Personal Finance

86-year-old grandmother got her nearly $32,000 student loan debt forgiven

Published

7 months ago

November 2, 2024

Business Finance News

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Rebecca Finch couldn’t think of a better gift for her 86th birthday.

She received a notice in early September from Navient that the lender would forgive the private student loan on which she was a co-signer.

“We’ve waived the remaining balance on your private student loan in the amount of $31,730.76,” the Aug. 29 letter said, in part.

Navient had determined that Rebecca qualified for its disability discharge. Rebecca received the news from the lender not long after CNBC wrote about the Finch family’s situation.

Rebecca Finch

Courtesy: Rebecca Finch

But the road to that relief was long, confusing and intensely stressful, said Rebecca’s daughter, Sabrina Finch.

“Finding out about the forgiveness option was very difficult,” said Sabrina, 53.

‘Transparency is severely lacking’

As the cost of higher education swells, the $130 billion private education loan industry has quickly grown. But private student loans come with few protections for those who run into repayment issues, including becoming disabled, consumer advocates say.

Only about half of the private lenders offer student borrowers the possibility of loan discharge if they become severely disabled and unable to work, according to an analysis by higher education expert Mark Kantrowitz.

In comparison, all federal student loans come with that option.

Even when a private student lender provides a disability discharge, it often doesn’t make the information widely known, advocates say.

“Transparency is severely lacking,” said Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, or EDCAP, based in New York.

“It’s often difficult for borrowers to even reach a representative who is knowledgeable about the disability discharge option,” Rodriguez said.

Anna Anderson, a staff attorney at the National Consumer Law Center, has seen that play out as well.

“Even the borrowers who allegedly have access to it, it’s still very, very difficult for them to actually seek and receive a discharge,” Anderson said.

On Sept. 9, in the course of reporting on the Finch family’s story, CNBC asked Navient if it had a link to a disability discharge application on its website.

“No,” Paul Hartwick, vice president of corporate communications at Navient, wrote in an email the same day.

He sent a link to a page on the lender’s website that encourages struggling borrowers to reach out to learn of their options. By the time of publication, that link no longer worked. Hartwick explained that that was because a different company, Mohela, or the Missouri Higher Education Loan Authority, began servicing the private student debt owned by Navient in October. That portfolio includes around 2.5 million borrowers.

Hartwick directed CNBC to Mohela’s website, which contained similarly limited information about loan discharge opportunities for those with disabilities.

In response to a request for comment, a Mohela spokesperson pointed CNBC back to Navient.

“MOHELA is a service provider for private loans and does not determine the benefits available by lenders,” the spokesperson wrote in an email. “Program attributes and terms are defined by each lender/loan holder.”

For comparison, the U.S. Department of Education has an easy-to-access disability application for federal student loan borrowers, and detailed information on its website about documentation and eligibility requirements.

Around 13% of Americans report having a disability, according to Pew Research Center. People with a disability are much less likely to be employed than those without one, and unemployment rates are far higher for those with disabilities, the U.S. Department of Labor found.

Disabled mother and daughter, and a $31,000 debt

Most private student lenders require a co-signer who is equally legally and financially responsible for the debt. That’s because student borrowers tend to have a thin or nonexistent credit history.

Originally, Sabrina was the primary borrower of the Navient private student loan, and her mother, Rebecca, was the co-signer. Rebecca co-signed the loan in 2007 while Sabrina — then in her 30s — was in school to become a nurse.

In the 20 years that followed, both women developed serious health issues.

In 2023, Sabrina was approved for Social Security disability benefits due to her bipolar disorder, she said. Even though she could no longer work, she assumed she was still responsible for the Navient loan. She researched her relief options but couldn’t find any information.

Sabrina said she just kept describing her situation to multiple customer service representatives at Navient. For weeks, those conversations led nowhere — until one day, an agent mentioned the disability option.

The next headache was figuring out the proof she’d need to gather, Sabrina said.

She only learned what the requirements were a few weeks later when Navient mailed her documents outlining the needed materials. In the end, Sabrina said, she sent as much information as she could to the lender, including evidence from her doctors.

