Blog
The Markets
Artificial Intelligence (AI) is the new Industrial Revolution.
Last week, market volatility reflected uncertainty about how artificial intelligence will reshape the economy. Early in the week, a report titled “The 2028 Global Intelligence Crisis” alarmed investors by describing a hypothetical future where artificial intelligence tools greatly improve productivity, causing white-collar jobs to vanish, and unemployment to rise above 10 percent.1
Innovation and disruption is not new
It’s likely that some types of employment will disappear as AI advances. However, AI is also expected to create new types of employment, just as previous disruptive innovation has done. Kenneth G. Pringle of Barron’s explained:
“That AI technology will come for jobs is certain. The destruction and creation of jobs is a defining characteristic of the Industrial Revolution. Less certain is what kind of new jobs—and how many—will take their place…Think of the automobile industry replacing the horse-and-carriage trade in the first decades of the 20th century, or IT departments supplanting secretarial pools in recent decades…The new jobs can be vastly different in nature, requiring novel skills and perhaps relocation, such as from farm to city in the first Industrial Revolution.”2
The current state of AI
Markets calmed during the week as investors recognized that the pace of AI adoption has been slow. In late 2025, about 37 percent of Americans used generative AI (GenAI) at work, according to Alexander Bick, Adam Blandin, and David Deming of the St. Louis Federal Reserve bank.3
GenAI was introduced just three years ago, so it’s likely to be more widely adopted over time. Adoption may be slow with AI tools gaining users and increasing productivity over an extended period, mirroring the adoption of computers and software.4 That said, AI agents, which arrived last year, have the potential to accelerate change. However, according to Edward Harrison of Bloomberg:
“Gartner expects over 40 [percent] of agentic AI projects to be canceled by 2027. Not only are companies unlikely to make immediate and wrenching company-wide changes, they won’t even be able to extract enough benefits from the projects they have in place any time soon. Just as with the personal computer and Internet revolutions before AI, it will be years before households and companies work out how to get benefits from the new technology.”5
Friday’s employment scare
The calm didn’t last long. On Friday, markets jolted again when a major financial technology company cut 40 percent of its workforce. The company’s founder wrote, “intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company,” reported Connor Smith of Barron’s.6
Major U.S. stock indexes finished the week lower.7 U.S. Treasuries rallied as yields on many maturities moved lower over the week.8
Data as of 2/27/26 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | -0.4% | 0.5% | 17.4% | 20.0% | 12.0% | 13.5% |
| Dow Jones Global ex-U.S. Index | 1.8 | 11.2 | 35.0 | 16.7 | 6.5 | 7.8 |
| 10-year Treasury Note (yield only) | 4.0 | N/A | 4.3 | 3.9 | 1.5 | 1.7 |
| S&P GSCI Gold Index | 3.3 | 20.9 | 81.2 | 42.2 | 25.0 | 15.6 |
| Bloomberg Commodity Index | 1.7 | 10.9 | 16.7 | 4.7 | 7.5 | 4.8 |
S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
WHAT DO YOU KNOW ABOUT AI? Kevin Warsh, who has been nominated to lead the Federal Reserve (Fed), faces a significant challenge. Along with the other members of the Federal Open Market Committee, he will be responsible for monetary policy and economic stability during a period of enormous innovation. AI tools are likely to change business models and workflows, just as the introduction of the printing press, electricity, the telephone, and the automobile did.See what you know about AI by taking this brief quiz.
- GenAI is best known for helping people:9
- a. Write difficult math equations
- b. Generate new content like text, images, or video
- c. Reach conclusions without any data
- d. Wash cars and bikes
- Which of these products relies on AI?10
- a. Navigation apps
- b. Self-driving cars
- c. Virtual assistants
- d. All of the above
- In late 2024, Gallup asked Americans whether they had used AI-enabled products during the previous week. Thirty-six percent said yes, 50 percent said no, and 14 percent weren’t sure. When survey participants were questioned further, it turned out many were using at least one AI-enabled product without realizing it. What percentage had used AI-enabled products during the previous week?10
- a. 36 percent
- b. 64 percent
- c. 83 percent
- d. 9 percent
- The first AI chatbot was named Eliza. The bot was developed at MIT. When it was given a “Doctor” prompt, it would interact with the user as though it was a therapist and the user was a patient. When was this bot built?11
- a. 1941 to 1944
- b. 1964 to 1967
- c. 2002 to 2005
- d. 2016 to 2020
WEEKLY FOCUS – THINK ABOUT IT
“We are going to have to have different ethics for different artificially intelligent machines. You obviously want a different set of ethics for a military artificially intelligent machine or robot than you have for a care-taking robot.”12
― Gray Scott, Futurist Answers: 1) b; 2) d; 3) d; 4) b
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss. * Consult your financial professional before making any investment decision.
