Personal Finance
Trump, Musk promote idea of $5,000 ‘DOGE dividend’ checks
Elon Musk and President Donald Trump in the Oval Office at the White House, Feb. 11, 2025.
Andrew Harnik | Getty Images News | Getty Images
As the so-called Department of Government Efficiency looks to cut federal spending, Elon Musk and President Donald Trump have floated the idea that some of any savings could come back to Americans in the form of $5,000 dividend checks.
But experts say it’s too soon to say whether such checks could materialize — and caution that if they did, there could be economic consequences for consumers.
How ‘DOGE dividend’ proposal came to be
Both Musk and Trump boosted a proposal that James Fishback, CEO of investment firm Azoria, posted Feb. 18 on social media platform X, that suggested sending millions of American households checks.
“Americans sent their hard-earned tax dollars to Washington, D.C.,” Fishback told CNBC.com. He said he believes some of “those tax dollars were wasted.”
“There needs to be restitution to correct that,” Fishback said.
The White House released in early February a list of what it called “waste and abuse” of funds at the U.S. Agency for International Development, including $1.5 million to promote diversity, equity and inclusion in Serbia’s workplaces and $70,000 for a DEI musical in Ireland.
Under Trump, DOGE, an advisory group, set an aim to cut $2 trillion in federal spending. However, Musk said in a recent interview that target may be the “best-case outcome” and there may be a “good shot” of cutting half that amount.
In his proposal, Fishback starts from the presumption that DOGE will achieve $2 trillion in cuts to the government. By taking 20% of that total savings — or around $400 billion — that may leave room for around 79 million tax-paying households to each receive a $5,000 tax refund, per Fishback’s plan.
More from Personal Finance:
How Trump, DOGE job cuts may affect the economy
What experts say borrowers should do amid risks to Education Dept.
Why Trump tariffs may raise your car insurance premiums
The idea of direct money may sound familiar to American households, millions of whom received Covid-era stimulus checks. But these payments would be different from the stimulus checks, which work to stimulate the economy at a time of weak gross domestic product growth, Fishback said. Unlike the stimulus checks, the DOGE dividend checks would be only for households that pay federal income taxes, Fishback said.
The idea calls for a dividend closer to something like the Alaska Permanent Fund, in that it would represent a share of collected savings, noted Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget.
The rebate would be sent only to households that are “net payers of federal income tax,” per the plan — people who pay more in taxes than they get back. Under those terms, lower-income Americans would not qualify for the return. According to the Pew Research Center, most Americans who have an adjusted gross income of under $40,000 effectively pay no federal income tax.
Fishback, meanwhile, told CNBC.com there’s no minimum income requirement, but Americans would have to file a federal tax return to receive the money. The prospect of the payments may provide an incentive for non-working individuals to re-enter the labor force, according to the plan.
To be sure, the terms of the plan could change if lawmakers decide to consider it.
Trump has welcomed the idea. Musk, who Trump brought on board to implement DOGE, “very much agrees the incentives are in place” to get everyday Americans to report waste, fraud and abuse, Fishback said of a recent conversation he had with the billionaire.
Congress would have to approve payments
Yet to send the DOGE checks out, the Trump administration will need Congress’ approval. Fishback has been meeting with House and Senate members to promote the idea.
Last week, House Speaker Mike Johnson, R-Louisiana, said that while it would be “great” politically, other priorities should come first. Experts say DOGE needs to figure out how much money has been saved before promising people checks in the mail.
“We have a $36 trillion federal debt. We have a giant deficit,” Johnson said. “I think we need to pay down the credit card.”
White House Deputy Chief of Staff Stephen Miller recently said the DOGE checks will be “worked on through the reconciliation process with Congress that’s going underway right now.”
Yet some experts have expressed doubts about the proposal.
“There’s no appropriation for this,” said Elaine Kamarck, a senior fellow at the Brookings Institution who ran the Clinton Administration’s National Performance Review, which implemented cuts in an effort to modernize and improve the federal government’s performance.
“You cannot spend money without Congress telling you that you can spend money,” Kamarck said. “That is illegal.”
It also remains to be seen whether the DOGE initiative can generate enough savings to justify $5,000 payments, Kamarck said. Even with the savings DOGE plans hope to generate, initiatives like curbing immigration will require new or increased spending in other areas.
Without yet having generated meaningful savings, it’s premature to talk about dividend checks, MacGuineas said.
