Key Points
- Under Secretary of Education Nicholas Kent explains how the Working Families Tax Cuts Act simplifies the federal student aid system, cutting more than 40 repayment and discharge options down to two new plans starting July 1.
- Kent breaks down what SAVE borrowers must do now, the 90-day transition clock, and why the new Repayment Assistance Plan (RAP) is designed so on-time payments always lower your balance.
- Kent shares the new graduate and Parent PLUS borrowing limits and how some schools are already cutting program costs in response.
The federal student loan system is heading into the largest set of changes to borrowing and repayment in decades and most borrowers don't yet know what they need to do before July 1.
In this episode, Robert Farrington sits down with Department of Education Under Secretary Nicholas Kent, the top federal policy official overseeing postsecondary education, career and technical education, adult education, and the $1.7 trillion federal student aid portfolio. Together they unpack how we got here, what's changing, and the practical steps borrowers should take in the weeks ahead.
Kent talks about his path from a first-generation Pell Grant student in rural West Virginia to the Under Secretary's office, and why that background shapes how he thinks about the more than 40 million Americans affected by federal student aid policy. He explains why he describes today's system as a "patchwork" (or even a "Frankenstein") and how the new law aims to streamline it.
The conversation also digs into the end of the SAVE plan, the rollout of the new Repayment Assistance Plan and tiered standard plan, and a first-ever set of borrowing limits for graduate and Parent PLUS borrowers. Kent makes the case that these caps are designed to put downward pressure on the cost of higher education and points to early examples of schools already responding.
This conversation offers timely takeaways for borrowers, parents, and anyone trying to navigate the student loan changes taking effect July 1.
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Episode Summary
Robert speaks with Under Secretary of Education Nicholas Kent about the sweeping student loan borrowing and repayment changes arriving July 1 under the Working Families Tax Cuts Act. The conversation explores:
- What an Under Secretary of Education does and the higher education portfolio they oversee
- Why the current federal student aid system is a "patchwork" being simplified
- The end of the SAVE plan and the 90-day transition clock for borrowers
- The new Repayment Assistance Plan (RAP) and the new tiered standard plan
- How the RAP interest subsidy and principal matching payment can lower balances
- New short-term Pell Grant access for high-value programs as short as eight weeks
- First-ever borrowing limits for graduate and Parent PLUS loans
- How loan caps are meant to lower the cost of attendance with early examples from schools
- The "professional" vs. "graduate" program designation
- Degree inflation, accreditation, and program accountability
- What borrowers should do right now to be ready for July 1
Key Moments And Topics Covered
Looking for a specific moment?
1:46 — What is an Under Secretary of Education? Kent explains the office and the Federal Student Aid, Postsecondary Education, and Career and Technical Education portfolios.
3:00 — "The who drives the what." Kent shares his story as a first-generation, low-income Pell Grant student from rural West Virginia.
4:59 — Why education isn't just a four-year degree, and championing two-year, vocational, and career and technical pathways.
6:08 — How we got here: the "patchwork" or "Frankenstein" federal student aid system and the goal of simplifying it.
9:00 — Simplifying more than 40 repayment and discharge options down to two new plans, plus the new short-term Pell program and program accountability.
10:25 — Turning to repayment: SAVE winding down and the moving parts of the transition.
11:02 — Why the SAVE plan is "dead," how the department has been communicating with borrowers, and how servicers will notify borrowers in tranches.
13:00 — The 90-day clock: how it works, why July 1 is the key date, and why borrowers are notified in groups.
15:17 — Is there a final deadline? Kent's advice on timing and why borrowers shouldn't wait.
15:37 — "Don't wait until July 2nd." Plus the 300,000+ SAVE borrowers who have already moved and the roughly 7 million who still need to leave SAVE.
17:22 — RAP vs. the tiered standard plan: who fits into each and how to think about the decision.
19:00 — The "game changer": how the RAP interest subsidy and principal matching payment solve negative amortization so your balance always goes down.
21:00 — How the tiered standard plan works, with repayment terms tied to your starting balance.
23:00 — Turning to borrowing: major changes coming to graduate and Parent PLUS loan limits.
24:13 — Why borrowers should treat new loan limits as a "stop sign," and a new tool letting financial aid offices cap borrowing by program type.
26:00 — How 2006 opened the door to unlimited graduate lending up to the cost of attendance, with price tags set by the institutions themselves.
27:30 — Stopping the "cash cow": the new $100,000 limit for most graduate programs and $200,000 for programs like law and medicine.
29:00 — Early evidence schools are responding: Purdue, UC Irvine, and Santa Clara Law School reducing costs or offering scholarships.
30:09 — "Professional" vs. "graduate" program designations — why it's a technical label, not a value judgment.
33:24 — Inside negotiated rulemaking: how a wide range of stakeholders reached consensus on the professional program definition.
33:47 — State licensing requirements, degree inflation, and accreditation reform.
35:33 — What should borrowers do right now to be ready for July 1?
38:07 — Why broad student loan forgiveness "is not going to happen," and the cost of staying in default.
38:54 — Where to find the new tools: StudentAid.gov.
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Colin Graves is a financial writer and editor with more than 20 years of experience in banking and wealth management. Before joining The College Investor, he managed retail and commercial portfolios exceeding $1 billion, earning multiple awards for leadership and customer service. Colin holds several credentials from the Canadian Securities Institute, including the Canadian Securities Course, Professional Financial Planning Course, and the Certificate of Financial Services Advice.
Today, he applies that expertise to editing and writing about investing, credit, and money management for readers seeking practical, trustworthy financial information. Colin also writes at ColinGraves.com, where he helps people transition from traditional employment to self-employment through financial literacy and business coaching.