Connect with us

Personal Finance

Student loan ‘on ramp’ relief ends: Borrowers may become delinquent

Published

2 years ago

on

We are overly reliant on student loans to fund higher education, says NACAC CEO Angel Perez

The one-year grace period for student loan borrowers who miss a payment expired this week. And yet, millions of Americans are likely unprepared to give up that key safety net.

The goal of the 12-month “on ramp” to repayment was to give borrowers some breathing room as they worked student loan payments back into their budgets. Although interest still accrued on their balances, missed payments did not damage their credit.

As of Sept. 30, however, student loan servicers are once again able to report missed payments to credit agencies, which means falling behind could hurt your credit score — that three-digit number that lenders use to determine if you can borrow, and the interest rate you’ll pay for credit cards, car loans and mortgages.

Generally speaking, the higher your credit score, the better off you are when it comes to getting a loan.

Recent studies show some borrowers are at risk of not being able to keep up.

Some borrowers haven’t made payments in years

Congress initially passed legislation to allow federal student loan borrowers to pause their loan payments in March 2020 as part of the Covid economic response. During that time, interest rates on most federal loans were set to zero. It’s now been roughly a year since student loan payments resumed.

Almost half, 47%, of borrowers said they’ve made at least some payments since the end of the payment pause, but 26% said they made no payments at all, according to a new report by the National Endowment for Financial Education. The nonprofit in August polled 813 adults who have or had student loan debt.

“When you have to cut $500 to $1,000 from the monthly budget, that’s a significant amount of dollars people don’t have for other things,” said NEFE president and CEO Billy Hensley, a member of the CNBC Global Financial Wellness Advisory Board. “This will continue to be a shock and reverberate around the kitchen table.”

A separate report by Intuit Credit Karma also found that 20% of student loan borrowers have not made any payments toward their student loans since the pause ended and the majority — 69% — of borrowers who have not been paying on time said they will not be able to afford to pay down the interest they’ve accrued.

Many of those borrowers are now worried their credit score will take a hit once their student loan payment history is reported to the credit bureaus, Credit Karma found. In August, the site surveyed nearly 2,000 adults with outstanding student loan debt.

Consequences could be ‘catastrophic’

HOUSTON, TEXAS – AUGUST 29: Students study in the Rice University Library on August 29, 2022 in Houston, Texas.

Brandon Bell | Getty Images News | Getty Images

“When you don’t pay something for 4½ years the intent is clear, you are not going to pay,” said certified financial planner Ted Jenkin, CEO and founder of oXYGen Financial in Atlanta, referring to the pandemic-era pause on federal student loan payments.

“Many believe that someone is going to bail them out and I think it’s going to end badly for a lot of people,” said Jenkin, who is also a member of CNBC’s Financial Advisor Council.

In fact, 48% of student loan borrowers anticipate debt forgiveness in the future, according to Sallie Mae’s annual How America Pays for College report. Of those who expect forgiveness, 37% plan to work in public service, while 7% say their future employer will pay for their loans. The biggest share, 47%, think the government will forgive student loans.

While there are still opportunities for relief, missed payments could now come at a high cost for borrowers, Jenkin said. “It’s going to be catastrophic to their credit score.”

How a missed payment can hurt your credit score

Student loan delinquencies will show up on your credit report once they hit 90-days past due, according to Liz Pagel, senior vice president of consumer lending at TransUnion.

“If a consumer misses their October payment and still hasn’t made the payment in November or December, then in January they will be reported as 90-days past due for that October payment and that is when their credit will be negatively impacted,” she said.

TransUnion data shows that just over half of student loan borrowers made payments over the past several months. 

“That doesn’t necessarily mean that these consumers cannot make the payments,” Pagel said. “Some may have made a logical choice to hold off awaiting possible loan forgiveness or just because they were aware that their credit would not be affected by not making payments.”

More from Personal Finance:
Federal judge extends block on Biden’s student debt forgiveness plan
The sticker price at some colleges is now nearly $100,000 a year
These are the top 10 highest-paying college majors

To be sure, working those payments back into budgets after a four-year hiatus may require some sacrifices.

In the last year, roughly three-quarters of borrowers with student loan balances have had to make budgetary changes in order to make their payments, according to the NEFE report.

“If you don’t want your credit rating impacted, you have to develop a budget and figure out how you are going to incorporate student loan payments into that budget,” said Andrew Housser, co-founder and co-CEO of personal finance site Achieve.

“It’s crucial to look at options for consolidating other debts and reducing interest rates where possible,” Housser explained.

Of those with outstanding loans, 31% said they are less likely to pursue additional education, after taking the end of the repayment pause into account, NEFE also found.

A separate study commissioned by EdAssist by Bright Horizons also highlighted the impact student loan debt has had on borrowers.

To that point, 53% of U.S. workers said that knowing they would incur additional debt has prevented them from pursuing more education.

And as much as 86% of workers with education debt said their degree wasn’t worth the toll that student loans has had, according to Bright Horizons’ fourth annual education index, which in May polled more than 2,000 adults who are employed either full- or part-time.

Consumer advocates often caution students not to borrow more than you expect to earn as a starting salary.

“Higher education needs to do a better job of helping people understand the earning potential of a degree,” said NEFE’s Hensley. “We need to talk through how to launch and what that plan looks like.”

Subscribe to CNBC on YouTube.

Related Topics:
Continue Reading

Personal Finance

$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

Published

7 days ago

on

August 8, 2026

By

The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

Continue Reading

Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

Published

1 week ago

on

August 7, 2026

By

Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

Continue Reading

Personal Finance

Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

Published

2 weeks ago

on

August 1, 2026

By

As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

Continue Reading

Trending