In May, Navient excused Sabrina from her private student loan.

But that news was bittersweet. Almost immediately, the lender transferred the loan to her then 85-year-old mother.

Sabrina said she had told Navient that Rebecca has serious health conditions of her own, including cardiovascular disease and constant pain from a fractured hip. Several strokes have left Rebecca with speech and cognitive issues, Sabrina said. Sabrina spoke with CNBC on her mother’s behalf, given Rebecca’s extensive medical issues.

Even so, Sabrina said, a customer service agent at Navient told her that it would be hard for Rebecca to receive a loan discharge.

“Navient said that she would probably not be excused, regardless of [the documents] submitted,” Sabrina said.

On Oct. 25, Hartwick declined to comment on that conversation, but said that the private student loan was “discharged in full for Rebecca once her disability information was processed.”

But there’s no question it’s incredibly difficult for co-signers to be forgiven from a private student loan, consumer advocates say. The Consumer Financial Protection Bureau found in 2015 that private student lenders rejected 90% of co-signer release applications.

Advocates say those odds haven’t improved.

“Based on my experience, co-signer release is virtually non-existent in practice,” EDCAP’s Rodriguez told CNBC in August.

Navient’s attempts earlier this year to collect the debt severely upset Rebecca, Sabrina said.

The women were most afraid the lender could sue Rebecca and get a lien on her house in Troutville, Virginia. Sabrina said one of the callers from Navient mentioned that possibility to her mother.

A spokesperson for Navient told CNBC on Aug. 8 that he couldn’t comment on whether the lender discussed the possibility of a lien on Rebecca’s house.

“But I can say, in general, private student loans do not go into collections until after a period of delinquency,” he said. “And, like other loans, there’s a process, often lengthy, to take legal action toward repayment.”

On July 26, Sabrina emailed Navient as much information as she could on her mother’s physical condition, sending copies to CNBC.

Around two weeks after CNBC published an article on the family’s experience, Navient informed Rebecca that the lender would release her from the debt.

It was a tremendous relief to her and her mother, Sabrina said.

But she remains angry at how difficult she found it to even learn about the disability discharge option.

“There has got to be great deal of people out there that are disabled and fighting to stay afloat with these loans,” Sabrina said. “And I assure you the lenders are not volunteering the options for loan forgiveness to those asking them for help.”

Personal Finance

How appealing property taxes can benefit new homeowners

Published

8 hours ago

May 24, 2025

Business Finance News

If you just bought a house, it may be a good time to check the accuracy of your property tax assessment, experts say.

Your property tax assessment is the way officials determine the value of your property for tax purposes. Inaccuracies about your home that factor into that formula could mean that you’re overpaying.

If it’s inaccurate, you likely have most of the essential documents you need to appeal, as part of your recent home purchase, according to Sal Cataldo, a real estate lawyer and partner at O’Doherty & Cataldo in Sayville, New York.

The title report, for instance, is going to tell you the age of the house, Cataldo said. You might have a home inspection report on hand that details the property’s flaws, as well as an appraisal and your mortgage, which show the value of the house and the comparable value in the neighborhood.

“You’ve gotten a wealth of information about your house, whether you realize it or not,” Cataldo said.

A home sale will typically trigger a property tax reassessment because the property is changing hands, with the new market value applied to the assessment. But the specific rules of when the new value is applied and the frequency of reassessments will depend on your area.

Here’s why it may be valuable to add reviewing your property tax assessment to your to-do list as a newly minted homeowner:

Property taxes on the rise

In addition to your mortgage payment, home insurance and maintenance costs, property taxes are another factor to consider as you assess your housing expenses.

In recent years, property taxes have climbed because of rising home values and tax rates.

The median property tax bill in the U.S. in 2024 was $3,500, up 2.8% from $3,349 in 2023, according to an April report by Realtor.

Home affordability plummets: Here's what's needed to balance the market

How much you pay varies widely depending on where you live, and some areas see higher bills and price hikes.

As of 2023, the median property tax for homeowners in New York City was $9,937, LendingTree found in a recent report. The city ranks first among the metropolitan areas with the highest median property taxes. Rounding out the top three are San Jose, California and San Francisco, where homeowners paid a median $9,554 and $8,156, respectively.

