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30% of student loan borrowers have gone without food or medicine: CFPB

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A student student sits in a lecture hall while class is being dismissed at the University of Texas at Austin on February 22, 2024 in Austin, Texas.

Brandon Bell | Getty Images

Nearly a third, 30%, of federal student loan borrowers say they’ve gone without food or medicine because of their monthly bills.

That grim finding comes from a new survey by the Consumer Financial Protection Bureau, conducted between October 2023 and January 2024, and including more than 3,000 responses from people with an active or recently active student loan account.

The bureau sought to gauge more broadly how tens of millions with education debt fared when their bills resumed in September 2023 after the Covid-era pause on the payments expired.

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In addition to skipping necessities, 38% of borrowers said they carried credit card debt they wouldn’t have otherwise, the bureau found. Around 44% of borrowers said their education debt delayed when they could by a home, and 26% said the debt pushed back when they’d start a family.

“It’s clear that many borrowers are struggling with repayment,” CFPB Director Rohit Chopra said in a statement.

Outstanding education debt in the U.S. exceeds $1.6 trillion, according to a 2022 report by the nonpartisan Congressional Research Service. Nearly 43 million people — or 1 in 6 adult Americans — carry student loans, the report said.

An end to Biden-era student loan aid

The CFPB report, released in the final months of President Joe Biden‘s tenure, is likely aimed at making the case that the Biden administration’s relief measures for student loan borrowers were and continue to be needed.

Biden has forgiven more federal student loan debt than any other president.

Since he took office, the Education Department has canceled the student loans of roughly 5 million people, totaling more than $175 billion in relief. It has done so mostly by improving existing student loan relief programs that had long been plagued by problems.

Surveyed borrowers who have had their debt forgiven say they were able to make numerous positive changes in their lives, the CFPB report found. Nearly half, 45%, of those borrowers saved more than they could have otherwise. Another 9% of borrowers changed jobs or started a business, and 19% said they sought medical treatment after their debt was excused.

President-elect Donald Trump is a vocal critic of student loan forgiveness policies, calling them “vile” and “not even legal.” Experts expect Trump will abandon most of the Biden administration’s efforts to deliver deeper student cancellation.

Republicans have framed Biden’s student loan relief efforts as a handout to those who are already financially comfortable.

“Forgiving student debt is a massive windfall to the rich,” Vice President-elect JD Vance of Ohio, a Yale Law School graduate, wrote on X in April 2022.

“Republicans must fight this with every ounce of our energy and power,” he wrote.

However, the median household income for people who received student loan forgiveness was between $50,000 and $65,000, the CFPB found. For comparison, the median household income in the U.S. is over $80,000.

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House just voted yes to increase Social Security for some beneficiaries

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A bipartisan bill to change Social Security benefit rules for pensioners passed in the House of Representatives on Tuesday, with 327 lawmakers voting to support the measure.

Now, the proposal heads to the Senate, where the chamber’s version of the bill has 62 co-sponsors, “surpassing the majority needed to pass the bill on the U.S. Senate floor and send it to the president’s desk to be signed into law,” Reps. Abigail Spanberger, D-Virginia, and Garret Graves, R-Louisiana, co-leaders of the bill, said in a joint statement.

The proposal — called the Social Security Fairness Act — would repeal rules that reduce Social Security benefits for individuals who receive pension benefits from state or local governments.

It would eliminate the windfall elimination provision, or WEP, that reduces Social Security benefits for individuals who worked in jobs where they did not pay Social Security payroll taxes and now receive pension or disability benefits from those employers. About 3% of all Social Security beneficiaries — about 2.1 million people — were affected by the WEP as of December 2023, according to the Congressional Research Service.

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The bill would also eliminate the government pension offset, or GPO, which reduces Social Security benefits for spouses, widows and widowers who also receive pension checks. As of last December, about 1% of all Social Security beneficiaries — or 745,679 individuals — were affected by the GPO, according to the Congressional Research Service.

