Suze: August 3rd, 2025. Why do I always chuckle when I
Suze: say the date? I don't know. But anyway, welcome everybody
Suze: to the Women and Money podcast, as well as everybody
Suze: smart enough to listen.
Suze: Today is Suze School, and we are going to continue
Suze: from last week's going over some of the provisions of
Suze: the big beautiful bill that I think you should know about.
Suze: But Miss Travis, as we speak, is in British Columbia
Suze: catching fish, salmon with her sister and some friends and
Suze: having the time of her life, but she will be
Suze: back in time for
Suze: Ask KT's asking show anyway, that's what she calls it,
Suze: by the way. It's the KT asking show when she
Suze: talks to me about it. Get out your Suze notebooks
Suze: because I am going to talk about three different aspects
Suze: of the new big beautiful bill, all right, just so
Suze: you know, the first one is all about how there
Suze: is a new law.
Suze: That temporarily, and I want you to underline the word
Suze: temporarily increases the state and local tax deduction. Now state
Suze: and local tax deduction.
Suze: It's abbreviated by the initials SALT state and local tax.
Suze: All right, so when you hear me say salt, you'll
Suze: know what I'm talking about. So those of you who
Suze: live in states with an income tax, you may be
Suze: in line for some really serious tax relief.
Suze: Now the big new federal tax bill that became law
Suze: in early July increases the federal deduction for salt.
Suze: And that will help you on your taxes.
Suze: Do you remember how ever since the 2017 tax bill
Suze: when that was passed, there has been a $10,000 limit
Suze: on salt that can be deducted from federal taxes. Do
Suze: you remember that?
Suze: The new law, however, increases the potential deduction to $40,000.
Suze: Now this is per household, everybody, not per person, per household.
Suze: The maximum $40,000 salt deduction is allowed for single filers
Suze: as well as married file jointly with a modified gross
Suze: income below $500,000. If you are married, filing separately.
Suze: The max to take the $20,000 salt deduction is if
Suze: you make under $250,000 of modified adjusted gross income.
Suze: However, if your income is above those limits, then your
Suze: maximum salt deduction is reduced by 30% of the amount.
Suze: Your income exceeds the limit. Now what that means to
Suze: you is this if you have over $633,333 of modified
Suze: adjusted gross income and.
Suze: You are single or married finally jointly.
Suze: You've maxed out your salt deduction and it automatically goes
Suze: all the way back down to $10,000 if you are
Suze: married finally separately, once you make $316,667 or more.
Suze: You've lost your $20,000 salt deduction and it too goes
Suze: back to what? $5000. So let me give you an example.
Suze: Let's say you're single or married finally jointly does not matter,
Suze: and you make $550,000 of adjusted gross income. You are
Suze: $50,000 over the $500,000 max for the full $40,000 salt deduction.
Suze: You would times that $50,000 by 30% and that equals $15,000.
Suze: You would minus $15,000 from the $40,000 and you would
Suze: have a $25,000 salt deduction. Now let's just say you
Suze: were married finally separately.
Suze: Same thing and your income now is let's just say
Suze: $300,000 or $50,000 above the maximum.
Suze: 50,000 again times 30% is $15,000 so $15,000 from $20,000
Suze: which is the max if you're married finally and separately,
Suze: so now your deduction is $5000. Again I'm just gonna reiterate,
Suze: no matter how much money you make.
Suze: You always will have either a 10,000 salt deduction if
Suze: in fact you're married finally, jointly or single, or 5000
Suze: if you are married finally separately.
Suze: Now, do you remember when I started this, I said
Suze: pay attention to the word temporary.
Suze: The $40,000 salt deduction is temporary and it can be
Suze: claimed for 2025, 2026, 2027, 2028, and 2029. Under the
Suze: new law, the salt deduction is going to revert to
Suze: the $10,000 limit for all households in 2030.
Suze: So from 2026 through 2029, the $40,000 salt deduction and
Suze: the modified adjusted gross income limits will both increase 1%
Suze: a year, so.
Suze: If you have a hefty state income tax bill and
Suze: property tax bill, let's just say you do, and your
Suze: household income is near the deduction limits, it may pay
Suze: to do some tax planning to see if you can
Suze: push your income just below the limits so you can
Suze: claim the highest possible salt deduction.
