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Yahoo
17 minutes ago
- Yahoo
What student loan repayment will look like after Trump's budget bill
As of 2025, 42.5 million people have outstanding federal student loans. Of those, approximately 12.3 million — about 29% of borrowers — are currently enrolled in an income-driven repayment (IDR) plan. These plans provide significant relief, giving borrowers more affordable monthly payments. However, President Trump's One Big Beautiful Bill (OBBB) overhauled federal student loans and their repayment options. The changes will have a major impact on both current and future student loan borrowers. And, depending on what loans you have, you may have a limited amount of time to take action — or risk losing repayment options permanently. How the Trump administration will change student loan repayment The OBBB made sweeping changes, but when they go into effect varies by provision. Whether you have existing loans or plan on taking out loans in the near future, here's what you need to know. 1. It creates a new standard repayment plan Who it affects: Any borrower who takes out a federal student loan on or after July 1, 2026 When it goes into effect: July 1, 2026 The current loan system's standard repayment plan requires fixed monthly payments over 10 years. The OBBB scraps that design and introduces a tiered repayment schedule based on borrowers' loan balances. The new standard repayment plan applies to borrowers who take out a new loan — even if they have existing federal loans — on or after July 1, 2026. 2. There is a new repayment plan Who it affects: All undergraduate and graduate loan borrowers When it goes into effect: July 1, 2026 The bill creates a new repayment plan, the Repayment Assistance Plan (RAP). Unlike the current IDR plans, the RAP requires all borrowers — regardless of income or dependents — to make payments of at least $10 per month. The new plan bases payments on the borrower's income (minus $50 for each dependent). For example, say your AGI is $45,000 per year and you have one child. Your payment would be set at 4% of your income or $1,800 per year ($150 per month). But, because you have a dependent child, your payment is reduced by $50 per month, so your monthly payment amount would be $100. The RAP waives interest that accrues if your payment amount doesn't cover the full amount, but borrowers will be in repayment for 30 years. 3. New borrowers will have just two repayment options Who it affects: Undergraduate and graduate loan borrowers who take out loans on or after July 1, 2026 When it goes into effect: July 1, 2026 Borrowers who take out new loans will have just two repayment options. "Any borrower who takes a loan on or after July 1, 2026, will only have access to the new standard and RAP repayment plans," said Scott Buchanan, executive director of the Student Loan Servicing Alliance. New borrowers won't have access to today's IDR plans, extended repayment, or graduated repayment. 4. Current undergraduate and graduate borrowers will transition to new plans Who it affects: Undergraduate and graduate loan borrowers with existing loans When it goes into effect: July 1, 2028 Legacy undergraduate or graduate borrowers — meaning those with existing loans — have a bit more time before they need to change their payment plans. As long as you don't take out any new loans on or after July 1, 2026, you can continue under any of the following repayment plans for the time being: Income-Contingent Repayment (ICR) Income-based Repayment (IBR) Pay As You Earn (PAYE) Saving on a Valuable Education (SAVE) Extended repayment Graduated repayment However, the OBBB will phase out most of these options over time, and all borrowers in discontinued payment plans will be required to enroll in a new plan — either IBR, the new RAP, or the new Standard Repayment plan — by July 1, 2028. Read more: Can you change your student loan repayment plan? 5. New parent loan borrowers will no longer be eligible for alternative repayment plans Who it affects: Borrowers who take out new Parent PLUS Loans on or after July 1, 2026 When it goes into effect: July 1, 2026 Under the current system, Parent PLUS Loan borrowers can consolidate their loans with a Direct Consolidation Loan and qualify for an ICR repayment plan (and if they work for an eligible employer, they can qualify for Public Service Loan Forgiveness). The OBBB eliminates those features; anyone who takes out a new Parent PLUS Loan on or after July 1, 2026, will only be eligible for standard repayment. Parents can't qualify for alternative payment plans or PSLF. "[Parent borrowers] will not be eligible for RAP or other old repayment plan options," said Buchanan. "Keep in mind: The new standard plan will flex monthly payments based upon the balance of the loan, offering a lower monthly payment over a longer period for larger balances, which is different from the old standard plan that was set at a 10-year term regardless of balance.' 6. Current parent borrowers have to take action Who it affects: Current parent loan borrowers When it goes into effect: July 1, 2026 Parent PLUS Loan borrowers will no longer be eligible for alternative payment plans. For existing borrowers, only those who consolidate their debt by July 1, 2026, and enroll in an IDR plan will have access to alternative payment plans. If you have not yet consolidated your loans, you must complete the process before June 30, 2026. "Any Parent PLUS borrower who consolidates or takes out new loans on or after July 1, 2026, would only have access to the standard plan," said Adam Minsky, a student loan attorney. 