“The bottom line is when you’re running $2 trillion deficits every year, you can’t give away more money in stimulus checks,” MacGuineas said.
“Basically, you’re borrowing more to give back to people, but the borrowing still falls on them,” MacGuineas said.
But if the DOGE were able to generate $1 trillion in savings per year, “absolutely additional savings being returned to taxpayers would make total sense and be desirable,” she said.
‘Wrong time’ to have consumer stimulus?
Inflation spiked in the aftermath of the Covid pandemic and is still higher than the Federal Reserve’s 2% target. Some experts worry that additional direct payments to Americans would contribute to more inflation.
“This is certainly the wrong time to have any sort of consumer stimulus,” said Judge Glock, director of research and senior fellow at the Manhattan Institute. “Inflation remains elevated; any sort of stimulus would exacerbate that inflation.”
However, the amount of money saved under DOGE may not provide payments big enough to fuel inflation, Kamarck said.
The prospect of direct payments comes as Congress may look at extending provisions in the Tax Cuts and Jobs Act later this year.
There are already a number of policies being added to that package that are raising deficit concerns, said Alex Muresianu, senior policy analyst at the Tax Foundation.
“This would be another very large thing to try and squeeze in as well,” he said.
Meanwhile, Fishback maintains the DOGE dividend checks would simply refund Americans money they already contributed through income taxes.
Moreover, the way Americans would likely use an unexpected $5,000 — by paying off debt, saving or investing toward long-term goals like retirement — would not be inflationary, Fishback said, citing a 2019 CNBC survey.
“Every American has the mechanism with DOGE and the incentive with the DOGE dividend to report this waste, fraud and abuse,” Fishback said. “We’ll save even more of our hard-earned tax dollars when we give every American skin in the game.”
franckreporter | Getty Images
Nearly 2 million federal student loan borrowers who’ve requested to be in an affordable repayment plan are stuck in a backlog of applications, waiting to be approved or denied, according to new data recently shared by the U.S. Department of Education.
The Education Department disclosed the information in a May 15 court filing in response to a legal challenge lodged by the American Federation of Teachers. The teachers’ union sued the Trump administration in March for shutting down access to income-driven repayment plan applications on the Education Department’s website.
IDR plans cap borrowers’ monthly bills at a share of their discretionary income with the aim of making their payments manageable.
More from Personal Finance:
House Republican bill calls for bigger child tax credit
Student loan borrowers in default may see 15% of Social Security benefit garnished
How college savers can manage 529 plans in a turbulent market
In late March, the Trump administration made the online applications available again, and said that it pulled the forms because it needed to make sure all repayment plans complied with a court order that blocked the Biden administration’s new IDR plan, known as SAVE, or the Saving on a Valuable Education plan.
Trump officials argued that the ruling had broader implications for other IDR plans, and it ended up removing the loan forgiveness component under some of the options.
The backlog complicates things for borrowers as the Trump administration restarts collection activity. The Education Department estimates that nearly 10 million people could be in default on their student loans within months.
Without access to an affordable repayment plan, student loan borrowers can be suspended on their timeline to loan forgiveness and at risk of falling behind and facing collection activity.
‘The opposite of government efficiency’
In the May court document, the Education Department disclosed that more than 1.98 million IDR applications remained pending as of the end of April. Only roughly 79,000 requests had been approved or denied during that month.
Consumer advocates slammed the findings.
“This filing confirms what borrowers have known for months: Their applications for loan relief have effectively been going into a void,” said Winston Berkman-Breen, legal director at the Student Borrower Protection Center.
The Center said that if the Education Department continued to move at its current rate, it would take more than two years to process the existing applications.
AFT President Randi Weingarten called the backlog “outrageous and unacceptable.”
“This is the opposite of government efficiency,” Weingarten said. “Millions of borrowers are being denied their legal right to an affordable repayment option.”
What’s behind the backlog
A spokesperson for the Education Dept. blamed the backlog on the Biden administration, saying that it “failed to process income-driven repayment applications for borrowers, artificially masking rising delinquency and default rates and promising illegal student loan forgiveness to win points with voters.”
“The Trump Administration is actively working with federal student loan servicers and hopes to clear the Biden backlog over the next few months,” they said.
The Biden administration put the student loan borrowers who’d enrolled in its new IDR plan, SAVE, into an interest-free forbearance while the GOP-led legal challenges to the program unfolded. Many of the currently pending IDR requests are likely from borrowers who are trying to leave that blocked plan to get into an available one.