Suze: So I want you all to sit down with the
Suze: tax pro and to consider ways to reduce your income.
Suze: Example, I know, I know modifying Roth conversions, you may
Suze: not want to do roth conversions during those years, or
Suze: reducing taxable withdrawals from your retirement accounts. That can all
Suze: be a very, very smart move. All right, so just
Suze: know there are rules you need to know. The next one,
Suze: and this one upsets me a little bit, I have
Suze: to tell you.
Suze: Is the law that makes big changes to federal college loans.
Suze: You ready, everybody?
Suze: Any student or family planning to take out federal loans
Suze: to pay for college, you need to be aware that
Suze: there are huge changes to how much can be borrowed
Suze: and how repayment will work.
Suze: The big federal tax bill signed into law in July
Suze: is going to limit parents how much you can borrow
Suze: for a child's undergrad degree and how the repayment plans
Suze: are going to change. So bottom line is that paying
Suze: for college just got more complicated. So are you ready?
Suze: Let's start with a list of the new rules, and
Suze: then I'll share my advice on how to plan.
Suze: For college, given these new rules, undergraduate borrowing beginning July 1st, 2026.
Suze: Write this down, everybody. The parent plus loan program limits
Suze: parental borrowing to $20,000 per year per student and a
Suze: lifetime total per student of $65,000.
Suze: Under the old rules you could borrow up to the
Suze: full cost of their attendance for your kids' parents. Not
Suze: any more. So what does that mean? That means if
Suze: you're sending your kids and they want to go to
Suze: these schools that are $65,000 a year.
Suze: Good luck. How are you going to pay for them?
Suze: You better start thinking about that right now. Parent plus
Suze: loans taken out after July 1st, 2026. I hate this one,
Suze: will no longer be eligible for an income-driven repayment plan.
Suze: Parent plus loans will only be eligible everybody for the
Suze: standard repayment plan which sets repayments between 10 and 25
Suze: years depending on the balance. So you used to be
Suze: able to pay off these loans based on your income.
Suze: A standard repayment plan is a whole lot more so parents,
Suze: you better think twice before you just take out a loan.
Suze: You think you're going to be able to repay it.
Suze: You better know the new rules, how much you can
Suze: borrow and what it is actually going to cost you,
Suze: and you best sit down with your children who want
Suze: help from you and really go over. Can you afford
Suze: it or not.
Suze: Again, beginning July 1st, 2026, students, students, listen to me
Suze: borrowing for undergrad will have their interest payments during school
Suze: added to their loan balance. Do you remember when you
Suze: used to be able to get subsidized loans? Subsidized meaning
Suze: that while you were in school, interest didn't accrue to
Suze: the money you borrowed, not any more.
Suze: Now what you're going to see is that the new
Suze: law makes all undergrad loans unsubsidized, so in plain English
Suze: that means that even those students do not have to
Suze: make payments on their loans while they are in school.
Suze: The interest on the loan is charged, and if unpaid
Suze: while in school, the interest charged is added to the
Suze: loan balance. That will mean bigger payments once the student
Suze: leaves school and repayment starts. So you might want to
Suze: think about it, everybody, that if you're going to take
Suze: out a student loan.
Suze: The student is going to take it out. You might
Suze: want to pay the interest on that loan yearly starting
Suze: the very first year, because otherwise it's going to compound.
Suze: The annual borrowing limits for federal undergraduate loans is unchanged. Oh, well,
Suze: we have one thing unchanged. They start at 5500 for
Suze: the first year, $6500 for year 2 $7500 for year
Suze: three and beyond. Now there is a lifetime limit, listen
Suze: to me, of $31,000 for students who are claimed as
Suze: a dependent.
Suze: On a parent's tax return, so limits for independent students
Suze: are higher just so you know, but I want you
Suze: to think about that. If the parent plus loans, you
Suze: are limited to what you can borrow.
Suze: You now have to pay it back under an unfavorable term.
Suze: Interest on these student loans start accumulating right away.
