Connect with us

Personal Finance

Biden’s student loan forgiveness plan could erase up to $20,000 in interest

Published

on

U.S. President Joe Biden waves as he departs for Baltimore from the White House in Washington, U.S., April 5, 2024. 

Kevin Lamarque | Reuters

President Joe Biden will unveil his new plan to forgive student debt on Monday, less than a year after the Supreme Court blocked his initial attempt.

Biden wants this aid package to survive any legal challenges. As a result, the president has made the program narrower by targeting specific groups of borrowers for debt forgiveness, including those facing financial hardship.

But one of the provisions under the new plan could still reach up to 25 million Americans. That’s Biden’s intent to “cancel runaway interest.”

More from Personal Finance:
Why gas is so expensive in California
Credit card users face ‘consequences’ from falling behind
After Biden praises progress on inflation, economists weigh in

“These historic steps reflect President Biden’s determination that we cannot allow student debt to leave students worse off than before they went to college,” U.S. Undersecretary of Education James Kvaal said in a statement.

Interest provision may erase up to $20,000 per borrower

Consumer advocates have long criticized the fact that interest rates on federal student loans may exceed 8%, which can make it tough for borrowers who fall behind or are on certain payment plans to reduce their balances.

More than 25 million federal student borrowers owe more than they originally borrowed, according to the Biden administration.

It estimates that, if its new plan is enacted as proposed, borrowers will get up to $20,000 of unpaid interest on their federal student debt forgiven, regardless of their income.

Pres Biden: Today's decision closed one path, now we are going to push through another

Certain low- and middle-income borrowers may benefit even more.

Single people who earn $120,000 or less, and married borrowers making $240,000 or under, could have the entire amount of interest that has accrued on their debt since they entered repayment canceled under Biden’s plan.

Borrowers would need to be enrolled in an income-driven repayment plan to qualify but shouldn’t have to apply for the relief.

“Student debt interest capitalization has been keeping families from accessing their version of the American Dream,” said Jaylon Herbin, director of federal campaigns at the Center for Responsible Lending. “Erasing that debt will lessen the burden of student loan debt on millions of borrowers and allow them to pay off their loans in a timely manner.”

Who may benefit from new forgiveness plan

In addition to the cancellation of interest, Biden’s new plan is also expected to forgive the debt of certain groups of borrowers, including those who:

  • Are already eligible for debt cancellation under an existing government program but haven’t yet applied
  • Have been in repayment for 20 years or longer on their undergraduate loans, or over 25 years on their graduate loans
  • Attended schools of questionable value
  • Are experiencing financial hardship

It’s not entirely clear yet how financial hardship will be defined, but it could include those burdened by medical debt or high child care expenses, the Biden administration said.

Biden originally attempted to cancel people’s student debt through executive action, but he’s now turned to the rulemaking process. The next step in that procedure is for the Biden administration to issue a proposed rule on its plan, which will be followed by a public comment period.

The president hopes to begin forgiving student debt before the November election.

Continue Reading

Personal Finance

How to land a job in a ‘low firing, low hiring’ market: economist

Published

on

Job seekers at a job fair hosted by the Metropolitan Washington Airports Authority to support federal workers looking for new career opportunities, at Ronald Reagan Washington National Airport in Arlington, Virginia, on April 25, 2025.

Ting Shen/Bloomberg via Getty Images

These days, job hunting may feel like something of a paradox: Even though the overall market is strong, it can be tough for jobseekers to find a new gig, according to economists.

Unemployment was relatively low in April, at 4.2%, and job growth exceeded expectations. The layoff rate is historically low, meaning those with jobs are holding onto them.

Yet it has gotten harder to find new work.

Businesses are hiring at their slowest pace since 2014. Nearly 1 in 4 jobless workers, 23.5%, are long-term unemployed — meaning they’ve been out of work for more than six months — up from 19.6% a year ago.

Cory Stahle, an economist at the Indeed Hiring Lab, called it a “low firing, low hiring trend” in a note on Friday.

Why job scam texts are on the rise

There’s a “growing divide” in the labor market between those out of work and those who are employed, Stahle wrote.

The changing market conditions may feel jarring for job seekers, given that a few years ago there were record-high job openings and workers were quitting at record levels amid ample opportunity.

“This is just how it is right now: Companies are not hiring,” said Mandi Woodruff-Santos, a career coach and personal finance expert. “If they are, it’s very infrequent.”

Economic headwinds like trade wars and tumbling consumer confidence may make job-finding more difficult in coming months, economists said.

“The market can’t escape the consequences of rapidly souring business and consumer confidence forever,” Stahle wrote.