Inaccuracies may be costing you

It’s not uncommon for properties to be over-assessed, meaning you end up paying more taxes than you should be, said Pete Sepp, president of the National Taxpayers Union Foundation: “It pays to check.”

Sometimes it’s because details in your assessment were never corrected over the years, such as an incorrect square footage of livable space or the amount of bathrooms that are actually in your home.

NTUF estimates 30% to 60% of taxable property in the U.S. is over-assessed, based on reports from individual state tax assessors.

Success in the appeal can lead to savings for several years as the change becomes the basis for the next assessment, said Sepp. While some state or local governments reassess annually, others have less-frequent cycles with gaps of several years. Some have no set schedule at all.

Over 40% of homeowners across the U.S. could potentially save $100 or more per year by protesting their assessment value, with median savings of $539 a year, per Realtor.com estimates.

Personal Finance

Deferred capital gains tax on mutual funds: Lawmakers pitch rule change

Published

23 hours ago

May 23, 2025

Business Finance News

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If you own mutual funds, year-end payouts can trigger a surprise tax bill — even when you haven’t sold the underlying investment. But some lawmakers want to change that.

Sen. John Cornyn, R-Texas, this week introduced a bill, known as the Generate Retirement Ownership Through Long-Term Holding, or GROWTH, Act. If enacted, the bill would defer reinvested mutual fund capital gains taxes until investors sell their shares.

Bipartisan House lawmakers introduced a similar bill in March.

Why mutual funds incur capital gains tax

When you own mutual funds in a pre-tax 401(k) or individual retirement account, growth is tax-deferred. But if you hold assets in a brokerage account, capital gains distributions and dividends incur yearly taxes.

Depending on performance, some mutual funds can spit off substantial gains during the fourth quarter. In 2024, some paid double-digit distributions, Morningstar estimated.

These payouts are subject to long-term capital gains taxes of 0%, 15% or 20%, depending on your taxable income. Some higher earners also pay an extra 3.8% surcharge on investment earnings.

About $7 trillion of long-term mutual fund assets held outside of retirement accounts could be impacted by the legislation, according to the Investment Company Institute, which represents the asset management industry.

Bill would ‘provide parity’ for mutual funds

In a statement Wednesday, Cornyn described the mutual fund proposal as a “no-brainer” that would “help provide parity with other investment options.”

If enacted, the proposal would “incentivize Americans to save and invest for their long-term goals” without the stress of an “unexpected tax bill,” Eric Pan, president and CEO of the Investment Company Institute, said in a statement following the bill’s introduction.

However, it’s unclear whether the bill will advance amid competing priorities. Lawmakers are wrestling over President Donald Trump‘s multi-trillion-dollar tax and spending package, which passed in the House on Thursday, and could face hurdles in the Senate.

The U.S. Department of the Treasury has also asked Congress to raise the debt ceiling before August to avert a government shutdown.

Switch to exchange-traded funds

While deferring yearly taxes could benefit some investors, you could also make portfolio changes, financial experts say.

You can avoid mutual fund payouts by switching to similar exchange-traded funds, or ETFs, which typically disburse less income, Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida, previously told CNBC.

Of course, the trade could also trigger taxes if the mutual fund has embedded gains, which may require some planning, he said.

Alternatively, investors could opt to keep mutual funds in tax-deferred accounts, such as pre-tax 401(k)s or IRAs.

House advances President Trump's tax & spending bill

Personal Finance

What Medicaid, SNAP cuts in House Republican bill mean for benefits

Published

1 day ago

May 23, 2025

Business Finance News

A “Save Medicaid” sign is affixed to the podium for the House Democrats’ press event to oppose the Republicans’ budget on the House steps of the Capitol on Tuesday, February 25, 2024.

Bill Clark | Cq-roll Call, Inc. | Getty Images

The multitrillion-dollar tax and spending package passed by the House of Representatives on Thursday includes historic spending cuts to Medicaid health coverage and the Supplemental Nutrition Assistance Program, or SNAP.

Now, it is up to the Senate to consider the changes — and to perhaps propose its own.

