The landscape of student loans is undergoing significant transformations, with the July 1 implementation of the One Big Beautiful Bill Act (OBBBA) just weeks away. This week, Under Secretary of Education Nicholas Kent shared invaluable insights on the College Investor Podcastclarifying the changes and their implications for borrowers, parents, and educational institutions.
In addition to the OBBBA updates, this week has seen the release of a Congressional Research Service (CRS) report detailing the Treasury Department’s takeover of defaulted student loans, a FAFSA upgrade providing real-time eligibility information, and ongoing concerns about cybersecurity in higher education.
Under Secretary of Education Nicholas Kent Discusses July 1 Student Loan Changes
Under Secretary of Education Nicholas Kent recently appeared on the College Investor Podcast to discuss the impending changes to the federal student aid system. With the July 1 deadline looming, Kent provided a comprehensive overview of the OBBBA and its impact on borrowers and institutions.
The OBBBA aims to simplify the federal student aid system by reducing the number of repayment and discharge options from over 40 to just two new plans. Kent emphasized the importance of the 90-day transition window for SAVE borrowersurging them to choose their next plan before the deadline to avoid being automatically placed in a plan.
One of the most significant changes discussed was the introduction of the Repayment Assistance Plan (RAP)designed to ensure that on-time payments always reduce the borrower’s balance. This contrasts with previous plans like SAVE and Income-Based Repayment (IBR)which could result in negative amortization.
Kent also highlighted the new borrowing limits for graduate and Parent PLUS loansexplaining that these caps are intended to exert downward pressure on the cost of higher education. He cited early examples, such as the Paul Merage School of Business at UC Irvine, which has reduced MBA tuition by up to 38% to comply with the new limits.
Treasury Department Takes Over $179 Billion in Defaulted Student Loans
A recent CRS reportpublished on June 9provides details on the transfer of defaulted federal student loan servicing from the Department of Education to the Treasury Department’s Bureau of the Fiscal Service. As of December 31, 2026the defaulted portfolio included loans from approximately 7.8 million borrowers, totaling $179 billion.
The report outlines the methods the Treasury Department will use to collect on these loans, including administrative wage garnishment, the Treasury Offset Program, and referrals to the U.S. Department of Justice. However, a concerning detail emerged: the Fiscal Service has experienced a roughly 40% reduction in employees between and February 2026.
This reduction in staff could lead to increased friction, more errors, and longer resolution times for borrowers trying to get out of default. The report also notes that the pause on offsetting Social Security benefits, which began in June 2026could be reversed under the new structure.
For borrowers in default, the window to act on their own terms is closing fast. The two best paths out of default remain loan rehabilitation, which involves nine on-time payments based on income, and direct consolidation, which is faster but leaves the default mark on the credit report.
FAFSA Upgrade Provides Real-Time Eligibility Information
In a significant upgrade, the Federal Student Aid office announced on June 1 that students can now see their Student Aid Index (SAI)Pell Grant eligibility, and any comment and reject codes immediately upon submitting the 2026-27 FAFSA. This change eliminates the previous wait of days or weeks for processed results.
Students can also make up to four corrections with instantaneous results, with a fifth correction triggering a 24-hour hold before results are returned. This upgrade is particularly beneficial for high school juniors getting an early look at their aid eligibility.
The federal deadline for filing the 2026-27 FAFSA is June 30, 2027but many state and college deadlines have already passed. The real-time results upgrade allows families to compare aid offers and run cost scenarios immediately, aiding in smarter borrowing and school-choice decisions.
Cybersecurity Concerns in Higher Education
Following the recent Canvas hackwhich exposed the data of 275 million users, concerns about cybersecurity in higher education have intensified. Students remain the primary vulnerability point for college and university cybersecurity, with phishing emails and malicious attachments targeting their.edu email accounts.
The convergence of three trends makes this issue particularly relevant right now. First, the Canvas breach data is still circulating, making phishing attempts using real-sounding course details more likely. Second, summer aid disbursements are happening across thousands of campuses, increasing the volume of legitimate financial aid emails and making fake ones harder to spot.
Third, the OBBBA rollout has created a wave of legitimate communications about changing loan terms, providing perfect cover for scams. To protect themselves, students should treat any email referencing their student loans, financial aid, course registration, or Canvas account with extra skepticism.
It is advisable to avoid clicking links in financial aid emails and instead log directly into StudentAid.govthe school’s portal, or the servicer’s site. Enabling multi-factor authentication on every account, using a password manager, and being cautious of any requests for sensitive information via email are crucial steps in maintaining cybersecurity.
