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Student loan borrowers brace for wage garnishment

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US Secretary of Education Linda McMahon attends the International Women of Courage Awards Ceremony at the State Department in Washington, DC, on April 1, 2025.

Brendan Smialowski | Afp | Getty Images

Jason Collier, a special education teacher in Virginia, often needs to wait until payday to fill up the gas tank of his car — and in the meantime hopes he doesn’t run out.

“Money is tight when you’re a teacher,” Collier, 46, said.

Now he’s afraid that the U.S. Department of Education will soon garnish up to 15% of his wages because he’s behind on his student debt payments. Collier said he hasn’t been able to meet his monthly bill for years, while juggling the expenses of raising two children and medical expenses from a cancer diagnosis.

If his paycheck is garnished, “it would just be more of a pinch,” Collier said. “If I need a car repair, or something comes up, I might not be able to do those things.”

The consequences are punitive and sometimes tragic.

James Kvaal

former Education Dept. undersecretary

After a half-decade pause of collection activity on federal student loans, the Trump administration announced on April 21 that it would once again seize defaulted borrowers’ federal tax refunds, paychecks and Social Security benefits.

More than 5 million student loan borrowers are currently in default, and that total could swell to roughly 10 million borrowers within a few months, according to the Education Department.

The Biden administration focused on extending relief measures to struggling borrowers in the wake of the Covid pandemic and helping them to get current. The Trump administration’s aggressive collection activity is a sharp turn away from that strategy.

“Borrowers should pay back the debts they take on,” said U.S. Secretary of Education Linda McMahon in a video posted on X on April 22.

Student loan default collection restarting

More than 42 million Americans hold student loans, and collectively, outstanding federal education debt exceeds $1.6 trillion. The Education Department can garnish up to 15% of defaulted borrowers’ disposable income and federal benefits, as well as their entire federal tax refunds.

“In an environment where the cost of living remains stubbornly high, this kind of withholding from your income can pose real problems when trying to make ends meet, and force people into choosing between vital expenses,” said Nancy Nierman, assistant director of the Education Debt Consumer Assistance Program in New York.

Most people who default on their student loans “truly cannot afford to pay them,” James Kvaal, who served as U.S. undersecretary of education for former President Joe Biden, said in an April interview with CNBC.

“The consequences are punitive and sometimes tragic,” Kvaal said.

A retiree who can’t go home now

Marceline Paul and her grandson

Courtesy: Marceline Paul

Marceline Paul is homesick.

But if the Trump administration begins garnishing her Social Security benefit next month, there’s no way she’ll be able to afford a trip back to Trinidad. She moved from there to the United States in the ’70s.

“I need to go home,” said Paul, 68, who worked for decades in the health care industry and retired during the Covid-19 pandemic to take care of her sick mother.

The student debt she had taken on for her daughter was the last thing on her mind during that time, she said: “I couldn’t focus on anything else.”

She felt terrified when she received a recent notice from the Education Dept. that her retirement check could be offset. Nearly all of her income comes from her monthly Social Security benefit of around $2,600. Social Security benefits can generally be reduced by up to 15% to repay student debt in default, so long as beneficiaries are left with at least $750 per month.

“When I saw that email, it made me sick to my stomach,” Paul said.

Already on a tight budget in retirement, the garnishment will force her to cut back on her everyday expenses, skip necessary repairs on her house in Maryland and forgo traveling to her home country.

“I don’t know the last time I had a vacation,” she said. “I’ve paid into the system and I should be able to retire.”

More than 450,000 borrowers ages 62 and older in default on their federal student loans and likely to be receiving Social Security benefits, the Consumer Financial Protection Bureau found earlier this year.

Collection activity begins despite chaotic time

But in recent months, the Trump administration has terminated around half of the Education Department’s staff, including many of the people who helped assist borrowers.

Now some student loan borrowers report waiting hours on the phone before being able to reach someone about their debt, despite the Trump administration telling borrowers to contact it to get current.

The Education Department did not respond to a request for comment.

Borrowers try and fail to get current on their loans

Kia Brown, who works as a management analyst at the Department of Veterans Affairs, wants to start repaying her student loans again — but she said she’s run into numerous challenges trying to do so.

“The biggest issue I have is the lack of information,” said Brown, 44.

When she signed up for Biden’s SAVE plan, she could afford her monthly student loan bill of $150. But now that plan is blocked and she’s worried she won’t be able to afford her new payment.

