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Biden administration releases new student loan forgiveness proposal

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US President Joe Biden gestures after speaking about student loan debt relief at Madison Area Technical College in Madison, Wisconsin, April 8, 2024. 

Andrew Caballero-Reynolds | AFP | Getty Images

The Biden administration has published its new student loan forgiveness proposal, putting it on the path to start clearing debt for millions of borrowers this fall.

The public has 30 days, through May 17, to comment on the details of the revised aid package.

Since the U.S. Supreme Court rejected President Joe Biden‘s first attempt at wide-scale loan cancellation last summer, his administration has been working on this do-over plan.

Biden wants the program to survive legal challenges this time. To that end, the U.S. Department of Education has made the relief more targeted and turned to the regulatory process. The president initially attempted to forgive student debt through an executive action.

Outstanding federal education debt in the U.S. stands at around $1.6 trillion, and burdens Americans more than credit card or auto debt. More than 40 million people hold student loans.

Here’s what to know about Biden’s new relief plan.

What the revised plan calls for

While Biden’s previous relief plan forgave student debt for most borrowers, this aid package targets specific groups of people, and the interest on the loans.

It calls to cancel “the full amount” of someone’s debt that has grown from their original balance when they first entered repayment. To qualify for this provision, these borrowers would also need to be enrolled in one of the Education Department’s income-driven repayment plans and to earn under a certain amount, including $120,000 or less as a single filer.

Regardless of their income, borrowers would be eligible for up to $20,000 in cancellation on the portion of their debt that is unpaid interest.

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.

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Borrowers who have been in repayment for 20 years or longer on their undergraduate loans, or more than 25 years on their graduate loans, would get full debt cancellation.

The plan also erases the debt of people who are already eligible for that relief but haven’t received it or applied for it. Such stories are common.

Lastly, it delivers relief to borrowers who enrolled and took out debt to attend low-financial-value schools and programs or institutions that failed to provide sufficient financial value.

The Education Department left out from its relief proposal, for now, the group of borrowers experiencing financial hardship. Previously, its plan was expected to include people in this situation.

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“As President Biden said last week, our Administration is working as quickly as possible to deliver relief to as many borrowers as possible,” an Education Department spokesperson said in a statement.

As a result, while it continues to create a proposal for those struggling financially, it moved forward “with these proposed rules today so we can begin delivering relief to borrowers as early as this fall,” the spokesperson said.

And what comes next …

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Black Friday deals and discounts to expect this season

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A customer visits Macy’s Herald Square store in New York City during early morning Black Friday sales, Nov. 24, 2023.

Kena Betancur | Getty Images

Typically, the five days beginning Thanksgiving Day and ending Cyber Monday are some of the busiest shopping days of the year.

This year, the number of people shopping in stores and online during that period could hit a new record, according to the National Retail Federation’s annual survey.

But consumers trying to make the most of the Black Friday sales may not be getting the best prices of the season.

According to WalletHub’s 2023 Best Things to Buy on Black Friday report, 35% of items at major retailers offered no savings compared with their pre-Black Friday prices. The site compared Black Friday advertisements against prices on Amazon earlier that fall. 

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“Some Black Friday deals are misleading as retailers may inflate original prices to make a deal look like a better value,” said consumer savings expert Andrea Woroch.

This year, in particular, some of the deals are already as good as they are going to get.

“Those holidays have gotten a little watered down because retailers want to maximize the selling days,” said Adam Davis, managing director at Wells Fargo Retail Finance.

“Compounding the importance of stretching the holiday season, retailers are facing a shorter selling season between Thanksgiving and Christmas — almost a week shorter in 2024,” he said. “That will force the retailer’s hand to be pretty promotional in November.”

Concerns about shipping

Retailers plan to deliver your holiday deals a little slower this year

In a period of such high volume, third-party shippers are particularly strained, according to Lauren Beitelspacher, a professor of marketing at Babson College. An ongoing labor shortage also means that some companies simply cannot hire enough workers to sort, transport and deliver packages on time.