7. Federal consolidation won't be as useful Who it affects: All student loan borrowers When it goes into effect: July 1, 2026 For borrowers who cannot afford their payments, consolidating with a Direct Consolidation Loan could provide some relief. It gives some borrowers access to repayment plans they wouldn't otherwise qualify for, and some borrowers can qualify for 30-year terms and get more affordable payments. Although Direct Consolidation Loans will still exist in the future, the OBBB reduces their usefulness. "Consolidation will be an option, but one with very little practical value for most borrowers going forward after July 1," said Buchanan. The new RAP and standard repayment plan have longer repayment terms. And consolidating on or after July 1, 2026, will cause legacy borrowers to lose access to alternative payment plans. Up Next Up Next Managing your debt after the OBBB The OBBB completely changed federal financial aid and repayment options, and details are still forthcoming on some updates. For example, the ICR plan will be eliminated, but the deadlines borrowers must meet are unclear. "We will publish more information about the ICR enrollment deadlines that borrowers must meet before ICR is eliminated in order for them to continue to be able to access the IBR Plan," the Department of Education said on the Federal Student Aid announcement site. As you adjust to these changes, check in with the announcement page for the latest details. And if you need help understanding your loan options or enrolling in a different repayment plan, contact your loan servicer.
Vox
20 minutes ago
- Vox
The serious trend behind MSNBC's silly new name
is a senior politics correspondent at Vox, covering the White House, elections, and political scandals and investigations. He's worked at Vox since the site's launch in 2014, and before that, he worked as a research assistant at the New Yorker's Washington, DC, bureau. Goodbye MSBNC, and hello 'MS NOW.' In an announcement that has triggered widespread befuddlement and mockery, the progressive cable news network is getting rebranded. The new name isn't meant to call to mind Microsoft or the honorific 'Ms.' Instead, in the style of congressional bill-naming, MS NOW is purportedly an acronym for the following mouthful: 'My Source for News, Opinion, and the World.' Underneath this seemingly silly story, though, are currents of major change — and fear — in the mainstream media. Today, Explained Understand the world with a daily explainer, plus the most compelling stories of the day. Email (required) Sign Up By submitting your email, you agree to our Terms and Privacy Notice . This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply. Because both MSNBC and its fellow political news network CNN are meeting the same fate; they're being jettisoned by the big corporate bethemoths that currently own them. Those corporate behemoths — Comcast owns MSNBC, while Warner Bros. owns CNN — have legitimate business reasons for making this change. Each is offloading these political news channels, as well as various other cable networks, to a new separate company, called by some a 'SpinCo' (spin-off company) and by others a 'ShitCo' (no explanation needed). This is because cable news is viewed as a declining business. Yet there's another clear implication. President Donald Trump loathes both MSNBC and CNN, and his administration has been willing and eager to wage personal and political vendettas against their corporate owners. Take, for instance, how Paramount had to grovel before Trump because he was annoyed at Paramount-owned CBS. The Federal Communications Commission held up Paramount's merger deal until the company agreed to pay a $16 million settlement in a bogus lawsuit Trump had brought against 60 Minutes. So now, with these spinoffs, Comcast and Warner Bros. will no longer have to worry about being punished by the federal government for MSNBC and CNN's coverage. To be clear: Comcast's spin-off of MSNBC and other cable properties was already in the works before Trump won his second term. And there's obviously no political motivation behind Comcast ditching its other cable properties, like the USA Network, SYFY, Oxygen, the Golf Channel, CNBC, and E! (Comcast is keeping NBC News and Universal Studios.) But since Trump began his second term, the company's thinking has apparently evolved on one point: whether MSNBC can keep its name. Back in January, the new CEO of MSNBC's SpinCo, Mark Lazarus, said that MSNBC would keep its name after the spin-off. So the announcement Monday of the new MS NOW name was a change of plan. This would, of course, create more obvious distance between whatever 'MS NOW' is up to and the existing NBC media empire. CNBC, in contrast, will get to keep its name despite being spun off. We don't know whether that's because they're less likely to displease Trump, less likely to cause problems for NBC's brand, or some other reason. What we do know is that, this year, Trump has normalized the weaponization of the government against corporations who have displeased him with shocking speed. For now, at least, this has to be part of companies' strategic calculations. Placating the president is the new cost of doing business in the United States of America.
