Finance
Biden cancels another $6 billion in student loans, this time for public service workers
78,000 public service workers qualify for this new round of forgiveness. (iStock)
More student loan forgiveness is here, this time for 78,000 public service workers. Nurses, teachers, firefighters and a large array of other workers qualify for President Biden’s $6 billion in forgiveness, the White House recently announced.
Due to fixes to the Public Service Loan Forgiveness (PSLF) program, workers that never received forgiveness are now having their debts partially forgiven or canceled. Only about 7,000 public service borrowers received forgiveness prior to the Biden Administration, now that total hovers closer to 870,000, the announcement said.
This forgiveness comes on the tail of other educational fixes the Biden Administration says it has implemented.
“Today’s announcement comes on top of the significant progress we’ve achieved for students and student loan borrowers in the past few years,” the announcement stated. “This includes: providing the largest increases in Pell Grants in over a decade to help families who earn less than roughly $60,000 a year; fixing Income-Driven Repayment plans so borrowers in repayment for years get the relief they earned; and creating the most generous Income-Driven Repayment plan in history – the SAVE plan.”
If you have private student loans, this federal relief doesn’t apply to you, unfortunately. If you want to lower your monthly payments and ease the burden of student loan debt, consider refinancing. You can easily check your loan rate options via the online marketplace Credible.
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Older generations still paying student loans risk losing Social Security
A recent group of representatives wrote a letter to Congress, hoping to address the issue of seniors still paying down student loans. Currently, under the Treasury Offset Program (TOP), the government can collect funds, such as tax refunds and Social Security, to pay outstanding student loan balances.
“Under the TOP, the federal government can withhold up to 15 percent of monthly Social Security or disability benefits for defaulted student loans,” the lawmakers explained in their letter.
This program leaves millions of older Americans at risk of losing vital income. Democratic representatives urged the Biden administration to act. The letter had 30 total signatures from other Democratic leaders.
“Given alarming reports exposing the crushing impact of offsets on older Americans dependent on Social Security, we urge you to consider seeking an end to administrative offset of student loan debts for all Social Security benefits,” the letter said.
To see if you can qualify for lower interest rates, an online tool like Credible can help you compare student loan refinancing rates from multiple lenders.
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Time is running out for borrowers to apply for forgiveness
For students who want to take advantage of student loan forgiveness, the expanded timeline is coming to an end on April 30.
To earn forgiveness, the following loan types must be consolidated into a Federal Direct Loan:
- Commercially held Federal Family Education Loan (FFEL)
- Parent PLUS loans
- Perkins loans
- Health Education Assistance Loan (HEAL) Program loans
Once consolidated, borrowers with Direct Loans will receive at least three years of credit towards loan forgiveness. Some may see their loans forgiven automatically if they’ve been making payments long enough. This adjustment is intended to help borrowers who were due to receive forgiveness in the past, but never did. The adjustment is set to take place through the end of July, so borrowers should see the credit reflected by then.
If you can qualify for a student loan refinance at a lower rate than you’re currently paying, there are few downsides to refinancing. You can use Credible to compare student loan refinancing rates without affecting your credit score.
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.
Investors always pay close attention to bonds, and what the latest movement in prices and yields is saying about the economy. Right now, the action is telling investors to stick to the shorter-end of the fixed-income market with their maturities.
“There’s lots of concern and volatility, but on the short and middle end, we’re seeing less volatility and stable yields,” Joanna Gallegos, CEO and founder of bond ETF company BondBloxx, said on CNBC’s “ETF Edge.”
The 3-month T-Bill right now is paying above 4.3%, annualized. The two-year is paying 3.9% while the 10-year is offering about 4.4%.
ETF flows in 2025 show that it’s the ultrashort opportunity that is attracting the most investors. The iShares 0-3 Month Treasury Bond ETF (SGOV) and SPDR Bloomberg 1-3 T-Bill ETF (BIL) are both among the top 10 ETFs in investor flows this year, taking in over $25 billion in assets. Only Vanguard Group’s S&P 500 ETF (VOO) has taken in more new money from investors this year than SGOV, according to ETFAction.com data. Vanguard’s Short Term Bond ETF (BSV) is not far behind, with over $4 billion in flows this year, placing with the top 20 among all ETFs in year-to-date flows.
“Long duration just doesn’t work right now” said Todd Sohn, senior ETF and technical strategist at Strategas Securities, on “ETF Edge.”
It would seem that Warren Buffett agrees, with Berkshire Hathaway doubling its ownership of T-bills and now owning 5% of all short-term Treasuries, according to a JPMorgan report.
Investors including Warren Buffett have been piling into short term Treasuries.
“The volatility has been on the long end,” Gallegos said. “The 20-year has gone from negative to positive five times so far this year,” she added.
The bond volatility comes nine months after the Fed’s began cutting rates, a campaign it has since paused amid concerns about the potential for resurgent inflation due to tariffs. Broader market concerns about government spending and deficit levels, especially with a major tax cut bill on the horizon, have added to bond market jitters.
Long-term treasuries and long-term corporate bonds have posted negative performance since September, which is very rare, according to Sohn. “The only other time that’s happened in modern times was during the financial crisis,” he said. “It is hard to argue against short term duration bonds right now,” he added.
Sohn is advising clients to steer clear of anything with a duration of longer than seven years, which has a yield in the 4.1% range right now.
Gallegos says she is concerned that amid the bond market volatility, investors aren’t paying enough attention to fixed income as part of their portfolio mix. “My fear is investors are not diversifying their portfolios with bonds today, and investors still have an equity addiction to concentrated broad-based indexes that are overweight certain tech names. They get used to these double-digit returns,” she said.
Volatility in the stock market has been high this year as well. The S&P 500 rose to record levels in February, before falling 20%, hitting a low in April, and then reversing all of those losses more recently. While bonds are an important component of long-term investing to shield a portfolio from stock corrections, Sohn said now is also a time for investors to look beyond the United States with their equity positions.
“International equities are contributing to portfolios like they haven’t done in a decade” he said. “Last year was Japanese equities, this year it is European equities. Investors don’t have to be loaded up on U.S. large cap growth right now,” he said.
The iShares MSCI Eurozone ETF (EZU) is up 25% so far this year. The iShares MSCI Japan ETF (EWJ) Japan ETF is up 25% over the last two years.
Overseas assets have become more popular.
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