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New federal repayment programs could squeeze your middle-tier and parent clients. By Jennifer Lea Reed

SWEEPING SET OF CHANGES TO THE FEDERAL student loan system taking effect this year will reduce the number of repayment plans from more than a dozen to just two for new borrowers. At the same time, caps on borrowing— especially for Parent PLUS loans— are tightening access on the front end, while new repayment structures may dramatically increase monthly payments and extend time lines on the back end.

The result, advisors and student loan experts say, is a system that is cleaner on paper but more rigid and most likely more expensive in reality— one that could force earlier, harder financial decisions about college and leave less room to manage outcomes once loans are in place.

Now pair that with a fundamental shift in how payments are calculated and how long borrowers will remain in a repayment status. Under the new Repayment Assistance Plan, or RAP, monthly payments are tied directly to income, but forgiveness may take as long as 30 years— an increase from the 20 years it takes under some existing plans.

For many borrowers, that trade-off could mean paying more over time, even if monthly payments appear manageable.“ The net result is that college affordability is going downhill,” says Mark Kantrowitz, a Skokie, Ill.-based national expert in higher education loans.

A System With Fewer Levers

For advisors, the biggest change may not be the payment formulas themselves but the loss of important planning tools.

Under the previous system, borrowers could choose among multiple income-based repayment plans, switch strategies over time, and optimize outcomes through tax-filing decisions, timing, or consolidation strategies. That flexibility is disappearing.

“ I think most people [ will ] probably end up paying more,” says Joe Messinger, a financial advisor who specializes in college planning at Capstone Wealth Partners in Dublin, Ohio.“ It’ s more of a graduated system. You’ ll plug in your income, and they’ ll tell you what your payment is.”

Messinger’ s clients include a family of four earning around $ 80,000 who saw their projected monthly payments rise from roughly $ 60 to $ 70 under the old structure to more than $ 300 under the new one. That kind of ballooning obligation, advisors say, is particularly acute for middle-income households— those too affluent to benefit significantly from forgiveness, but not wealthy enough to absorb higher payments without strain.

“ The middle band is getting squeezed the most,” says Meagan McGuire, a senior advisor and student loan specialist for Durhman, N. C.-headquartered SLP Wealth. The financial planning and coaching

30 | FINANCIAL ADVISOR MAGAZINE | MAY / JUNE 2026 WWW. FA-MAG. COM