Finance

Supreme Court blocks President Biden’s SAVE plan again

Published

3 months ago

August 29, 2024

Business Finance News

Millions of SAVE plan borrowers are in forbearance while the legal battle continues. (iStock )

Despite President Biden’s request to reinstate the SAVE plan the administration created to help student loan borrowers pay less in monthly payments, the Supreme Court declined to do so on Wednesday. Lower courts blocked the plan earlier in the summer after legal challenges were brought up by GOP-led states.

The decision by the court had no immediate effect on the millions of borrowers enrolled in the plan but blocks new applications. When the initial block came, borrowers who were part of the plan were automatically placed into an interest-free forbearance. During this forbearance, borrowers aren’t required to make monthly payments.

The fate of the plan remains to be seen as legal battles in lower courts continue. Alaska, South Carolina and Texas have all asked for partial blocks to the program while they fight their respective court battles.

Although the Education Department can no longer offer the SAVE plan to new borrowers, the Biden Administration said in a statement that they plan to continue fighting for student loan forgiveness.

“The Biden-Harris Administration will continue to aggressively defend the SAVE Plan in court and continue to pursue all available tools to reduce the burden of student loans on borrowers across the country,” the statement said.

If you have private student loans, federal relief doesn’t apply to you, unfortunately. If you’re looking to lower monthly payments and ease the burden of student loan debt, consider refinancing your student loans. See what rates you qualify for via the online marketplace Credible.

PAYE VS. SAVE: COMPARE YOUR OPTIONS

Biden-Harris Admin provides over $80M to improve college readiness for low-income students

In an effort to continue providing educational resources, the Biden-Harris administration recently announced that more than $80 million will be given to 26 different grantees to support college readiness programs. The idea is to help students from low-income backgrounds be better prepared to go to college.

The grants are under the Gaining Early Awareness and Readiness for Undergraduate Programs (GEAR UP) program. The purpose of the program is to increase the number of students from underserved communities who attend college or trade schools.

“GEAR UP helps communities come together to start early in preparing young people to go to college and succeed,” U.S. Under Secretary of Education James Kvaal said. “The Biden-Harris Administration has fought to help all students reach their college dreams and go on to a better life.”

These grants are six- or seven-year grants that states, schools and universities can use to provide services to middle and high school students from low-income families who are on the fence about attending post-secondary schools.

If you can qualify for a student loan refinance at a lower rate than you’re currently paying, there are few downsides to refinancing. You can use Credible to compare student loan refinancing rates from multiple private lenders all in one place.

STUDENT LOAN DEBT HAS INCREASED BY 430% SINCE 2003 – HERE’S HOW TO LOWER YOUR DEBT

Percentage of Americans approaching retirement with student loan debt up 500%

Student loan debt is a pervasive problem in America, affecting everyone from newly graduated high schoolers to parents taking out loans for their college-aged children. More and more Americans nearing retirement are still struggling with student loan debt, even after years of making payments.

The percentage of Americans who are about to retire and still have student loan debt has risen over 500% in the last two decades, a New America study found. In 2022 alone, 3.5 million Americans over 60 held $1.25 billion in student loan debt.

Many seniors still have student loan debt for a couple of different reasons. For some, the debt is the original debt they took out when they went to college, but others are dealing with debt after taking out federal Parent PLUS loans for their children attending college. Some also co-signed loans their children can’t pay, so they’re now saddled with the debt.

A handful of seniors in the report stated they’ve had student loan debt for at least 15 years, if not longer. Seniors still dealing with this debt also have higher default rates, the report found.

To see what you’d pay on a private student loan — either with or without a cosigner — you can visit Credible to view a rates table that allows you to compare fixed and variable rates from multiple lenders without affecting your credit score.

PARENTS RELY HEAVILY ON BORROWING TO PAY FOR COLLEGE COSTS: SURVEY

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.

Finance

Visa & Mastercard execs grilled by senators on high swipe fees

Published

5 hours ago

November 19, 2024

Business Finance News

The Senate Judiciary Committee convened on Tuesday for a hearing on the alleged Visa–Mastercard “duopoly,” which committee members from both sides of the aisle say has left retailers and other small businesses with no ability to negotiate interchange fees on credit card transactions.

“This is an odd grouping. The most conservative and the most liberal members happen to agree that we have to do something about this situation,” committee chair and Democratic Illinois Sen. Dick Durbin said.

Interchange fees, also known as swipe fees, are paid from a merchant’s bank account to the cardholder’s bank, whenever a customer uses a credit card in a retail purchase. Visa and Mastercard have a combined market cap of more than $1 trillion, and control 80% of the market.

“In 2023 alone, Visa and Mastercard charged merchants more than $100 billion in credit card fees, mostly in the form of interchange fees,” Durbin told the committee.

Durbin, along with Republican Kansas Sen. Roger Marshall, have co-sponsored the bipartisan Credit Card Competition Act, which takes aim at Visa and Mastercard’s market dominance by requiring banks with more than $100 billion in assets to offer at least one other payment network on their cards, besides Visa and Mastercard.

“This way, small businesses would finally have a real choice: they can route credit card transactions on the Visa or Mastercard network and continue to pay interchange fees that often rank as their second or biggest expense, or they could select a lower cost alternative,” Durbin told the committee.

Visa and Mastercard, however, stand by their swipe fees.

“We consider them incentives, some people might consider them penalties. But if you can adopt new technology that reduces the risk and takes fraud out of the system and improves streamlined processing, then you would qualify for lower interchange rates,” said Bill Sheedy, senior advisor to Visa CEO Ryan McInerney. “It’s very expensive to issue a product and to provide payment guarantee and online customer service, zero liability. All of those things, and many more, senator, get factored into interchange [fees].”

The executives also warned against the Credit Card Competition Act, with Sheedy claiming that it “would remove consumer control over their own payment decisions, reduce competition, impose technology sharing mandates and pick winners and losers by favoring certain competitors over others.”

“Why do we know this? Because we’ve seen it before,” Mastercard President of Americas Linda Kirkpatrick said, in reference to the Durbin amendment to the 2010 Dodd-Frank Act, which required the Fed to limit fees on retailers for transactions using debit cards. “Since debit regulation took hold, debit rewards were eliminated, fees went up, access to capital diminished, and competition was stifled.”

But the current high credit card swipe fees for retailers translate to higher prices for consumers, the National Retail Federation told the committee in a letter ahead of the hearing. The Credit Card Competition Act, the retail industry’s largest trade association wrote, will deliver “fairness and transparency to the payment system and relief to American business and consumers.”

“When we think of consumer spending, credit card swipe fees are not the first thing that comes to mind, yet those fees are a surprisingly large part of consumer spending,” Notre Dame University law professor Roger Alford said. “Last year, the average American spent $1,100 in swipe fees, more than they spent on pets, coffee or alcohol.”

Visa and Mastercard agreed to a $30 billion settlement in March meant to reduce their swipe fees by four basis points for three years, but a federal judge rejected the settlement in June, saying they could afford to pay more.

Visa is also battling a Justice Department lawsuit filed in September. The payment network is accused of maintaining an illegal monopoly over debit card payment networks, which has affected “the price of nearly everything,” according to Attorney General Merrick Garland.