Sarah Sattlemeyer, a project director at New America and senior advisor under the Biden administration, said that the current backlog began last year “and has existed across both the Biden and Trump administrations” as a result of the legal battle over the SAVE plan.
“It is a demonstration of how complicated the loan system is, how much uncertainty there has been over the last few years and what is at stake,” Sattlemeyer said. “There also isn’t clarity around how some applications in the backlog should or will be handled, such as those where a borrower chose an option that no longer exists on the application.”
In recent months, the Trump administration has terminated around half of the Education Department’s staff, including many of the people who helped assist borrowers.
That is also likely one reason why so many of the applications haven’t been processed, said higher education expert Mark Kantrowitz.
“Perhaps the reduction in staff is affecting their ability to process the forms,” Kantrowitz said.
The Trump administration’s resumption of collection efforts on defaulted federal student loans has far-reaching consequences for delinquent borrowers.
For starters, borrowers who are in default may have wages, tax returns and Social Security payments garnished.
But involuntary collections could also have a “spillover effect,” which puts consumers at risk of falling behind on other debt repayments, according to a recent report from the Federal Reserve Bank of New York,
As collection activity restarts, disposable income falls
“We were obviously somewhat concerned about potential spillovers to delinquencies on other types of debt,” the New York Fed researchers said on a press call earlier this month.
“During the period where people were not required to make payments on their student loans, they could have used that money to pay their credit card bills and auto loans,” the researchers said. “Now they have to make these payments again on their student loans, so that could put pressure on their ability to pay these other loans.”
More from Personal Finance:
Wage garnishment for defaulted student loans to begin
What loan forgiveness opportunities remain under Trump
Is college still worth it? It is for most, but not all
The U.S. Department of Education’s crack down on student loan repayments could take billions of dollars out of consumers’ pockets, reports show. Monthly collections on defaulted loans may reduce disposable personal income between $3.1 billion to $8.5 billion a month, according to research by JPMorgan.
“Part of the reason that some people are adding to credit card debt is because they have student loan payments — that’s the spillover effect,” said Ted Rossman, senior industry analyst at Bankrate. “Something’s got to give.”
‘It’s just money that can’t go to other financial things’
Until earlier this month, the Department of Education had not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That on-ramp officially ended on Sept. 30, 2024, and the Education Department restarted collection efforts on defaulted student loans on May 5.
Whether borrowers face garnishment, or opt to resume payments to get current on their loan, that’s likely to have a significant impact on their wallet.
“It’s just money that can’t go to other financial things,” said Matt Schulz, chief credit analyst at LendingTree.
After the five-year pause ended and collections are resumed, the delinquency rate for student loan balances spiked, the New York Fed found. Nearly 8% of total student debt was reported as 90 days past due in the first quarter of 2025, compared to less than 1% in the previous quarter.
Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default, according to the Education Department. Another 4 million borrowers are in “late-stage delinquency,” or over 90 days past due on payments.
Among borrowers who are now required to make payments — not including those who are in deferment or forbearance or are currently enrolled in school — nearly one in four student loan borrowers are behind in their payments, the New York Fed found.
As borrowers transition out of forbearance and into repayment, those borrowers may also face challenges making payments, according to a separate research note by Bank of America. “This transition will likely drive delinquencies and defaults on student loans higher and could have further knock-on effects for consumer finance companies,” Bank of America analyst Mihir Bhatia wrote to clients on May 15.
In a blog post, the New York Fed researchers noted that “it is unclear whether these penalties will spill over into payment difficulties in other credit products, but we will continue to monitor this space in the coming months.”
Stocks making the biggest moves premarket: TGT, PANW, LOW, UNH
Accountants on class actions, SEC audit clients and more
Misunderstandings keep families from claiming tax credits
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?
-
Economics1 week agoCPI inflation April 2025: Rate hits 2.3%
-
Economics1 week agoTariff receipts topped $16 billion in April, a record that helped cut the budget deficit
-
Personal Finance7 days agoHouse Republicans advance Trump’s tax bill. ‘SALT’ deduction in limbo
-
Economics6 days agoViolent crime is falling rapidly across America
-
Personal Finance1 week agoFidelity technical issues kept some investors out of their accounts
-
Economics1 week agoGerman business leaders tell new government: It’s time to deliver
-
Economics5 days agoThe low-end consumer is about to feel the pinch as Trump restarts student loan collections
-
Personal Finance1 week agoHow to save on groceries amid food price inflation