Suze: You have to really be careful about how much you
Suze: are borrowing now repayment of loans taken out, everybody, after
Suze: July 1st, 2026. They will be eligible for two basic
Suze: repayment plans, a standard plan that will require the loan
Suze: be paid off in 10 to 25 years, depending on
Suze: the loan size. But however,
Suze: There will be just one income driven plan, and it's
Suze: going to be called the repayment assistant plan or RAP
Suze: that will tie payments to income. Payments will range from 1%
Suze: to 10% of your discretionary income.
Suze: And there will be no zero payment options. So nowadays
Suze: it's possible, depending on your income that you don't have
Suze: to pay anything on it and you're not in default
Suze: or anything. Under rap, a loan will be forgiven, however,
Suze: after 30 years, which is 5 years longer than the
Suze: old plans. So what does that mean?
Suze: For borrowers on an IDR plan taken out before July 26th,
Suze: you will need to switch to one of these two
Suze: new plans after July 28th. So don't think if you
Suze: took out a loan before this goes into effect that
Suze: you missed it. No, you didn't. So beginning July 1st, 2027,
Suze: not 2026.
Suze: Deferment of a federal loan due to economic hardship is ended.
Suze: Did you just hear me?
Suze: Is this a bill that you love that passed?
Suze: Are you all excited about it? Are you starting to
Suze: understand how this bill works against you if you are
Suze: out there and you need to borrow money?
Suze: To send your kids to school, are you understanding this?
Suze: So again, I'm going to say this one more time.
Suze: Beginning July 1st, 2027, not 2026, deferment of a federal
Suze: loan due to economic hardship is ended. There will be
Suze: no way to completely defer.
Suze: Principal and interest payments due to hardship. No, you can
Suze: still defer payments while in school, but this new rule
Suze: applies to once you have left school, you are in
Suze: the repayment phase, and there is nothing you can do
Suze: to stop that repayment phase. Again beginning July 1st, 2027,
Suze: you will still be able to apply for repayment forbearance.
Suze: Which means you can't afford to pay it back, but
Suze: if granted, it will only be allowed for 9 months
Suze: within any 2-year period. Remember, with forbearance you do not
Suze: owe any payments, but the interest on the loan continues
Suze: to accrue and is added to your loan balance. Why
Suze: do they want to be able to allow you to
Suze: do that?
Suze: Because student loans still in most cases are not dischargeable
Suze: in bankruptcy, they can come after you. They can garnish
Suze: your wages. They can even go after your Social Security
Suze: check later on in life, and it's compounding and compounding,
Suze: so you better be careful. Let's talk about graduate borrowing
Suze: because this was for undergraduate beginning July 1st, 2026, so
Suze: about one year from now.
Suze: The graduate plus program ready, everybody is abolished.
Suze: Under this program, graduate students have been able to borrow,
Suze: you all know this, up to the full cost of attendance.
Suze: There are now limits on how much a graduate student
Suze: can borrow.
Suze: Beginning July 1, 2026, the only remaining program for federal
Suze: graduate school borrowing will be unsubsidized loans for graduate school.
Suze: The annual limit for master's programs and PhD programs will
Suze: be $20,500 a year.
Suze: And there will be a lifetime limit of $100,000. So
Suze: for professional degrees like doctors, lawyers, federal borrowing will be
Suze: limited to $50,000 a year and a $200,000 total.
Suze: Where are you all going to get the money to
Suze: attend college? Doesn't it kind of feel like we have
Suze: a thing going on about higher education with everything that's
Suze: going on with many of the universities? I don't know
Suze: what you think, but I sure do. So the new
Suze: grad school lifetime limits are in addition to any federal
Suze: undergraduate borrowing. Now my advice for undergrad debt.
Suze: I have long advised you, have I not, parents, you
Suze: are not to put their retirement at risk by borrowing
Suze: or overborrowing for their children's college costs. You know how
Suze: I feel about that, but I also know that has
Suze: been a challenge for many families.
Suze: These new limits provide some guard rails that can help
Suze: nudge more of you to carefully calibrate college borrowing for
Suze: your kids, and the same rule applies. Children should always
Suze: borrow first before you, parents. The interest rate that they
Suze: pay on federal loans is lower than the cost of
Suze: parent plus loans, so they need to do it first
Suze: before you. Got that.
Suze: More importantly,
Suze: Do I sound sad to you cause this all makes
Suze: me so sad I can't even stand it. The new
Suze: borrowing limits should really spark your family to double down
Suze: on looking for the best affordable school. So the dream
Suze: school for your children and for you is the one.