CNBC
20 minutes ago
- CNBC
How retail accounting could distort profitability as tariffs take effect
As more tariffs take effect on goods imported into the U.S., a specific accounting method could have major implications for how American retailers calculate the impact. A tariff adds to the cost of an imported item when it's received and paid for when it crosses a border. While there's debate over who pays that tariff — the manufacturer, the retailer, the consumer or some combination — the hit will likely show up in retailers' bottom lines. But a specific accounting practice, called retail inventory method accounting, or RIM, can make profitability appear stronger than it is in the short term. "Retail inventory method accounting (RIM) is less responsive to initial product cost changes compared to cost accounting, and can initially overstate profitability," said Ali Furman, PwC U.S. consumer markets industry leader. "This would normalize once tariffs stabilize, depending on how much of the cost retailers absorb." Because RIM uses an average cost-to-retail price ratio across a broad group of items, rather than the actual cost of every item, like in cost accounting, RIM does not entirely capture the immediate impact of rising costs. Nearly a quarter of U.S. retailers use the retail inventory method of accounting, according to PwC. Walmart, Target and Home Depot are among them. All three retailers report quarterly earnings this week, and their results may not fully show how tariffs have cut into their profitability so far. Take Walmart, the largest U.S. retailer, which will post fiscal second-quarter earnings Thursday. TD Cowen analyst Oliver Chen estimated about half of Walmart's quarter will include the impact of levies, as the company brought in inventory at different cost levels before and after new tariff rates took effect. That could temporarily distort gross margin profitability, Chen said. Walmart's accounting has in part informed its strategy in recent months as it navigates President Donald Trump's unpredictable tariff policy. A week after Trump's April 2 announcement of so-called "reciprocal tariffs" on a wide swath of trade partners, Walmart withdrew its guidance for operating income in its first fiscal quarter. However, the company maintained its annual forecast, citing in part the influence of RIM accounting. Then when it reported its fiscal first-quarter earnings in May, Walmart said it would mitigate higher costs as much as possible, but would likely have to increase some prices at the current tariff rates. In response, Trump wrote on his Truth Social platform that Walmart should "just eat" the tariffs. Doing so could actually benefit a retailer's bottom line, at least initially, according to Furman. "The more costs retailers absorb in retail accounting, the greater the risk of overstating profitability during periods of increasing costs, such as tariff increases," she said. Walmart management briefed Trump this spring about the impact its accounting method may have on results in a high-tariff environment, according to a person familiar with the discussion, who asked to remain unnamed while speaking about private conversations. Still, James Bowie, managing director in EY's technical accounting advisory group, warned "all of the inventory costing methodologies will be affected in some ways." It typically takes a large, non-fast fashion retailer using RIM roughly two to four quarters for cost volatility to settle and profitability to get closer to its true level, according to PwC. The method could make profitability look higher initially, then lower in a subsequent quarter, before it has time to stabilize. "It's kind of like you've got a speed boat on the price," he said. "I can turn pretty quickly, but I've got a cruise liner that is carrying all my average of my inventory. It takes a little longer for it to turn and so even though they might ultimately be able to go the same speed, it takes a little bit of time for that one turn to take place." While RIM is more likely to lead to a temporary overstating of profitability, it can also wind up understanding profits if tariffs are negotiated lower. Bowie said if a retailer responds to lower tariff rates by cutting retail prices, under RIM accounting, "it looks like my margin has