These rules, which have been in effect for decades, reduce the incomes of certain retired police officers, teachers, firefighters and other public servants, Graves said during a Tuesday speech on the House floor.

“This has been 40 years of treating people differently, discriminating against a certain set of workers,” Graves said.

“They’re not people that are overpaid; they’re not people that are underworked,” he said.

Supporters call bill a ‘step in the right direction’

Social Security is a key issue for voters, survey finds: Here’s how to maximize benefits

On Tuesday, Larson voted against the Social Security Fairness Act, as well as another bill, the Equal Treatment of Public Servants Act. The latter bill would use a new formula for Social Security retirement and disability benefits for pensioners rather than eliminate the WEP. It would not change the GPO.

The bill, which was proposed by Rep. Jodey Arrington, R-Texas, failed when it was brought up for a vote.

“I could not vote for the bills on the floor tonight because they are not paid for and therefore put Americans’ hard-earned benefits at risk,” Larson said in a statement. “It would hurt most deeply the five million of our fellow Americans who receive below poverty checks, and almost half of all Social Security recipients who rely on their earned benefits for the majority of their income.”

Critics say the bill will weaken Social Security

The Social Security Fairness Act would add an estimated $196 billion to deficits over the next decade, the Congressional Budget Office has estimated. It would also move Social Security’s trust fund depletion dates closer by an estimated six months, according to the Committee for a Responsible Federal Budget.

“The long-term solvency of Social Security is an issue that Congress must address,” Spanberger said on the House floor on Tuesday.

“But that is a separate issue from allowing Americans who did their part, who contributed their earnings, for them to retire with dignity,” she said.

However, critics say Social Security’s funding woes should be a priority for Congress now. The program’s actuaries project the trust fund used to pay retirement benefits may be depleted in 2033, at which point 79% of benefits will be payable.

“This is not the right policy,” said Romina Boccia, director of budget and entitlement policy at the Cato Institute. “It’s what special interests were pushing, and politicians are responsive to their demands.”

Though the alternative bill proposed by Arrington would not address the GPO, it would provide a “fairer formula” for the WEP, Boccia said. However, broader changes are needed to shore up the program’s finances.

“We should reform Social Security so that it provides basic income security to the most vulnerable Americans in old age without adding to the debt or tax burden that younger workers face,” Boccia said.

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2025-26 FAFSA will open on Dec. 1 — Here’s how to prepare

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We are overly reliant on student loans to fund higher education, says NACAC CEO Angel Perez

The Free Application for Federal Student Aid for 2025-26 will be available for all students and contributors on or before Dec. 1, the Education Department says.

Typically, students have access to the coming academic year’s form in October, but this year’s delayed release follows a “phased rollout” meant to address reported issues from the 2024-25 FAFSA cycle. Last year’s new, simplified form was plagued with problems at the outset, some of which are still outstanding.

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Although the extended testing period for the 2025-26 FAFSA is important, another delayed start “creates a compressed timeline for students and families to submit their financial information, which can lead to missed opportunities for aid,” Beth Maglione, interim president and CEO of the National Association of Student Financial Aid Administrators, said in a statement.

How to prepare for the 2025-26 FAFSA

“I would encourage families to start gathering their financial documents and information now, so they’re ready to apply as soon as the application becomes available,” Maglione said. “Taking these steps early will help ensure they don’t miss out on vital financial support for college.”