Suze: That is so eager for your child to attend that
Suze: it will offer a great merit ad package that reduces
Suze: or even eliminates everybody the need for your kid to borrow,
Suze: let alone you.
Suze: Do you hear me? So you need to start talking
Suze: to your kids about this in grammar school in early
Suze: years of high school to say, listen, if you want
Suze: to go to college, I need you to really have
Suze: all the colleges want you to attend. So you have
Suze: got to get straight A's. Maybe you should excel in
Suze: a sport, but you have got to do everything and
Suze: anything you can do.
Suze: As for the change in repayment plans, well.
Suze: I have to tell you, the big takeaway is that
Suze: students and parents really need to think hard about what
Suze: they will owe after school is over. Please remember that
Suze: the repayment plans now are less generous, forbearance is limited.
Suze: You need to be prepared for making on-time payments once
Suze: the student leaves school.
Suze: And the worst thing you can do is borrow now
Suze: without understanding your future repayment commitment. Do you understand me?
Suze: Notice I said that the repayment happens as soon as
Suze: the student leaves schools. Loans must be repaid regardless of
Suze: what the student graduates or not.
Suze: So if you have a kid that goes to school
Suze: for 2 years, doesn't graduate, and now you have all
Suze: of these loans, you have to start making payments right away.
Suze: So that's just another reason to have a serious family
Suze: talk long before freshman year about attending college and paying
Suze: for college. The worst move is to force a child
Suze: into an education they aren't eager for.
Suze: And that they and you may still end up paying
Suze: for even if they don't complete a degree. I still
Suze: don't see anything wrong with community college just same. My
Suze: advice for grad school is this. All right. The majority
Suze: of recent borrowers for a master's degree borrowed less than $100,000.
Suze: All right, so I'm not too concerned about this new limit.
Suze: But you should be able to fulfill any borrowing needs
Suze: by sticking with federal loans. Professional degrees are another matter.
Suze: The cost of obtaining a medical degree or a law
Suze: degree absolutely exceeds in most cases, $200,000. So under the
Suze: new rules, anyone who needs to borrow.
Suze: More for their graduate degree will need to look for
Suze: a private student loan, and that is a big stand
Suze: in your truth moment. Do you hear me? You need
Suze: to slow down and carefully, and I mean very carefully,
Suze: understand the risks and retirements of a private student loan.
Suze: Got that? For starters, private student loans work a bit
Suze: like a car loan.
Suze: You know what I think about car loans, but anyway,
Suze: you need to qualify, and that means a credit score check.
Suze: So you better make sure that your FICO score, your
Suze: credit score is as high as it possibly can be,
Suze: because even if you are approved, the interest rate you
Suze: are offered.
Suze: On your private loan can be fixed or a variable
Suze: rate which will be set by your credit profile. So
Suze: another option is for someone else, typically a parent with income,
Suze: to co-sign.
Suze: Are you kidding me?
Suze: For the parents right now listening to me, please do
Suze: not tell me and more importantly yourself, that cosigning is
Suze: no big deal given it is for such a worthy endeavor.
Suze: What if your child doesn't finish the degree or if
Suze: the child's income is not sufficient to cover the hefty repayments? You,
Suze: my dear parents, will be on the hook to make
Suze: payments if that in any way interferes with your retirement security.
Suze: You get a hard denied from me. I'm serious. It's
Suze: also important to understand that private loans do not offer
Suze: the same repayment and protection plans as federal loans. That
Suze: doesn't mean that your child can become a doctor or
Suze: a lawyer. It does mean that they should look for
Suze: programs that will subsidize the cost. I'm going to repeat this.
Suze: The best school, whether we are talking about someone pursuing
Suze: an undergrad, master's, or professional degree, is the program that
Suze: offers the best financial aid. Ideally, you would never need
Suze: to take out private loans, and in a minimum, if
Suze: you need private loans, it should be for the smallest
Suze: amount possible. I'm sure there are millions of you out there.
Suze: That are saying, but Suze, what about me? I already
Suze: have student loans. How much of this applies to me?
Suze: The first thing I want to say to all of
Suze: you is stop going on all these boards and freaking
Suze: out because you're reading about oh my God, my payments
Suze: are immediately gonna go up 600%. I don't know how
Suze: to do it. It's crazy.
