Finance
Biden cancels student loans with one week left to his term
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.
INFLATION SEES THE LOWEST ANNUAL RISE SINCE 2021
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.
FHFA ANNOUNCES HIGHER MORTGAGE LOAN LIMITS FOR 2025
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.
SENIORS TO GET MODERATE COST OF LIVING BUMP IN SOCIAL SECURITY PAYMENTS NEXT YEAR
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.
U.S. Federal Reserve Chair Jerome Powell testifies before a Senate Banking, Housing and Urban Affairs Committee hearing on “The Semiannual Monetary Policy Report to the Congress,” at Capitol Hill in Washington, U.S., Feb. 11, 2025.
Craig Hudson | Reuters
The popular narrative among Federal Reserve policymakers these days is that policy is “well-positioned” to adjust to any upside or downside risks ahead. However, it might be more accurate to say that policy is stuck in position.
With an abundance of unknowns swirling through the economy and the halls of Washington, the only gear the central bank really can be in these days is neutral as it begins what could be a long wait for certainty on what’s actually ahead.
“In recent weeks, we’ve heard not only enthusiasm — particularly from banks, about possible shifts in tax and regulatory policies — but also widespread apprehension about future trade and immigration policy,” Atlanta Fed President Raphael Bostic said in a blog post. “These crosscurrents inject still more complexity into policymaking.”
Bostic’s comments came during an active week for what is known on Wall Street as “Fedspeak,” or the chatter that happens between policy meetings from Chair Jerome Powell, central bank governors and regional presidents.
Officials who have spoken frequently described policy as “well-positioned” — the language is now a staple of post-meeting statements. But increasingly, they are expressing caution about the volatility coming from President Donald Trump’s aggressive trade and economic agenda, as well as other factors that could influence policy.
“Uncertainty” is an increasingly common theme. In fact, Bostic titled his Thursday blog post “Uncertainty Calls for Caution, Humility in Policymaking.” A day earlier, the rate-setting Federal Open Market Committee released minutes from the Jan. 28-29 meeting, with a dozen references to the uncertain climate in the document.
The minutes specifically cited “elevated uncertainty regarding the scope, timing, and potential economic effects of possible changes to trade, immigration, fiscal, and regulatory policies.”
Uncertainty factors into the Fed’s decision making in two ways: the impact that it has on the employment picture, which has been relatively stable, and inflation, which has been easing but could rise again as consumers and business leaders get spooked about the impact tariffs could have on prices.
Missing the target
The Fed targets inflation at 2%, a goal that has remained elusive for going on four years.
“Right now, I see the risks of inflation staying above target as skewed to the upside,” St. Louis Fed President Alberto Musalem told reporters Thursday. “My baseline scenario is one where inflation continues to converge towards 2%, providing monetary policy remains modestly restrictive, and that will take time. I think there is a potential for inflation to remain high and activity to slow. … That’s an alternative scenario, not a baseline scenario, but I’m attentive to it.”
The operative in Musalem’s comment is that policy holds at “modestly restrictive,” which is where he considers the current level of the fed funds rate between 4.25%-4.5%. Bostic was a little less explicit on feeling the need to keep rates on hold, but emphasized that “this is no time for complacency” and noted that “additional threats to price stability may emerge.”
Chicago Federal Reserve President Austan Goolsbee, thought to be among the least hawkish FOMC members when it comes to inflation, was more measured in his assessment of tariffs and did not offer commentary in separate appearances, including one on CNBC, on where he thinks rates should go.
“If you’re just thinking about tariffs, it depends how many countries are they going to apply to, and how big are they going to be, and the more it looks like a Covid-sized shock, the more nervous you should be,” Goolsbee said.
Many risks ahead
More broadly, though, the January minutes indicated a Fed highly attuned to potential shocks and not interested in testing the waters with any further interest rate moves. The meeting summary pointedly noted that committee members want “further progress on inflation before making additional adjustments to the target range for the federal funds rate.”
There’s also more than just tariffs and inflation to worry about.
The minutes characterized the risks to financial stability as “notable,” specifically in the area of leverage and the level of long-duration debt that banks are holding.
Prominent economist Mark Zandi — not normally an alarmist — said in a panel discussion presented by the Peter G. Peterson Foundation that he worries about dangers to the $46.2 trillion U.S. bond market.