Sources:
1 https://substack.com/home/post/p-188821754
2 https://www.barrons.com/articles/ai-history-lessons-jobs-destroyed-created-cdcd0d71 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/03-02-26-Barrons-AI-Will-Create-And-Destroy-Jobs%20-%202.pdf
3 https://www.stlouisfed.org/on-the-economy/2025/nov/state-generative-ai-adoption-2025
4 https://www.computerhistory.org/timeline/computers/
5 https://www.bloomberg.com/news/newsletters/2026-02-25/ai-s-disruption-will-prove-beneficial-to-consumers-and-businesses or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/03-02-26-Bloomberg-AIs-Beneficial-Disruption%20-%205.pdf
6 https://www.barrons.com/livecoverage/stock-market-news-today-022726?mod=hp_LEDE_C_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/03-02-26-Barrons-Dow-Drops-520-Points%20-%206.pdf
7 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/03-02-26-Barrons-DJIA-S&P-Nasdaq%20-%207.pdf
9 https://en.wikipedia.org/wiki/Generative_artificial_intelligence?
10 https://news.gallup.com/poll/654905/americans-everyday-products-without-realizing.aspx
The Markets
When it rains it pours.
People respond in different ways when they’re caught in a downpour without an umbrella or rain gear. Some walk as they seek shelter, others run. Occasionally, on warm days, people may celebrate the storm by dancing in the rain or stomping puddles.
Last week, investors responded to a deluge of news and data in a variety of ways, making for a volatile week in the U.S. stock market. Here is a brief review of some of the issues they encountered:
- Strong company performance continued. Overall, companies in the Standard & Poor’s 500 (S&P) Index did very well in the fourth quarter of 2025. The Index appears to be on track to deliver its fifth consecutive quarter of double-digit earnings growth. In mid-February, the Index’s blended year-over-year earnings growth rate was13.2 percent, reported John Butters of FactSet.1
- Slower economic growth due to the government shutdown. Companies did well in the fourth quarter, but economic growth slowed more than expected due to the government shutdown. “Gross domestic product rose at an annualized rate of just 1.4 [percent], according to the Commerce Department, well below the Dow Jones estimate for a 2.5 [percent] gain,” reported Jeff Cox of CNBC.2
- Higher inflation in December. Last week, we learned that inflation accelerated in December. The personal consumption expenditures (PCE) price index, which is the Federal Reserve (Fed)’s preferred inflation measure, was delayed due to the government shutdown.3
| Headline inflation rate3 (PCE price index, year over year) | Core inflation rate3 (PCE price index, year over year, excluding food and energy prices) | |
| December 2025 | 2.9% | 3.0% |
| November 2025 | 2.8% | 2.8% |
| October 2025 | 2.7% | 2.8% |
- Unabated uncertainty around artificial intelligence (AI). This wasn’t new news. Investors have been struggling to understand the outlook for artificial intelligence for several weeks. They’re concerned about how AI will change business models, and whether the capital being spent on expansion will deliver attractive returns, reported Rita Nazareth of Bloomberg.4
- Supreme Court ruling on global tariffs. “The Supreme Court has ruled against the tariffs that President Donald Trump imposed under the International Emergency Economic Powers Act…The president has responded, saying he will continue his tariff regime, using different legal authorities. A first step is a 10 [percent] global tariff, in addition to existing levies, he said,” reported Barron’s.5
The U.S. stock market offered a bumpy ride last week, but major U.S. stock indexes finished higher.6 Yields on most maturities of U.S. Treasuries ended the week higher.7
Data as of 2/20/26 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 1.1% | 0.9% | 13.0% | 20.0% | 12.3% | 13.5% |
| Dow Jones Global ex-U.S. Index | 0.8 | 9.3 | 32.0 | 15.1 | 5.8 | 7.5 |
| 10-year Treasury Note (yield only) | 4.1 | N/A | 4.5 | 4.0 | 1.4 | 1.8 |
| S&P GSCI Gold Index | 0.7 | 17.0 | 71.9 | 40.2 | 23.0 | 15.4 |
| Bloomberg Commodity Index | 2.0 | 9.1 | 11.1 | 3.8 | 6.7 | 4.7 |
S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
A CHANGE IN LEADERSHIP. The Fed is the central bank of the United States. It is responsible for keeping the financial system running smoothly. In 2026, the Fed will see its leadership change. The current chair will retire, and former Fed Governor Kevin Warsh has been nominated to replace him.8
A new approach to monetary policy