She received conflicting information over whether her student loan servicer was Mohela or Navient (millions of people have had their accounts transferred between companies in recent years.) When she tried to reach someone at Navient about her student debt, she was on hold for more than two hours.

Meanwhile, a representative at Mohela couldn’t tell her what her new student loan payment would be, though she was quoted $319 by the company’s automated phone system.

Mohela and Navient did not respond to a request for comment.

Brown is still not sure which company is managing her account.

“The narrative is that people are dodging their payments,” Brown said, but added that she doesn’t think that’s true for many borrowers. “I truly believe many people will be blindsided due to lack of guidance on how to repay.”

If she’s not able to reach someone at the Education Dept. to get current on her payments and her wages are garnished, it’ll be a significant hardship for her family, she said.

“We’re living paycheck to paycheck,” she said. “I’m lucky if I can even put aside $100 for myself.”

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‘SALT’ deduction in limbo as Senate Republicans unveil tax plan

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U.S. Senate Majority Leader John Thune (R-SD) speaks at a press conference following the U.S. Senate Republicans’ weekly policy luncheon on Capitol Hill in Washington, D.C., U.S., June 10, 2025.

Kent Nishimura | Reuters

As Senate Republicans release key details of President Donald Trump‘s spending package, some provisions, including the federal deduction for state and local taxes, known as SALT, remain in limbo.

Enacted via the Tax Cuts and Jobs Act, or TCJA, of 2017, there’s currently a $10,000 limit on the SALT deduction through 2025. Before 2018, the tax break — including state and local income and property taxes — was unlimited for filers who itemized deductions. But the so-called alternative minimum tax reduced the benefit for some higher earners.

The Senate Finance Committee’s proposed text released on Monday includes a $10,000 SALT deduction cap, which is expected to change during Senate-House negotiations on the spending package. That limit is down from the $40,000 cap approved by House Republicans in May.

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The SALT deduction has been ‘contentious’

SALT cap is not a senate priority. Here's the latest on the mega bill

However, raising the SALT deduction cap has been controversial. If enacted, benefits would primarily flow to higher-income households, according to a May analysis from the Committee for a Responsible Federal Budget.

Currently, the vast majority of filers — roughly 90%, according to the latest IRS data — use the standard deduction and don’t benefit from itemized tax breaks.

Plus, the 2017 SALT cap was enacted to help pay for other TCJA tax breaks, and some lawmakers support the lower limit for funding purposes.

In the Senate, “there isn’t a high level of interest in doing anything on SALT,” Senate Majority Leader John Thune said June 15 on “Fox News Sunday.”

“I think at the end of the day, we’ll find a landing spot, hopefully that will get the votes that we need in the House, a compromise position on the SALT issue,” he said. 

But some House Republicans have already pushed back on the proposed $10,000 SALT deduction cap included in the Senate draft. 

Rep. Mike Lawler, R-N.Y., on Monday described the Senate proposed $10,000 SALT deduction limit as “DEAD ON ARRIVAL” in an X post.

Meanwhile, Rep. Nicole Malliotakis, R-N.Y., on Monday also posted about the $10,000 cap on X. She said the lower limit was “not only insulting but a slap in the face to the Republican districts that delivered our majority and trifecta.”

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Welcome to the zoo. That’ll be $47 today — ask again tomorrow.

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Giant panda Bao Li chews on bamboo during his public debut at the Smithsonian’s National Zoo in Washington, U.S., January 24, 2025. 

Kevin Lamarque | Reuters

How much will it cost to visit a museum, zoo or aquarium this summer? The answer, increasingly, is: It depends.

John Linehan can rattle off almost two dozen factors that Zoo New England’s dynamic pricing contractor, Digonex, uses to recommend what to charge guests.

“It’s complicated,” said Linehan, president and CEO of the operator of the two zoos in eastern Massachusetts.

Before adopting dynamic pricing, the organization was changing prices seasonally and increasing entry rates little by little. “As we watched that pattern, we were afraid some families were going to get priced out,” he said of the earlier approach. “I’m a father of four and I know what it is like.”

Now, Zoo New England’s system provides cheaper rates for tickets purchased far in advance. That, coupled with the zoo’s participation in the Mass Cultural Council’s discounted admissions program for low-income and working families, “puts some control back in the consumer’s hands,” Linehan said.

We charge what we need to make ends meet while delivering on our mission.

John Linehan

CEO of Zoo New England

The zoo is one of many attractions embracing pricing systems that were earlier pioneered by airlines, ride-hailing apps and theme parks. While these practices allow operators to lower prices when demand is soft, they also enable the reverse, threatening to squeeze consumers who are increasingly trimming their summer travel budgets.

