President Donald Trump signed the tax and spending bill earlier this month, which introduces significant changes to federal student loan programs. This move has sparked a debate on how the funding gap will be filled.
What Happened: As part of the new bill, new limits on federal student loans for parents and graduate students will be imposed starting from July 1, 2026. Under the new rules, parents can borrow up to $20,000 per year, with a lifetime cap of $65,000 per student, through the federal Parent PLUS program, reported the New York Times.
Graduate students will face an annual borrowing limit of $20,500 and a total cap of $100,000, not counting any undergraduate debt. Meanwhile, students in professional programs — like medical or law school — will generally be limited to $50,000 per year and $200,000 overall.
These changes are expected to create a funding gap, potentially leading to a surge in private student loan lenders. The question remains whether these lenders will offer fair interest rates and terms.
Why It Matters: The new regulations, which were signed into law by President Trump earlier this month, are expected to have a significant impact on the student loan industry.
Private lenders like SoFi Technologies, Inc. (NASDAQ:SOFI) are poised to benefit from these changes, as they are likely to see an increase in demand for their services.
The bill has been met with criticism from Sen. Elizabeth Warren (D-Mass.) and former Treasury Secretary Lawrence Summers, who have voiced their concerns about the potential consequences of the bill, including significant impacts on working American families.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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