“We are very spoiled; we got to the point where we think of something we want and it magically appears,” Beitelspacher said. But at the same time, “we’ve learned how fragile the supply chain is.”

When there are more packages to ship, shipping times increase, which can also boost the chance they may get damaged, lost or stolen en route — not to mention the risk of “porch piracy” once an item is delivered.

What discounts to expect on Black Friday

“You are easily going to see 20% to 30% off,” Davis said — but “not necessarily storewide.”

Depending on the retailer, some markdowns could be up to 50%, according to Beitelspacher. However, premium brands — including high-end activewear companies such as Nike, Alo or Lululemon — likely will not discount more than 20% or 30%, she said. “It’s a fine balance with maintaining the premium brand integrity and offering promotions.”

As in previous years, these companies are aware of how price sensitive consumers have become.

“The holidays are a time people want to treat themselves, but they also want to make their dollar last longer,” Beitelspacher said.

To that end, retailers will also try to lure shoppers to spend with incentives, such as a free gift card with a minimum purchase, Woroch said. “Many stores will also offer bonus rewards when you spend a certain amount on Black Friday.”

What not to buy on Black Friday

With toys, it could pay to hold out until the last two weeks of December, and holiday decorations are cheaper the last few days before Christmas or right after, according to Woroch.

Exercise equipment, linens and bedding tend to be marked down more during January’s “white sales,” she said, and furniture and mattress deals are often better over other holiday weekends throughout the year, such as Presidents’ Day, Memorial Day and Labor Day weekends.

How to get even lower prices

Woroch recommends using a price-tracking browser extension such as Honey or Camelizer to keep an eye on price changes and alert you when a price drops. Honey will also scan for applicable coupon codes.

If you are shopping in person, try the ShopSavvy app for price comparisons. If an item costs less at another store or popular site, often the retailer will match the price, Woroch said.

Further, stack discounts: Combining credit card rewards with coupon codes and a cash-back site such as CouponCabin.com will earn money back on those purchases. Then, take pictures of your receipts using the Fetch app and get points that can be redeemed for gift cards at retailers such as Walmart, Target and Amazon.

Finally, pay attention to price adjustment policies. “If an item you buy over Black Friday goes on sale for less shortly after, you may be able to request a price adjustment,” Woroch said. Some retailers such as Target have season-long policies that may apply to purchases made up until Dec. 25.

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Why tax-loss harvesting can be easier with ETFs

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Izusek | E+ | Getty Images

Despite a strong year for the stock market, you could still be sitting on portfolio losses. But you can leverage down assets to score a tax break, experts say.

The tactic, known as “tax-loss harvesting,” involves selling losing brokerage account assets to claim a loss. When you file your taxes, you can use those losses to offset portfolio gains. Once your investment losses exceed profits, you can use the excess to reduce regular income by up to $3,000 per year.

“Tax-loss harvesting is a tried and true strategy to lower investors’ tax bills,” said certified financial planner David Flores Wilson, managing partner at Sincerus Advisory in New York. 

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After offsetting $3,000 in regular income, investors can carry any additional losses forward into future years to offset capital gains or income.

“Investors can benefit substantially over time” by tax-loss harvesting consistently throughout the year, Wilson said.

What to know about the wash sale rule

Tax-loss harvesting can be simple when you’re eager to offload a losing asset. But it’s tricky when you still want exposure to that asset.

That’s because of guidelines from the IRS known as the “wash sale rule,” which blocks you from claiming the tax break on losses if you rebuy a “substantially identical” asset within the 30-day window before or after the sale.

In other words, you can’t sell a losing asset to claim a loss and then immediately repurchase the same investment. 

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Ultimately, the IRS definition of “substantially identical” isn’t black and white and “depends on the facts and circumstances” of your case, according to the agency.

When in doubt, consider reviewing your plan with an advisor or tax professional to make sure you’re safe from violating the wash sale rule.