eroded, but it's only because I now am waiting for the cost relationship to catch back up, so [it] might look like there's margin compression even in a period of decreasing tariffs." Furman added that PwC is seeing "a clear disconnect" for companies that use RIM accounting. "Companies might be doing all the right things: navigating sourcing challenges, managing suppliers, and even mitigating tariffs," she said. "But, those efforts often aren't reflected in the financials. That misalignment between operational execution and reporting for those using RIM is exacerbating the challenges retailers face." The retail inventory method of accounting is an older method that was most useful for retailers when they had many items from a range of categories without an easy, or technological, way to track inventory. "Inventory accounting methods existed before this thing called Excel," said Bowie. "[A retailer] had an abacus and a dream trying to figure out what you're going to do." Over time, technology made it easy to use actual costs rather than averages, so cost accounting became more common. As retailers grow and accounting methods become ingrained, it's difficult, though not impossible, to switch tactics. Macy's and Nordstrom recently made the change to cost accounting. PwC said it takes an average of two to three years to make the transition from one accounting method to another and can require millions of dollars and a restatement of previous years' financials to provide apples-to-apples comparisons. Still, the accounting firm said about half of retailers that use RIM have considered switching. CNBC worked with PwC's Furman and Suni Shamapande, the firm's U.S. retail customer experience and operations leader, to develop a simplified example demonstrating the difference between RIM and weighted average cost accounting in how they affect gross profit margins. The example demonstrates how RIM accounting can "overstate" true profitability at a moment in time when costs increase quickly. For the purposes of this example, PwC and CNBC used weighted average cost accounting, which takes a SKU-level weight average and blends all costs together, regardless of purchase date. A SKU is a stock-keeping unit, which retailers use to track inventory of specific items. Base case: No tariffs The base case, which does not include tariffs, uses three different T-shirts types from three different countries. Each type of T-shirt, or individual SKU, has a different cost and is sold to consumers at a different retail price. The retailer bought each type of T-shirt in different quantities, as did consumers. Here's how the math differs to start. The gross profit margin for the items calculated using weighted average cost accounting is 46%. Using RIM, it's 53%. Tariff case 1: Retailer's costs increase, all else remains the same If the retailer's cost for each T-shirt goes up as a result of tariffs, but everything else — units bought, units sold and retail price — remains the same, gross margin falls if calculated using cost accounting and RIM. But it would still be higher under RIM than if the company used cost accounting. Here's the math for our simplified example: Tariff case 2: Retailer raises prices to offset higher costs If the retailer passes on the full dollar value of the tariff cost to the customer, and units bought and sold stay the same, gross margin improves under both accounting methods. In our example, it goes to 36% in cost accounting and 47% with RIM. Both gross margin percentages are lower than the base case, which assumes no tariffs, but the percentage change is smaller under RIM than under cost accounting. Tariff case 3: Retailer raises prices and units bought and sold both fall Here's where it gets interesting, and likely more realistic, to reflect supply and demand choices a retailer and consumer would likely make as costs rise. If the retailer passes on the full dollar value of tariffs to the customer and also sells fewer items to consumers at the higher retail price, RIM makes profit margins look temporarily rosier. Gross margin in our example falls to 27% under cost accounting, but holds steady under RIM at 47% even though units sold have changed. Here's where you see how the ratio of cost of goods sold to selling price hasn't had time to adjust.