As it stands, the legislation — called the “One Big Beautiful Bill Act” — would slash Medicaid spending by roughly $700 billion and SNAP, formerly known as food stamps, by about $300 billion.

“Bottom line is, a lot of people will lose benefits, including people who are entitled to these benefits and who are not the target population of this bill,” said Jennifer Wagner, director of Medicaid eligibility enrollment at the Center on Budget and Policy Priorities.

The cuts to Medicaid and SNAP — the largest in the programs’ histories — come as the reconciliation bill would add roughly $3 trillion to the nation’s debt including interest over the next decade, estimates the Committee for a Responsible Federal Budget.

To help pay for a variety of tax perks included in the bill, House Republicans have targeted Medicaid and SNAP for savings.

“We don’t want any waste, fraud or abuse,” President Donald Trump said Tuesday on Newsmax when asked about prospective Medicaid changes. “Other than that, we’re leaving it.”

Likewise, some Republican leaders have pointed to rooting out abuse of SNAP benefits.

One way House Republicans are seeking to curb the programs’ spending is through new work requirements.

New Medicaid work requirements to get earlier date

Under the House proposal, new Medicaid work requirements will apply to people who are covered through the Affordable Care Act expansion. To be eligible, those individuals will need to participate in qualifying activities for at least 80 hours per month unless they can prove they have an approved exemption, according to Jennifer Tolbert, deputy director of KFF’s Program on Medicaid and the Uninsured.

In last-minute negotiations, House Republicans moved the date for implementing those work requirements to no later than Dec. 31, 2026, up from a previously proposed effective date of Jan. 1, 2029 — around two years earlier than the original version, CBPP’s Wagner noted.

Notably, it also gives states permission to start implementing the work requirements earlier than that date.

“On the Medicaid side, the work requirement is arguably the harshest provision,” Wagner said. “It will lead to the greatest cuts of enrollment in Medicaid.”

Rep. Chip Roy on House tax bill: Hope the Senate addresses issues around deficit and Medicaid

The new accelerated timeline also doesn’t allow time for rulemaking, a process by which the public can submit comments, and the Centers for Medicare and Medicaid Services may respond to those submissions, Wagner noted. Instead, the legislative proposal calls for guidance to be issued by the end of 2025, which she said is a “big deal” because it eliminates the opportunity for adjustments to be made in response to public comments.

Moving up the effective date also limits the ability to conduct public outreach to notify individuals of the coming changes, said Tolbert of KFF. States will also have less time to adjust their systems to track whether individuals are working the required number of hours or engaging in other necessary activities, she said.

CMS Administrator Dr. Oz: Major goal in Medicaid is to align the federal government with the states

Within the work requirements, the House also moved to limit the discretion to determine other medical conditions that may make someone exempt that had been in the original version, Wagner said.

Notably, the proposal also calls for states to conduct more frequent eligibility redeterminations for adults who are eligible for Medicaid through Affordable Care Act expansions. Starting Dec. 31, 2026, states will be required to conduct redeterminations every six months, compared to current requirements that require eligibility reviews within 12 months of changes in a beneficiary’s circumstances, according to KFF.

The increased frequency of the redeterminations are “likely to have a big impact,” Tolbert said.

Ultimately, the work requirements may make it difficult for people to access the health coverage they need, she said.

“What this may end up doing is having the opposite of the intended effect,” Tolbert said. “They may lose access to the very treatments and services that are enabling them to work.”

SNAP work requirements would be expanded

Under the House Republican bill, work requirements would also be expanded for SNAP benefits.

Individuals ages 18 to 54 who have no dependents and are able to work are already face SNAP benefit limitations based on 80-hour per month work requirements.

The proposal would extend those requirements to individuals ages 55 to 64, as well as households with children, unless they are under age seven. In addition, states would also be limited in the flexibility they may provide with waivers of the work requirements or discretionary exemptions, according to the Urban Institute.

In addition, federal funding cuts would make it so states would have to contribute more toward benefits and administration of the program.

Ultimately, those changes could take away food assistance for millions, according to the Center on Budget and Policy Priorities.