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Older voters prioritized personal economic issues on Election Day: AARP

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Voters line up to cast their ballots at a voting location in Bethlehem, Pennsylvania, on Nov. 5, 2024.

Samuel Corum | Afp | Getty Images

When asked, “Are you better off today than you were four years ago?” the answer for many older voters ages 50 and over was “no,” according to a new post-election poll released by the AARP.

Almost half — 47% — of voters ages 50 and over said they are “worse off now,” the research found, while more than half — 55% — of swing voters in that age cohort said the same.

In competitive Congressional districts, President-elect Donald Trump won the 50 and over vote by two percentage points — the same margin by which he carried the country, AARP found.

Among voters 50 to 64, Trump won by seven points. With voters ages 65 and over, Vice President Kamala Harris won by two points.

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The AARP commissioned Fabrizio Ward and Impact Research, a bipartisan team of Republican and Democrat firms providing public opinion research and consulting, to conduct the survey. Interviews were conducted with 2,348 “likely voters” in targeted congressional districts following Election Day between Nov. 6 and 10.

Older voters, who make up an outsized share of the vote and tend to lean Republican, made a difference in a lot of key congressional races, according to Bob Ward, a Republican pollster and partner at Fabrizio Ward.

“Overall, 50-plus voters really are what delivered Republicans their majority,” Ward said.

Older swing voters focused on pocketbook issues

When asked “How worried are you about your personal financial situation?” in a June AARP survey, 62% of voters ages 50 and over checked the worry box, while 63% of voters overall did the same.

Voters continued to place an emphasis on their money concerns on Election Day, the latest AARP poll found.

“All these surveys that we conducted for AARP spoke to a lack of economic security for people,” said Jeff Liszt, partner at Impact Research.

“The shock of inflation had left them without a feeling of security,” he said.

For voters ages 50 and over, food ranked as the top cost concern, with 39%, the poll found. That was followed by health care and prescription drugs, with 20%; housing, 14%; gasoline, 10%; and electricity, 6%.

More than half — 55% — of voters ages 50 and up said they prioritized personal economic issues, including inflation, the economy and jobs, and Social Security when determining their vote.

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Older swing voters were more likely to turn out at the polls due to those pocketbook issues than any other priorities, the poll found.  

Republicans won older voters on most personal economic issues, though voters ages 50 and up still favored Democrats on Social Security by two points.  

Democrats have traditionally had a stronger lead on Social Security, Ward said, while the poll results show it is now “completely up for grabs.”

“Looking at the midterms, whether I’m Republican or Democrat … this is going to be an issue I want to win on,” Ward said.

Voters 50 and over broadly support Medicare negotiating prescription drug prices, as well as policies to help the older population age at home. Non-financial issues such as immigration and border security and threats to democracy were also among top concerns for some older voters.

Social Security reform may be bigger focus

While both presidential candidates promised to protect Social Security on the campaign trail, they did not provide plans to restore the program’s solvency.

The trust fund Social Security relies on to pay benefits is projected to run dry in 2033, at which point 79% of those benefits will be payable.

“What’s absolutely clear is that there’s an action-forcing event that we’re getting closer to, and that at some point Congress is going to have to act,” said Nancy Altman, president of Social Security Works, an advocacy group focused on expanding the program.

While Trump has touted plans to eliminate taxes on Social Security benefits, research has found that would worsen the program’s insolvency. The House voted this week to eliminate rules that reduce Social Security benefits for certain people who have pension income, which would also add to the program’s costs.

For most Americans, Social Security is the primary source of retirement income, according to the AARP. About 42% of people ages 65 and over rely on the program for at least 50% of their incomes; about 20% rely on it for at least 90% of their incomes.

Like Social Security, Medicare also faces a looming trust fund depletion for the Part A program that covers hospital insurance.

“We want to ensure that we’re protecting Medicare, Social Security and that it’s done in a fiscally responsible way,” AARP CEO Dr. Myechia Minter-Jordan told CNBC in a recent interview.

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