Finance

Biden cancels student loans with one week left to his term

Published

3 months ago

January 15, 2025

Business Finance News

More student debt relief is underway as Biden prepares to exit office. (iStock)

As President Joe Biden’s term draws to a close, he has granted federal student loan relief to an additional 150,000 borrowers.

These 150,000 borrowers include almost 85,000 who attended schools that cheated and defrauded their students, 61,000 borrowers with total and permanent disabilities, and 6,100 public service workers. The debt forgiveness now brings the number of students whose student debt has been canceled during his administration to more than 5 million, according to a White House release.

The latest wave of debt relief includes 6,100 borrowers who have had $465 million of debt forgiven through the Public Service Loan Forgiveness (PSLF) program. This is a testament to the potential of such programs to alleviate the burden of student debt.

“Identifying 5 million people for student loan forgiveness means the federal government is finally keeping its promises,” U.S. Under Secretary of Education James Kvaal said. “People who cannot afford their student loans because they are in public service, have disabilities, were cheated by their college, or who have completed decades of payments are now getting the relief they were promised. These permanent reforms will continue for more and more borrowers every year.”

If you want to pay down your private student loan debt, a refinance could help you lower your interest rate and monthly payment. To see if this is the right option, contact Credible to speak to a student loan expert and answer your questions.

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New student loan forgiveness approvals

The Supreme Court previously blocked the Biden administration’s plans for broader student loan forgiveness. In 2023, the court stopped the administration from forgiving $400 billion in debt affecting more than 40 million borrowers.

In August, the Supreme Court shut down another administration proposal to lower monthly payments and speed up loan forgiveness. After the Supreme Court struck down Biden’s student loan forgiveness plan, Biden introduced SAVE. The White House said that the SAVE plan could lower borrowers’ monthly payments to zero dollars, reduce monthly costs in half and save those who make payments at least $1,000 yearly.

The Biden administration withdrew plans for an alternative student debt forgiveness plan in December. Despite losing in the Supreme Court, the administration has forgiven some $183.6 billion in student debt thanks to fixes implemented to process PSLF applications and approve discharges. The total number of borrowers approved for PSLF is now 1,069,000 and $78.46 billion compared to 7,000 borrowers who had received PSLF at the start of the Biden-Harris administration, according to the Department of Education.

Moreover, the administration approved $56.5 billion in debt relief for more than 1.4 million borrowers through Income-Driven Repayment, including the Saving on a Valuable Education SAVE plan. Some borrowers also have access to an extra $900 in Pell Grant funds to pay for school. Additional debt forgiven includes the student debt of borrowers whose schools cheated, saw their institutions precipitously close, or are covered by related court settlements.

Private student loan borrowers can’t benefit from federal loan relief. But you could lower your monthly payments by refinancing to a lower interest rate. Visit Credible to speak with an expert and get your questions answered.

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Debt forgiveness could be blocked forever

Republican Representative Glenn Grothman (R-WI) introduced a bill during the last Congress that effectively blocked any future mass student loan cancelation plans. The Protecting Taxpayers From Student Loan Bailouts Act prohibits the Secretary of Education from issuing regulations or executive actions that increase the costs of the federal student loan program.

The bill was ultimately incorporated into the College Cost Reduction Act, which did not reach a vote on the House floor.

“Congress might still consider taking action to block future administrations from forgiving debts,” Preston Cooper, American Enterprise Institute senior fellow, said in a blog post.

Cooper said that Republicans may not want to risk the chance that the next Democratic administration will successfully pursue a loan cancelation strategy that is less vulnerable to legal challenges.

Borrowers with private student loans could find relief by refinancing to lower their monthly payments. An online tool like Credible can help you compare student loan refinancing rates before you apply to help find the best deal for you.

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Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at [email protected] and your question might be answered by Credible in our Money Expert column.

Finance

More Americans buy groceries with buy now, pay later loans

Published

4 hours ago

April 26, 2025

Business Finance News

People shop for produce at a Walmart in Rosemead, California, on April 11, 2025.

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday.

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs.

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said.

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once.

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.”

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers.

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts.