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.
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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.
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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.
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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.
It appears T. Rowe Price is benefitting from the record growth in actively managed exchange traded funds.
Tim Coyne, the firm’s head of ETFs, reports the firm is seeing significant growth in the area — listing the T. Rowe Price Capital Appreciation Equity ETF (TCAF) and T. Rowe Price U.S. Equity Research ETF (TSPA) as two established strategies that can satisfy investor demand.
“I think having that professionally managed portfolio is really beneficial to clients,” Coyne told CNBC’s “ETF Edge” this week. “We’re seeing just… greater volatility [and] uncertainty across both the equity and fixed income markets.“
According to Coyne, the T. Rowe Price Capital Appreciation Equity ETF suits investors who are looking for long-term growth.
“The objective of the fund is to outperform the S&P 500 with lower volatility and greater tax efficiency,” he said. “It’s also a more concentrated portfolio, typically holding around a hundred names.”
As of April 24, the fund’s top holdings include Microsoft, Amazon, and Apple according to the T. Rowe Price website. But it’s not all Big Tech. The ETF also features smaller positions in companies like Becton Dickinson and Roper Technologies.
The T. Rowe Price Capital Appreciation Equity ETF is down about 5% so far this year while the S&P 500 is off about 7% However, the ETF is up close to 8% over the past year — roughly identical to the S&P 500’s performance.
Coyne notes the T. Rowe Price U.S. Equity Research ETF follows a similar strategy, but with a heavier weighting in top tech stocks.
“This is more of a large-cap growth product [T Rowe Price U.S. Equity Research ETF],” he said. “There are components of characteristics of both passive and active here. This fund is actually managed by our North American directors of research. So again, strong fundamental research is going into the stock selection.”
Both the T. Rowe Price U.S. Equity Research ETF and S&P 500 are down around 7% since the beginning of the year. Meanwhile, the fund is up almost 9% over the past year. That’s less than one percent better than the S&P 500’s performance.
T. Rowe Price U.S. Equity Research ETF vs. S&P 500
‘Some form of bear market’
Strategas Securities’ Todd Sohn thinks investment demand for active managers will continue to be strong.
“This is the type of the environment where it [active management] can actually shine,” the firm’s senior ETF and technical strategist said. “We are in some form of bear market. This is where the active manager really can come into hand and offer their solution they are doing right.”
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