Before the pandemic, less than 1% of attractions surveyed by Arival, a tourism market research and events firm, used variable or dynamic pricing. Today, 17% use variable pricing, in which entry fees are adjusted based on predictable factors such as the day of the week or the season, Arival said. And 6% use dynamic pricing, in which historical and real-time data on weather, staffing, demand patterns and more influence rates.

The changes come as barely half of U.S. museums, zoos, science centers and similar institutions have fully recovered to their pre-Covid attendance levels, according to the American Alliance of Museums. That has led many to pursue novel ways of filling budget gaps and offsetting cost increases.

“There’s a saying: ‘No margin, no mission,'” Linehan said, “and we charge what we need to make ends meet while delivering on our mission.”

Entry costs are climbing even at attractions that aren’t using price-setting technology. The broad “admissions” category in the federal government’s Consumer Price Index, which includes museum fees alongside sports and concert tickets, climbed 3.9% in May from the year before, well above the annual 2.4% inflation rate.

In 2024, the nonprofit Monterey Bay Aquarium raised adult ticket prices from $59.95 to $65 and recently upped its individual membership rate, which includes year-round admission, from $95 to $125. “Gate admission from ticket sales funds the core operation of the aquarium,” a spokesperson said.

While the Denver Art Museum has no plans to test dynamic pricing, it raised admissions fees last fall, three years after a $175 million renovation and a survey of ticket prices elsewhere, a spokesperson said. Entry costs went from $18 to $22 for Colorado residents and from $22 to $27 for out-of-state visitors. Prices rise on weekends and during busy times, to $25 and $30 for in- and out-of-state visitors, respectively. Guests under age 19 always get in free thanks to a sponsored program.

Some attractions are doing a daily analysis of their bookings over the next several days or weeks and making adjustments.

Douglas Quinby

CEO of Arival

Like many attractions, the art museum posts these prices on its website. But many attractions’ publicly listed ticket prices are liable to fluctuate. The Seattle Aquarium — which raised its price ranges last summer by about $10 ahead of the opening of a new ocean pavilion — also uses Digonex’s algorithmic recommendations.

During the week of June 8, for example, the aquarium’s online visit planner, which displays the relative ticket availability for each day, offered out-of-state adult admissions as low as $37.95 for dates later in the month and as much as $46.95 for walk-in tickets that week. In addition to booking in advance, there are more than half a dozen other discounts available to certain guests, including seniors and tribal and military members, a spokesperson noted.

At many attractions, however, admission fees aren’t even provided until a guest enters the specific day and time they want to visit — making it difficult to know that lower prices may be available at another time.

“Some attractions are doing a daily analysis of their bookings over the next several days or weeks and making adjustments” to prices continuously, said Arival CEO Douglas Quinby. Prices might rise quietly on a day when slots are filling up and dip when tickets don’t seem to be moving, he said.

Digonex, which says it provides automated dynamic pricing services to more than 70 attractions worldwide, offers recommendations as frequently as daily. It’s up to clients to decide how and whether to implement them, a spokesperson said. Each algorithm is tailored to organizations’ goals and can account for everything from weather to capacity constraints and even Google Analytics search patterns.

Data-driven pricing can be “a financial win for both the public and the museum,” said Elizabeth Merritt, vice president of strategic foresight at the American Alliance of Museums. It can reduce overcrowding, she said, while steering budget-minded guests toward dates that are both cheaper and less busy.

The stegosaurus fossil nicknamed Apex is unveiled to the media at the American Museum of Natural History in New York, December 5, 2024. Billionaire Kenneth C. Griffin, who bought the stegosaurus fossil for $44.6 million, is loaning it to the museum for four years. 

Timothy A. Clary | Afp | Getty Images

But steeper prices during peak periods and for short-notice visits could rankle guests — who may see anything less than a top-notch experience as a rip-off, said Stephen Pratt, a professor at the University of Central Florida’s Rosen College of Hospitality Management who studies tourism.

“Because of the higher prices, you want an experience that’s really great,” he said, transforming a low-key day at the zoo into a big-ticket, high-stakes outing. “You’ve invested this money into family time, into creating memories, and you don’t want any service mishaps.”

That could raise the risk of blowback at many attractions, especially those grappling with Trump administration cuts this summer. Some historic sites and national parks have already warned that their operations are under pressure.