“In my view, the biggest risk is that we see a major sell off in the bond market,” said Zandi, the chief economist at Moody’s Analytics. “The bond market feels incredibly fragile to me. The plumbing is broken. The primary dealers aren’t keeping up with the amount of debt outstanding.”
“There’s just so many things coming together that I think there’s a very significant threat that at some point over the next 12 months, we see a major sell-off in the bond market,” he added.
In this climate, he said, there’s scant chance for the Fed to cut rates — though markets are pricing in the potential for a half percentage point in reductions by the end of the year.
That’s wishful thinking considering tariffs and other intangibles hanging over the Fed’s head, Zandi said.
“I just don’t see the Fed cutting interest rates here until you get a better feel about inflation coming back to target,” he said. “The economy came into 2025 in a pretty good spot. Feels like it’s performing well. Should be able to weather a lot of storms. But it feels like there’s a lot of storms coming.”
Walmart stock may be a steal.
Former Walmart U.S. CEO Bill Simon contends the retailer’s stock sell-off tied to a slowing profit growth forecast and tariff fears is creating a major opportunity for investors.
“I absolutely thought their guidance was pretty strong given the fact that… nobody knows what’s going to happen with tariffs,” he told CNBC’s “Fast Money” on Thursday, the day Walmart reported fiscal fourth-quarter results.
But even if U.S. tariffs against Canada and Mexico move forward, Simon predicts “nothing” should happen to Walmart.
“Ultimately, the consumer decides whether there’s a tariff or not,” said Simon. “There’s a tariff on avocados from Mexico. Do you have guacamole with your chips or do you have salsa and queso where there is no tariff?”
Plus, Simon, who’s now on the Darden Restaurants board and is the chairman at Hanesbrands, sees Walmart as a nimble retailer.
“The big guys, Walmart, Costco, Target, Amazon… have the supply and the sourcing capability to mitigate tariffs by redirecting the product – bringing it in from different places [and] developing their own private labels,” said Simon. “Those guys will figure out tariffs.”
Walmart shares just saw their worst weekly performance since May 2022 — tumbling almost 9%. The stock price fell more than 6% on its earnings day alone. It was the stock’s worst daily performance since November 2023.
Simon thinks the sell-off is bizarre.
“I thought if you hit your numbers and did well and beat your earnings, things would usually go well for you in the market. But little do we know. You got to have some magic dust,” he said. “I don’t know how you could have done much better for the quarter.”
It’s a departure from his stance last May on “Fast Money” when he warned affluent consumers were creating a “bubble” at Walmart. It came with Walmart shares hitting record highs. He noted historical trends pointed to an eventual shift back to service from convenience and price.
But now Simon thinks the economic and geopolitical backdrop is so unprecedented, higher-income consumers may shop at Walmart permanently.
“If you liked that story yesterday before the earnings release, you should love it today because it’s… cheaper,” said Simon.
Walmart stock is now down 10% from its all-time high hit on Feb. 14. However, it’s still up about 64% over the past 52 weeks.
Sign up for the Spotlight newsletter, a hand curated collection of video clips selected by CNBC’s top editors and producers. Your daily recap of top business highlights and leading stories.
How Trump, DOGE job cuts may affect the U.S. economy
The Fed is stuck in neutral as it watches how Trump’s policies play out
Alibaba rose on China AI hopes. Where analysts see the stock heading
New 2023 K-1 instructions stir the CAMT pot for partnerships and corporations
The Essential Practice of Bank and Credit Card Statement Reconciliation
Are American progressives making themselves sad?
-
Technology1 week agoReddit CEO Steve Huffman Unveils Monetization Strategy for 2025
-
Leaders1 week agoAdebayo Ogunlesi – From Nigerian Roots to Global Financial Leadership
-
Blog Post1 week agoPower of Ratio Analysis in Business Performance Assessment
-
Personal Finance1 week agoHere’s what to do if you receive this tax form
-
Economics6 days agoWhat companies say about the impact of MAGA policies
-
Finance1 week agoStock pickers are on record run. Don’t be fooled, says index fund guru
-
Finance1 week agoWarren Buffett’s Berkshire Hathaway sells some DaVita, shares fall
-
Finance1 week agoGameStop is considering investing in bitcoin and other cryptocurrencies, sources say