Mr. Warsh is a vocal critic of certain Fed policies. He has argued that quantitative easing (QE), which is the Fed’s practice of purchasing U.S. government bonds to stabilize the financial system, encouraged Congress to spend more than it otherwise might have.9
In an April 2025 lecture, Warsh explained:
“In the 2008 crisis, we cut interest rates to near zero and sought new ways to make monetary policy looser and bring liquidity to illiquid markets. I strongly supported this crisis-time innovation, then and now. But when the crisis ended, the Fed never retraced its steps…QE – with some fits and starts in the 2010s – has become a near permanent feature of central bank power and policy. Fiscal policymakers – that is, elected members of Congress – found it considerably easier appropriating money knowing that the government’s financing costs would be subsidized by the central bank.”9
Retracing the Fed’s steps
One of Warsh’s priorities as Fed Chair may be reducing the central bank’s balance sheet, and there has considerable speculation about how this might be accomplished.Alex Harris of Bloomberg reported on several possibilities.10 These included:
- Reducing Treasury purchases. The Fed ended its latest round of quantitative tightening (QT) in December because bank reserves (the cash banks are required to keep on hand to ensure the stability of the system) were falling too low, creating stress in the system. The stress became significant enough that the Fed resumed bond purchases.12
“While restarting QT is unlikely, the Fed could gradually reduce the pace of T-bill purchases from $40 billion a month currently, or stop them altogether,” according to analysts cited by Harris.10
- Changing regulations. If bank reserve requirements were modified, the effect of QT on bank reserves could be reduced. “Regulators could relax the liquidity coverage ratio or internal liquidity stress test requirements, so lenders need to hold less cash,” suggested bank strategists cited by Harris.10
- Exchanging assets. Another option is for the Fed to sell longer-term Treasuries and buy shorter-term Treasury bills, which mature in 12 months or less. “But without close coordination with Treasury, long-dated debt issuance needs and costs would rise significantly as the Fed retreats,” wrote Harris.One estimate suggested the change could push “borrowing costs up by 40 to 50 basis points.”10
Warsh has expressed support for a more coordinated approach between the Fed and the U.S. Treasury Department, which could help mitigate the effects of Fed balance sheet reduction efforts, according to Ye Xie, Michael MacKenzie, and Maria Eloisa Capurro of Bloomberg. However, greater coordination could also raise questions about whether the Fed is acting independently.13
The Fed will face another significant challenge during Warsh’s tenure: managing monetary policy in an economy being transformed by AI. We’ll explore that next week.
WEEKLY FOCUS – THINK ABOUT IT
“Courage is what it takes to stand up and speak; courage is also what it takes to sit down and listen.”14
– Winston Churchill, Former British Prime Minister
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
2 https://www.cnbc.com/2026/02/20/pce-inflation-december-2025.html
3 https://www.bea.gov/news/2026/personal-income-and-outlays-december-2025 [Table 2.8.11, lines 32 and 37]
4 https://www.bloomberg.com/news/articles/2026-02-16/asian-stocks-set-for-muted-start-in-holiday-trade-markets-wrap? or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Bloomberg-Stocks-Whipsaw-as-AI%20-%204.pdf
5 https://www.barrons.com/livecoverage/trump-tariffs-scotus-ruling?mod=hp_LEDE_A_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Barrons-Trump-Plans-New%20-%205.pdf
6 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Barrons-DJIA-S&P-Nasdaq%20-%206.pdf
10 https://www.bloomberg.com/news/articles/2026-02-17/wall-street-is-sizing-up-warsh-s-options-to-shrink-fed-portfolio or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Bloomberg-Wall-Street-is-Sizing-Up%20-%2010.pdf
11 https://fred.stlouisfed.org/series/WALCL or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Federal-Reserve-Bank-of-St-Louis%20-%2011.pdf
12 https://www.federalreserve.gov/newsevents/speech/jefferson20260116a.htm
13 https://www.bloomberg.com/news/articles/2026-02-08/warsh-call-for-fed-treasury-accord-stirs-debate-bond-market or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-23-26-Bloomberg-Warsh-Call-For-Fed-Treasury%20-%2013.pdf
14 https://www.brainyquote.com/quotes/winston_churchill_161628?src=t_courage
Phillips Wealth Planners is proud to announce that Lauren Black and Lynn Phillips-Gaines were recognized by Forbes in the 2026 Best-In-State Top Women – Wealth Advisors!
The Markets
It was a busy, busy week.