How job seekers can stand out in a tough market

Shannon Fagan | The Image Bank | Getty Images

Even in this “low firing, low hiring” market, there are ways for jobseekers to stand out, experts said.

“When the market changes, the way you search for a job may also have to be adjusted,” Jennifer Herrity, a career trends expert at Indeed, wrote in an e-mail.

1. Be ‘creative’ with networking

Job seekers will likely have to lean on personal relationships more than in the recent past, experts said.

Most jobs come through referrals or internal candidates, meaning people need to be “creative” and “strategic” about networking possibilities, Woodruff-Santos said.

“Instead of waiting for someone to pick your resume from a pile, you have to make it undeniable: Put yourself in front of them,” she said.

“Creating space for human connections and creating relationships will give you a little something extra,” she added.

More from Personal Finance:
Prices are falling on some purchases but ‘not here to stay’
Your Social Security card will soon be available digitally
Student loan default has ‘dramatic and immediate’ credit score impact

Don’t just look for obvious networking events like job fairs or expos heavily attended by other job seekers, Woodruff-Santos said.

She recommends seeking out conferences, seminars, special talks and book signings. For example, say you work in information technology and someone writes a book on corporate security in the world of artificial intelligence. Go to that author’s book signing, lecture, seminar or Q&A, Woodruff-Santos said — since the audience would likely be people in businesses with an interest in IT security.

Reconnect with former colleagues to get on a hiring manager’s radar before a role opens to the general public, Herrity said.

2. Look for internal opportunities

Workers dissatisfied with their current roles may be overlooking internal career opportunities, experts said.

“While hiring may appear to be slowing on the surface, it usually just means that opportunities have gone further underground,” Frances Weir, a principal at organizational consulting firm Korn Ferry, said in a March briefing.

However, employees should be strategic: For example, they likely shouldn’t apply to several different jobs at the company or seek to move on from a role they started only months ago, according to the firm.

3. Customize applications

“Generic resumes won’t stand out to employers in a tight market,” Herrity said. “Tailor your resume and cover letter to each role, echoing keywords from the job description and aligning your skills with the employer’s needs.”

Applicants should also highlight results — instead of responsibilities — on their resume and in interviews, she said. That shows they’re a proven performer by quantifying achievements.

4. Upskill and reskill

“Employers value candidates who use slow periods to grow,” Herrity said. “This is especially important for those facing long-term unemployment who may find themselves in a skills gap.”

She recommends finding free or low-cost courses in any relevant career areas to help fill gaps and signal initiative, motivation and self-teaching.

Coffee badging: A workplace trend that's annoying employers

List recent certifications or course completions in the “education” or “skills” section of a resume, she said.

5. Be flexible

While waiting for your ideal job, success might mean being open to contract work, hybrid roles or adjacent industries, Herrity said.

“Short-term roles can be a great opportunity to grow your network and skills, then leap when the right full-time role appears,” she said.

Continue Reading

Personal Finance

I bonds investments and Trump’s tariff policy: What to know

Published

on

Kate_sept2004 | E+ | Getty Images

As investors worry about future inflation amid President Donald Trump‘s tariff policy, some experts say assets like Series I bonds could help hedge against rising prices.  

Currently, newly purchased I bonds pay 3.98% annual interest through October 31, which is up from the 3.11% yield offered the previous six months. Tied to inflation, the I bond rate adjusts twice yearly in part based on the consumer price index.

Certified financial planner Nathan Sebesta, owner of Access Wealth Strategies in Artesia, New Mexico, said there’s been a “noticeable uptick” in client interest for assets like I bonds and Treasury inflation-protected securities

“While inflation has moderated, the memory of recent spikes is still fresh, and tariff talk reignites those concerns,” he said.

More from FA Playbook:

Here’s a look at other stories impacting the financial advisor business.

I bonds can be a ‘sound strategy’

As of May 7, the top 1% average high-yield savings accounts currently pay 4.23%, while the best one-year CDs offer 4.78%, according to DepositAccounts. Meanwhile, Treasury bills still offer yields above 4%.

Of course, these could change, depending on future moves from the Federal Reserve.

If you’re worried about higher future inflation and considering I bonds, here are some key things to know.

How I bonds work

I bond rates combine a variable and fixed rate portion, which the Treasury adjusts every May and November.

The variable portion is based on inflation and stays the same for six months after your purchase date. By contrast, the fixed rate portion stays the same after buying. You can see the history of both parts here.

Currently, the variable portion is 2.86%, which could increase if future inflation rises. Meanwhile, the fixed portion is currently 1.10%, which could be “very attractive” for long-term investors, Ken Tumin, founder of DepositAccounts.com, recently told CNBC.