According to Maglione, there are five key moves that students and parents can make now to prepare for their application as soon as it becomes available. Here is her best advice:

  1. Set up a studentaid.gov account: Before the new form opens, students and their parents (if the student is a dependent) can set up a username and password, commonly called the FSA ID, to access and complete the FAFSA electronically. 
  2. Gather personal information: Students should have their Social Security number on hand (as should parents, if the student is a dependent, or student spouses, if applicable). However, if a student spouse, parent or stepparent does not have an SSN, they can still register for an FSA ID. The form may also ask for your driver’s license or state identification number. Non-citizens should have their Alien Registration number handy.
  3. Federal tax information: Applicants will need tax information from the prior-prior tax year. In this case, that means students should have 2023 tax returns for the 2025-26 FAFSA.
  4. Financial records: The FAFSA requires records of the student’s (and the parents’, if applicable) bank accounts, stocks, bonds, real estate (not including the family home) and other investments. Any records of untaxed income, such as child support or government benefits, should be documented as well.
  5. List of schools: Finally, FAFSA applicants should have a list of schools the student is applying to or attending, which will need to be listed on the FAFSA application.

Why the FAFSA is so important

For many students, financial aid is crucial when it comes to covering the cost of college.

Higher education already costs more than most families can afford, and college costs are still rising. Tuition and fees plus room and board for a four-year private college averaged $58,600 in the 2024-25 school year, up from $56,390 a year earlier. At four-year, in-state public colleges, it was $24,920, up from $24,080, the College Board found.

The FAFSA serves as the gateway to all federal aid money, including federal student loans, work-study and especially grants — which have become the most crucial kind of assistance because they typically do not need to be repaid.

Submitting a FAFSA is also one of the best predictors of whether a high school senior will go on to college, according to the National College Attainment Network. Seniors who complete the FAFSA are 84% more likely to enroll in college directly after high school, according to an NCAN study of 2013 data. 

How FAFSA failures have impacted students

After last year’s FAFSA complications, it became clear how much financial aid weighed heavily on decisions about college. 

In part because of issues with the new form, the number of new first-year college students sank 5% this fall compared with last year, according to an analysis of early data by the National Student Clearinghouse Research Center.

The declines in first-year student enrollment were most significant at four-year colleges that serve low-income students, the report also found.

At four-year colleges where large shares of students receive Pell Grants, first-year student enrollment dropped more than 10%.

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Here’s the inflation breakdown for October 2024 — in one chart

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A customer walks by a display of fresh eggs at a grocery store on Sept. 25, 2024 in San Anselmo, California.

Justin Sullivan | Getty Images

Progress in the fight to tame pandemic-era inflation appears to have stalled out in October, despite lower prices at the gasoline pump and a moderation in other consumer staples such as groceries.

Meanwhile, economists think policies such as import tariffs floated by President-elect Donald Trump would likely — if enacted — exacerbate the inflation rate, which hasn’t yet declined to policymakers’ long-term target.

The consumer price index, a key inflation gauge, was up 2.6% in October versus a year ago — an increase from 2.4% in September, the Bureau of Labor Statistics reported Wednesday. The reading was in line with economists’ expectations.

While that October uptick may seem like a setback, consumers can take solace that broad price pressures are continuing to ease, economists and policymakers said.

Federal Reserve Chair Jerome Powell on Thursday said economic data points to inflation “continuing to come down on a bumpy path.”

“One or two really good data months or bad data months aren’t going to really change the pattern at this point,” Powell said during a press conference.

Annual inflation rate hit 2.6% in October, meeting expectations

Stephen Brown, deputy chief North American economist at Capital Economics, echoed that sentiment: “The overall [inflation] trend is positive,” he said.

In fact, the pickup in the annual inflation rate is at least partly due to a statistical quirk: The monthly inflation rate in October 2023 was unusually low, making the October 2024 reading look relatively high by comparison, economists said.   

‘Lagged impacts’ create trouble spots

Inflation has pulled back significantly from its pandemic-era peak of 9.1% in June 2022.

However, there are still some trouble spots.

Auto insurance prices, for example, are up 14% since October 2023, according to CPI data.

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Vehicle insurance premiums face “upward pressure” largely due to a lag effect from earlier inflationary dynamics, Brown said.