If you just looked at the weekly return for the Standard & Poor’s (S&P) 500 Index, you might assume the United States stock market was relatively calm last week. It was not. A lot happened last week – and some news moved markets. Here’s a brief recap:
The Federal Reserve (Fed) held the federal funds rate steady. The Fed’s decision was expected and had little effect on U.S. stock markets. Chair Jerome Powell confirmed ‘the economy is solid, although officials anticipate rates may move lower this year,” reported Christopher Rugaber of the Associated Press.1
Overall, companies appear to have done well in the fourth quarter. We are in the midst of earnings season – the time when companies tell investors how they did in the previous quarter. About one-third of S&P 500 companies have reported. For the group overall, it looks like profits improved during the last three months of 2025. “The S&P 500 is now reporting double-digit (year-over-year) earnings growth for the 5th straight quarter,” reported John Butters of FactSet.2
Concerns about software companies drove markets lower. While earnings were solid overall, investors were not pleased with reports from software sector. Markets are concerned software firm profits will suffer if artificial intelligence (AI) companies begin to generate their own software. “…[A]nyone hoping earnings season would calm down some of the jitters among software investors has been sorely disappointed. Many software companies have been revising their expectations for future revenue and earnings down,” reported Tracy Alloway and Joe Weisenthal of Bloomberg. Late in the week, software stocks led the market lower.3
President Trump chose Kevin Warsh to head the Fed. Investors were reassured by the decision, which they hope will preserve Fed independence. Warsh previously served on the Fed for several years. “The financial markets’ initial reaction to the nomination was modest, suggesting investors are taking it in stride. They can expect a Fed that eases rates in the short term. And if inflation starts to bite, they have reason to hope that Warsh will act, despite Trump’s insistence that the Fed must keep rates low,” reported Matt Peterson of Barron’s.4
Major U.S. stock indexes finished the week near where they started it.5 Yields on U.S. Treasuries finished the week mixed.6
Data as of 1/30/26 | 1-Week | YTD | 1-Year | 3-Year | 5-Year | 10-Year |
| Standard & Poor’s 500 Index | 0.3% | 1.4% | 14.3% | 20.0% | 13.0% | 13.6% |
| Dow Jones Global ex-U.S. Index | 1.2 | 5.9 | 30.9 | 12.4 | 6.0 | 7.1 |
| 10-year Treasury Note (yield only) | 4.2 | N/A | 4.5 | 3.6 | 1.1 | 2.0 |
| S&P GSCI Gold Index | -5.4 | 9.3 | 66.8 | 34.8 | 20.6 | 15.5 |
| Bloomberg Commodity Index | 0.9 | 10.0 | 17.5 | 2.9 | 8.1 | 4.7 |
S&P 500, Dow Jones Global ex-US, S&P GSCI Gold Index, Bloomberg Commodity Index returns exclude reinvested dividends. The three-, five-, and 10-year returns are annualized; and the 10-year Treasury Note is simply the yield at the close of the day on each of the historical time periods.
Sources: Yahoo! Finance; MarketWatch; djindexes.com; U.S. Treasury.
Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly. N/A means not applicable.
COLLEGE FINANCIAL AID IS CHANGING. More than half of parents in a 2025 survey said they currently save – or plan to save – for their children’s college in tax-advantaged 529 College Savings Plans.7 That’s a sound plan because the One Big Beautiful Bill Act (OBBBA) made some significant changes that reduce the amount of federal financial aid available to undergraduate and graduate students. It also revised repayment options for parents and students, reported Kamaron McNair of CNBC.8
Here are the basics of the revised student lending programs:
- New borrowing limits. In general, the amounts undergraduate and graduate students can borrow for college were lowered, and so was the amount parents can borrow. In addition, a lifetime borrowing limit was set.
