Finance
Many student loan borrowers missing opportunity to find debt relief in SAVE plan: survey
Many student loan borrowers remain unaware of the benefits of income-driven repayment plans, a recent survey said. (iStock)
Many borrowers currently struggling with student loan payments would benefit from enrolling in an income-driven repayment plan, according to a recent Student Debt Crisis Center (SDCC) survey.
Roughly three out of four borrowers who make $75,000 or less annually and would benefit from the SAVE plan are not currently enrolled in the plan, the survey said. Moreover, 38% of these borrowers are at risk of defaulting on their student loan payments six months from now and could be missing an opportunity to find debt relief in existing programs.
President Joe Biden’s Saving on Valuable Education (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. This new IDR plan was announced after the Supreme Court struck down Biden’s student loan forgiveness plan.
“These survey results are a reflection of what borrowers have experienced these past six months since repayment restarted,” SDCC President and Founder Natalia Abrams said. “We have come so far in advocating for necessary relief to millions of borrowers, and seeing the Biden Administration act is great. However, communication of these vital resources is crucial so borrowers know help is available for them right now. If borrowers do not know the available resources, they will miss relief that can lower their monthly payments, cancel their debt entirely, and so much more.”
If you have private student loans, you could consider lowering your monthly payments by refinancing your loans to a lower rate. Visit Credible to speak with a personal loan expert and get your questions answered.
AMERICANS LIVING PAYCHECK TO PAYCHECK OWN 60% OF CREDIT CARD DEBT: SURVEY
Student loan servicers remain inaccessible
More than half of borrowers contacting their student loan servicers with questions about resuming payments came away with unanswered questions, according to the SDCC survey. Moreover, a quarter of borrowers don’t trust the information they get from their servicer, and 75% said the information they got was inaccurate or incomplete.
Every student loan borrower is assigned a loan servicer to help them navigate repayment options, including income-driven repayment (IDR), which can make payments more affordable.
In November, the Department of Education withheld $7.2 million in payment to student loan servicers over several billing errors that triggered a delinquency status for borrowers as repayments picked up again at the start of October. The department said that loan servicer MOHELA failed to send billing statements on time to 2.5 million borrowers, with some receiving them within only seven days of their payment date. Servicers are required to send billing statements to borrowers at least 21 days before their due date.
“I regularly hear from borrowers that they are experiencing inaccurate information or none at all from their loan servicers,” SDCC Managing Director Sabrina Calazans said. “As a student loan borrower myself, I know firsthand how frustrating and harmful these communication errors can be. Borrowers need more communications coming directly from the Department of Education, given their lack of trust in their respective service providers.”
If you’re having trouble making payments on your private student loans, you won’t benefit from federal relief. You could consider refinancing your loans for a lower interest rate to lower your monthly payments. Visit Credible to get your personalized rate in minutes.
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Billions in loans forgiven and a relief plan underway
Over $136 billion of student loans have been forgiven to more than 3.7 million Americans, even as the Supreme Court blocked Biden’s original plan for forgiveness.
The latest block of forgiveness impacts borrowers, such as teachers, nurses, firefighters, and other individuals who earned forgiveness after 10 years of public service, the White House said in a statement. As much as $5 billion of student debt will be forgiven under the latest announcement, bringing the total number of people who have gotten their debt erased to over 3.7 million Americans.
Starting in February, borrowers with as few as 10 years of payments who initially took out $12,000 or less for college had their remaining debts zeroed as long as they were enrolled in the SAVE plan. As many as 6.9 million borrowers have already enrolled in the SAVE Plan as of early January, with more than 3.5 million receiving at least $130 billion in student loan relief.
Additionally, the Biden Administration has doubled down on a new forgiveness plan. The plan seeks to bring relief for borrowers whose balances exceed what they originally borrowed, who first entered repayment long ago, who are eligible for relief but have not applied for it, or who attended programs or institutions that failed to provide sufficient financial value and financial hardships. Regulation for this plan could be ready by May, with enrollment opening as soon as this summer or fall, according to a recent Forbes article.
If you’re struggling with private student loan debt, you could consider refinancing to a lower interest rate. Visit Credible to speak with a student loan expert and get your questions answered.
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.
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