Before November 2023, I bonds hadn’t offered a fixed rate above 1% since November 2007, according to Treasury data.

Upper-income consumers stressed: Here's why

The downsides of I bonds

Despite the higher fixed rate and inflation protection, there are I bond downsides to consider, experts say.

You can’t access the money for at least one year after purchase, and there’s a three-month interest penalty if you tap the funds within five years. 

There are also purchase limits. You can buy I bonds online through TreasuryDirect, with a $10,000 per calendar year limit for individuals. However, there are ways to purchase more.

“There’s also the tax consequences,” Tsantes said.

I bond interest is subject to regular federal income taxes. You can defer taxes until redemption or report interest yearly.

Continue Reading

Personal Finance

Key ways consumer loans are affected

Published

on

CNBC Fed Survey: Respondents confident Fed will cut interest rates this year

When the Fed hiked rates in 2022 and 2023, the interest rates on most consumer loans quickly followed suit. Even though the central bank lowered its benchmark rate three times in 2024, those consumer rates are still elevated, and are mostly staying high, for now.

Five ways the Fed affects your wallet

1. Credit cards

Many credit cards have a variable rate, so there’s a direct connection to the Fed’s benchmark.

With a rate cut likely postponed until July, the average credit card annual percentage rate has stayed just over 20% this year, according to Bankrate — not far from 2024’s all-time high. Last year, banks raised credit card interest rates to record levels and some issuers said they are keeping those higher rates in place.

At the same time, “more people are carrying debt because of higher prices,” said Ted Rossman, senior industry analyst at Bankrate. Total credit card debt and average balances are also at record highs.

2. Mortgages

Prospective home buyers leave a property for sale during an Open House in a neighborhood in Clarksburg, Maryland.

Roberto Schmidt | AFP | Getty Images

Mortgage rates don’t directly track the Fed, but are largely tied to Treasury yields and the economy. As a result, uncertainty over tariffs and worries about a possible recession are dragging those rates down slightly.

The average rate for a 30-year, fixed-rate mortgage is 6.91% as of May 6, while the 15-year, fixed-rate is 6.22%, according to Mortgage News Daily. 

Mortgage rates “are showing signs of life after a slow couple of years,” said Michele Raneri, vice president and head of U.S. research and consulting at TransUnion. 

But for potential home buyers, that’s not enough of a decline to give the housing market a boost. “Many borrowers are reluctant to take on a loan at today’s rates, particularly if they currently have a loan at a significantly lower rate,” Raneri said.

3. Auto loans

Auto loan rates are tied to several factors, but the Fed is one of the most significant.

With the Fed’s benchmark holding steady, the average rate on a five-year new car loan was 7.1% in April, while the average auto loan rate for used cars is 10.9%, according to Edmunds. At the end of 2024, those rates were 6.6% and 10.8%, respectively.

With interest rates near historic highs and car prices rising — along with pressure from Trump’s 25% tariffs on imported vehicles — new-car shoppers are facing bigger monthly payments and an affordability crunch, according to Joseph Yoon, Edmunds’ consumer insights analyst.

“Consumers continue to face a challenging market, now with added uncertainty of the tariff impact on their next vehicle purchase,” Yoon said. “Prices and interest rates remain elevated, and there’s no fast or easy answer as to how the tariffs will affect inventory levels — and therefore pricing — as buyers try to make sense of an increasingly complex shopping journey.” 

4. Student loans

Federal student loan rates are fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.

Interest rates for the upcoming school year will be based in part on the May auction of the 10-year Treasury note, and are expected to drop slightly, according to higher education expert Mark Kantrowitz. Undergraduate students who took out direct federal student loans for the 2024-25 academic year are paying 6.53%, up from 5.50% in 2023-24.

Borrowers with existing federal student debt balances won’t see their rates change, adding to the other headwinds some now face along with fewer federal loan forgiveness options.

5. Savings

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate.

“Continued high interest rates are discouraging for those with debt but awesome for savers,” said Matt Schulz, chief credit analyst at LendingTree. 

Yields for CDs and high-yield savings accounts may not be as high as they were a year ago, but the Fed’s rate cut pause has left them well above the annual rate of inflation, Schulz said. Top-yielding online savings accounts currently pay 4.5%, on average, according to Bankrate.

“With all of the uncertainty in the economy right now, it makes sense for people to act now to lock in CD rates and take advantage of current high-yield savings account returns while they still can,” Schulz said.

Subscribe to CNBC on YouTube.

Continue Reading

Trending