| Annual borrowing limit* | Lifetime borrowing limit* | |
| Parent Plus loans | $20,000/per child | $65,000/per child |
| Graduate student loans | $20,500 | $100,000 |
| Professional student loans | $50,000 | $200,000 |
| All federal student loans (excluding Grad Plus and Parent Plus loans) | – | $257,500 |
- Elimination of Grad PLUS loans. Starting July 1, 2026, Grad PLUS loans, which allowed graduate students to borrow up to the full cost of attendance, will no longer be available to new borrowers.9
- Legacy provisions. If an undergraduate or graduate student or a parent borrowed through a Federal Direct Loan program before July 1, 2026, they can continue to borrow from the program under current loan limits for three academic years or until they receive a credential, whichever is less, according to the National Association of Student Federal Aid and Administration (NASFAA).10
Here are the basics of the revised repayment options:
- Repayment plans for new borrowers. For federal student loans made after July 1, 2026, the only repayment options available will be: 1) a new standard repayment plan, or 2) a new income-based repayment (IBR) plan called the Repayment Assistance Plan (RAP). The new program, RAP, requires borrowers to make loan payments of one to 10 percent of their income, with a minimum payment of $10. The repayment period is 30 years.10
- Repayment plans for current borrowers. Anyone who is enrolled in one of the following repayment plans – the Income-Contingent Repayment (ICR), Pay as You Earn (PAYE) or Saving on a Valuable Education (SAVE) plans – can remain in that plan until July 1, 2028. However, they must transition into a different plan – either the current IBR, the current standard plan, or RAP – by that date. If they do not, they will automatically be moved to RAP.10
The current IBR plan was changed so borrowers do not need to demonstrate partial financial hardship. In addition, balances of loans repaid may be cancelled after 25 years for current borrowers or 20 years for new borrowers.10
Consolidation loans used to pay off Parent PLUS loans must begin repayment before July 1, 2026, to qualify for IBR.10 As a result, parent borrowers who prefer to have an income-based option for loan repayment should consider consolidating their loans before that date, according to Student Loan Borrower Assistance at the National Consumer Law Center.11
- All loans must be repaid from the same repayment plan.10
- Higher K-12 withdrawal limits for 529 plans. In addition to expanding the “qualifying” education expenses, OBBBA increased the amount that may be withdrawn for qualified primary and secondary school expenses from $10,000 to $20,000.12
If you have questions or would like to discuss your college funding plans, please get in touch.
WEEKLY FOCUS – THINK ABOUT IT
“Knowledge is power.”13― Sir Francis Bacon, Philosopher
* These views are those of Carson Coaching, not the presenting Representative, the Representative’s Broker/Dealer, or Registered Investment Advisor, and should not be construed as investment advice.
* This newsletter was prepared by Carson Coaching. Carson Coaching is not affiliated with the named firm or broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
* Corporate bonds are considered higher risk than government bonds but normally offer a higher yield and are subject to market, interest rate and credit risk as well as additional risks based on the quality of issuer coupon rate, price, yield, maturity, and redemption features.
* The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. You cannot invest directly in this index.
* All indexes referenced are unmanaged. The volatility of indexes could be materially different from that of a client’s portfolio. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. You cannot invest directly in an index.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the 3:00 p.m. (London time) gold price as reported by the London Bullion Market Association and is expressed in U.S. Dollars per fine troy ounce. The source for gold data is Federal Reserve Bank of St. Louis (FRED), https://fred.stlouisfed.org/series/GOLDPMGBD228NLBM.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The Dow Jones Industrial Average (DJIA), commonly known as “The Dow,” is an index representing 30 stock of companies maintained and reviewed by the editors of The Wall Street Journal.
* The NASDAQ Composite is an unmanaged index of securities traded on the NASDAQ system.
* International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. These risks are often heightened for investments in emerging markets.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* The risk of loss in trading commodities and futures can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. The high degree of leverage is often obtainable in commodity trading and can work against you as well as for you. The use of leverage can lead to large losses as well as gains.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* The foregoing information has been obtained from sources considered to be reliable, but we do not guarantee it is accurate or complete.
* There is no guarantee a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
* Asset allocation does not ensure a profit or protect against a loss.
* Consult your financial professional before making any investment decision.
Sources:
1 https://apnews.com/article/federal-reserve-trump-powell-inflation-c13913c9e007981f075fb3b22d4a4cec
2 https://insight.factset.com/sp-500-earnings-season-update-january-30-2026
3 https://www.bloomberg.com/news/newsletters/2026-01-30/what-software-stocks-are-telling-us-about-the-copper-boom or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-02-26-Bloomberg-What-Software-Stock-Are-Telling%20-%203.pdf
4 https://www.barrons.com/articles/kevin-warsh-fed-chair-trump-choice-fa721ae0?mod=hp_LEDE_C_1 or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-02-26-Barrons-Kevin-Warsh-Is-Trumps-Man%20-%204.pdf
5 https://www.barrons.com/market-data?mod=BOL_TOPNAV or go to https://resources.carsongroup.com/hubfs/WMC-Source/2026/02-02-26-Barrons-DJIA-S&P-Nasdaq%20-%205.pdf
7 https://institutional.fidelity.com/app/proxy/content?literatureURL=/9921494.PDF
8 https://www.cnbc.com/2025/08/20/college-students-say-they-will-be-impacted-by-obbba-im-cooked.html
10 https://www.nasfaa.org/uploads/documents/Federal_Student_Aid_Change_OB3.pdf
12 https://www.congress.gov/bill/119th-congress/house-bill/1 [summary]