For example, new and used vehicle prices began to surge in 2021 amid a shortage of semiconductor chips used to manufacture cars; because of that sticker shock, insurers’ cost to replace vehicles after a car accident is much higher, Brown said. Insurers also typically need approval from regulators to raise consumer premiums, a process that takes time, he said.

“Lagged impacts” are affecting other categories, too, making for overall slow progress on reining in inflation, Brown said.

Housing is the ‘major impediment’

Homes in Discovery Bay, California.

David Paul Morri | Bloomberg | Getty Images

Housing, the largest CPI category, is a key example of that lag.

Shelter inflation has throttled back painfully slowly, even as inflation in the national rental market has declined considerably, economists said.

“Market rents, newly signed leases, are experiencing very low inflation,” Powell said during the press conference.

Shelter inflation has taken a long time to adjust to that housing backdrop due to how federal statisticians compile the CPI index. In short, its slow adjustment up or down is by design.

“So that’s just a catch-up problem,” Powell said. “It’s not really reflecting current inflationary pressures.”

CPI shelter inflation heated up on a monthly basis in October, rising to 0.4% from 0.2% in September. Its annual inflation rate has declined to less than 5% from a peak of more than 8% in early 2023.

Shelter is “the continued major impediment to getting inflation all the way back,” said Mark Zandi, chief economist at Moody’s.

The Federal Reserve has a long-term annual inflation target of around 2%.

Where consumers saw some relief in October

Brandon Bell | Getty Images News | Getty Images

Consumers saw some relief at the grocery store and at the gas pump in October.

Inflation for groceries cooled on a monthly basis, to 0.1% from September to October, down from 0.4% the prior month. Grocery prices are up about 1% since October 2023.

They’re “very, very tame,” Zandi said.

That’s despite various supply-and-demand idiosyncrasies that are raising prices for certain food items, he said. For example, avian flu, which is lethal for chickens and other birds, has negatively affected egg supply and led prices to swell 30% in the past year; similarly, a poor orange crop has pushed up orange prices 7% annually.

The price for a gallon of gasoline fell 1% during the month, according to CPI data. Prices are down more than 12% in the past year.

“Gasoline prices are way down,” Zandi said. Average prices could fall further, to below $3 a gallon, he said. They were at $3.05 a gallon, on average, as of Nov. 11, according to the U.S. Energy Information Administration.

“We could get more relief there because global oil prices are soft,” Zandi said.

That weakness may be in anticipation of President-elect Donald Trump’s proposed policies around China, said Zandi. Those may include tariffs of at least 60% on goods imported from China, which has a huge appetite for oil. If Trump’s policies were to negatively affect the Chinese economy, they’d also likely dampen China’s oil demand.

Trump policies thought to be inflationary

Trump has proposed broader tariffs, of perhaps 10% or 20% on all goods imported to the U.S. Additionally, he has announced plans to deport millions of undocumented immigrants and enact a package of tax cuts.

If put in place, such policies would likely stoke U.S. inflation, economists said.

“While we believe that inflation remains on a disinflationary trajectory, we now see the risks as clearly tilted to the upside,” Bank of America economists wrote in a note Monday. “These risks stem from potential policy changes rather than economic fundamentals.”

Placing an import tax on goods would likely lead U.S. companies to raise prices for those goods, for example, economists said. Fewer immigrants in the labor pool may push businesses to raise wages to attract applicants and retain workers, while tax cuts could put more money in consumers’ pockets and boost their spending.

“Indeed, we see pro-growth fiscal policy, tariffs, and tighter immigration as potential sources of upside inflation risk over the coming years if they are implemented,” Bank of America economists wrote.

The annual inflation would likely be around 2.1% by the end of 2025 absent Trump’s policies, said Brown of Capital Economics. If enacted, that figure would likely be around 3%, he said, as a “ballpark estimate.”

“The return of inflation to the 2% target may prove short-lived,” Brown wrote in a research note Wednesday.

However, much depends on how, when and if those policies are enacted, economists said.

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