Suze: So I've always said the only way to conquer fear
Suze: is through action.
Suze: When you take action, however, you have to have the
Suze: correct information so you know how to act. The first
Suze: thing you better all get is that anybody who has
Suze: an existing subsidized or non-subsidized staff for loan that's gonna
Suze: be dispersed before July 1st, 2026, you need to know
Suze: nothing has changed for you.
Suze: All the rules and repayment terms that you're under, you're
Suze: still under them, but only until July 1st, 2028. So
Suze: you have a lot of time to figure this out
Suze: or to put more money towards your student loan, but
Suze: you have time. So what happens on July 1st, 2028.
Suze: Well, that's when you gotta switch to the new available options,
Suze: and if you don't switch yourself, oh, you will be
Suze: auto-enrolled in the standard repayment plan.
Suze: Remember those are fixed monthly payments or the new repayment
Suze: assistant plan known as RAP which is income driven. Those
Suze: will be your only two choices now.
Suze: Existing parent plus borrowers, you can still consolidate and access
Suze: some income driven repayment plans or the IDR options, but
Suze: after July 1st, 2026, new parent plus loans must be
Suze: repaid under this standard repayment plan and will not be
Suze: eligible for RAM or IBR. So to maintain flexibility, everybody.
Suze: If you have a current parent plus loan, you should
Suze: think about consolidating and enrolling in an IDR plan before
Suze: July 1st, 2026. Got that? After that cutoff date, you
Suze: lose the ability to use any IDR option for any
Suze: new parent plus loan.
Suze: Now for those of you under public student loan forgiveness, oh,
Suze: it still exists, but with some changes, hopefully all of
Suze: you are up to date. I've tried educating you on this,
Suze: that the save program that maybe you've been using to
Suze: make repayments, it doesn't exist any more, and all of
Suze: you had to change by August 1st, a few days ago.
Suze: You had to change it to something else because if
Suze: you're still under save those payments are not going to
Suze: count towards your repayments, all right?
Suze: So what must you do? What is the something else
Suze: you must do? You should use now an IBR method
Suze: and then consider switching to rap when it launches just
Suze: that simple. But remember, by July 1st, 2028, 0, you
Suze: will be enrolled in rap or a qualifying plan, and
Suze: if you don't do it yourself, you're going to be
Suze: auto enrolled.
Suze: The one thing I want you to watch carefully if
Suze: you're in the PSLF plans is that while in 2025.
Suze: You will have forgiveness. Let's say you've paid it off
Suze: and you're forgiven you're not gonna pay taxes on that
Suze: starting in 2026 unless something changes, that forgiveness most likely
Suze: is going to be considered taxable. So those are the
Suze: main things you need to know if you have a
Suze: current student loan.
Suze: Now I had one more law that I wanted to
Suze: talk to you about which is about the law that
Suze: kills one's car buying tax credit and creates a new one,
Suze: but I have to tell you the one about student
Suze: loans dined me in. That's about all I can take
Suze: about this bill right now.
Suze: So that concludes this podcast, but listen to me on
Suze: August 10th. I'm gonna continue with the other things about
Suze: the BBB that you should know, and there's some really
Suze: great things, by the way, especially if you work for
Suze: tips or you do overtime or you have a car
Suze: loan or whatever it may be, don't miss it because again,
Suze: it's everything you need to know.
Suze: So with that we'll all look forward to Miss Travis
Suze: joining us again. I've missed her so much. I can't
Suze: even stand it. But anyway, there's only one thing that
Suze: I want you to remember when it comes to your money.
Suze: You have got to understand how this big beautiful bill
Suze: really affects you.
Suze: When does it allow you to make more out of
Suze: the money that you make, and when does it allow
Suze: you to make less out of the money that you
Suze: already make? You better understand it, and I hope that
Suze: this podcast today did a whole lot, especially on student loans,
Suze: to explaining that to you. So until Thursday, there's only
Suze: one thing that I want you to remember when it
Suze: comes to your money, and it is this.
Suze: You have to know everything so that you really can
Suze: make your money make more money. All right, everybody stay safe,
Suze: stay healthy, and once again know how much we love you.
Suze: Bye bye.