. The cap is $20,000 a year for those federal loans that parents can get access to.
And then the total limit over time might be four years, might be more depending on how long the kid takes to get through. That's $65,000 total.

**Rachel Abrams** (4:39)
Which is not a whole lot if you consider the fact that some universities charge that just for one year of school.

**Ron Lieber** (4:44)
Right. So now, over to those grad students. If you are in one of those standard master's degree programs or other programs that are deemed non-professional, you're limited to $20,500 per year. And the aggregate total that you're allowed to borrow is $100,000.