Consumers should expect more price complexity to come. Arival said 16% of attractions ranked implementing dynamic pricing as a top priority for 2025-26. Among large attractions serving at least half a million guests annually, 37% are prioritizing dynamic pricing, up from the 12% that use it currently.

For visitors, that could mean hunting harder for cheaper tickets. While many museums are free year-round, others provide lower rates for off-season visits and those booked in advance. It’s also common to reduce or waive fees on certain days or hours, and many kids and seniors can often get discounted entry.

Here are a few other ways to keep admissions costs low:

Ways to save on museum tickets:

“It may take a bit of research,” said Quinby, “but it’s still possible to find a good deal.”

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What that means for you

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U.S. President Donald Trump looks on as Fed Chair Jerome Powell speaks at the White House in Washington on Nov. 2, 2017.

Carlos Barria | Reuters

Political pressure is mounting against the Federal Reserve Chair Jerome Powell, and yet the Federal Reserve is expected to hold interest rates steady at the end of its two-day meeting this week.

Despite a wave of recent attacks on Powell from President Donald Trump, futures market pricing is implying virtually no chance of an interest rate cut, according to the CME Group’s FedWatch gauge.

The president has argued that maintaining a fed funds rate that is too high makes it harder for businesses and consumers to borrow, adding more strain to the U.S. economy. The federal funds rate sets what banks charge each other for overnight lending, but also affects many of the borrowing and savings rates most Americans see every day.

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With a rate cut likely postponed until at least September, consumers struggling under the weight of high prices and high borrowing costs aren’t getting much relief, experts say. 

“The combination of high interest rates, stubborn inflation and economic uncertainty is a pretty challenging one,” said Matt Schulz, chief credit analyst at LendingTree. “Most Americans don’t have a ton of wiggle room and today they have even less.”

From credit cards and mortgage rates to auto loans and savings accounts, here’s a look at how the Fed plays a role in your finances.

Credit cards

Credit card debt continues to be a pain point for consumers struggling to keep up with high prices. Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark.

But even with the Fed on the sidelines, credit card rates have edged higher. The average annual percentage rate is currently just over 20%, according to Bankrate, not far from last year’s all-time high

“This is a sign of banks trying to protect themselves from the risk that is out there in these uncertain times,” Schulz said. However, in this case, there is something consumers can do about higher APRs.

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“The truth is that people have way more power over the rates they pay than they think they do, especially if they have good credit,” Schulz said.

Rather than wait for a rate cut that may be months away, borrowers could switch now to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a lower-rate personal loan, he said.

Mortgages

Since 15- and 30-year mortgages are largely tied to Treasury yields and the economy, those rates haven’t moved much — and that hasn’t helped would-be buyers.

The average rate for a 30-year, fixed-rate mortgage has stayed within the same narrow range for months and is currently near 6.9%, according to Bankrate. Tack on the nationwide problem of limited inventory and housing affordability remains a key issue, regardless of the Fed’s next move.

“I don’t see any major changes coming in the immediate future, meaning that those shopping for a home this summer should expect rates to remain relatively high,” Schulz said.

Auto loans

Auto loan rates are fixed, and not directly tied to the Fed. But payments are getting bigger because car prices are rising, in part due to impacts from Trump’s trade policy.

Currently, the average rate on a five-year new car loan is 7.24%, according to Bankrate.

The growth in median car payments is outpacing both new and used car prices, according to separate data from Bank of America. Now, of those households with a monthly car payment, 20% pay more than $1,000 a month.

“Combine that with the potential for tariffs to drive auto prices even higher, and it adds up to a really challenging time to buy a car,” Schulz said. “However, shopping for the best rate and getting approved for financing before you ever set foot in the dealership can bring significant savings,” he added.

Student loans

Federal student loan rates are set once a year, based in part on the last 10-year Treasury note auction in May and fixed for the life of the loan, so most borrowers are somewhat shielded from Fed moves and recent economic turmoil.

Current interest rates on undergraduate federal student loans made through June 30 are at 6.53%. Starting July 1, the interest rates will be 6.39%.

Although borrowers with existing federal student debt balances won’t see their rates change, many are now facing other headwinds and fewer federal loan forgiveness options.

Savings

On the upside, top-yielding online savings accounts still offer above-average returns and currently pay more than 4%, according to Bankrate.

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 — so holding that rate unchanged has kept savings rates elevated, for now.

“The thing that is lost in this, is that savers, including millions of retirees, are actually earning good income on their savings, provided they have their money parked in a competitive place,” said Greg McBride, Bankrate’s chief financial analyst.

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