Student Loans

Some States Could Tax Biden’s Student Loan Debt Relief

Some states tax forgiven debt as income, which means borrowers who are still paying down student loans could owe taxes on money taken off their bill.

President Joe Biden’s student loan forgiveness plan could lift crushing debt burdens from millions of borrowers, but the tax man may demand a cut of the relief in some states.

That’s because some states tax forgiven debt as income, which means borrowers who are still paying down student loans could owe taxes on as much as $10,000 or even $20,000 that was taken off their bill. In Mississippi, Minnesota, Wisconsin, Arkansas and North Carolina, forgiven student loans will be subject to state income taxes unless they change their laws to conform with a federal tax exemption for student loans, according to a tally by the Tax Foundation, a Washington, D.C.-based think tank.

That dismays Cathy Newman, a Louisiana State University graduate who just took a job teaching freshman biology at the University of Southern Mississippi in Hattiesburg. She figures she could end up owing a few hundred dollars of money that she could have kept had she stayed in Louisiana.

Newman said she can come up with the cash because she has a good job, but she knows of a lot of other borrowers who will still be stuck in difficult financial positions even with their loans forgiven.

“If they stay in the state, they could end up with a pretty hefty tax burden if things don’t change,” Newman said. “I won’t be happy if I have to do it. I can do it. But a lot of people can’t.”

More than 40 million Americans could see their student loan debt cut or eliminated under the forgiveness plan President Biden announced late last month. The president is erasing $10,000 in federal student loan debt for individuals with incomes below $125,000 a year, or households that earn less than $250,000. He’s canceling an additional $10,000 for those who also used federal Pell Grants to pay for college. But it only applies to those whose loans were paid out before July 1, which leaves out current high school seniors and students who will follow them.

Although having $10,000 or $20,000 in loan payments eliminated will be a boon over the long term to borrowers who qualify, those in the affected states might be required to declare that as income. Depending on a state’s tax rates, the taxpayer’s other income and the deductions and exemptions they’re able to claim, that could add up to several hundred extra tax dollars that they’ll owe.

Spokespeople for tax agencies in several states — including Virginia, Idaho, New York, West Virginia, Pennsylvania and Kentucky — told The Associated Press that their states definitely won’t tax student loans forgiven under President Biden’s program. Revenue officials in a few other states said they needed to do more research to know.

Newman, 38, went into debt to pay for graduate school. She had already set herself up for relief under the federal Public Service Loan Forgiveness program, though that requires five more years of teaching on top of the five she already taught at the University of Louisiana Monroe. President Biden’s program would cut $10,000 off her debt load when it takes effect, but under existing Mississippi tax law, the relief won’t come free.

“It’s not a huge burden for me, but it could be for a lot of other people, which is what I’m worried about, especially if it’s unexpected, and I think a lot of people don’t realize that,” Newman said.

Any relief in states that would tax the forgiven debt would have to come from their Legislatures. Leaders of the Minnesota Legislature and Democratic Gov. Tim Walz have indicated in recent media interviews that there’s broad support for a fix, which could come during the 2023 session, or even earlier on the remote chance of a special session.

In Wisconsin, Democratic Gov. Tony Evers’ administration plans to propose a fix in the state budget next year, but that would have to be approved by the Republican-controlled Legislature. And Evers needs to get reelected in November before he can formally make that request. Republican legislative leaders and Evers’ GOP challenger, Tim Michels, did not reply to messages seeking comment on the student loan tax issue.

However, in Mississippi, the chairman of the state Senate committee in charge of taxes said he’s willing to take a look when the Legislature convenes next year. Republican state Sen. Josh Harkins, of Brandon, said he needs to learn more about what his state’s tax laws say on debt forgiveness.

“I’m sure people will want to look at adjusting that or making some changes in the law, but a lot of factors have to be considered,” Harkins said, noting that Mississippi enacted its biggest-ever tax cut earlier this year and adding that he wants to gauge the impact of inflation before making big tax policy decisions. “This all just hit in the last week.”

Additional reporting by the Associated Press.

Source: newsy.com

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Student Loan Forgiveness Is Complicated, Because This Is America

If we want higher education to cost less, we should make it cheaper when people enroll.

But that’s not how we do things in the United States, where the first rule of personal finance is that it should never be simple.

Instead, we befuddle people with a menu of a half-dozen retirement accounts. We fetishize the tax code and its deductions and credits and refunds. We name gold, silver and bronze health insurance plans after precious metals but award no medals for clearing the enrollment hurdles.

And so it goes with President Biden’s executive action around student loan debt cancellation. The potential $20,000 in relief per person gets the headlines. But the sleeper element here is a new income-driven debt repayment plan that would help many people pay much less of their student loan debt over time, if they’re not big earners.

choose among H.M.O., P.P.O., P.F.F.S., S.N.P., H.M.O.-P.O.S. and M.S.A. plans. The Centers for Medicare & Medicaid Services website has an acronym glossary with 4,420 entries, because personal finance is its own language. You learn as you go, or not at all.

Pamela Herd is a professor at Georgetown University’s McCourt School of Public Policy, with an expertise in these “administrative burdens.”

With certain social welfare benefits, Professor Herd explained in an interview this week, the original program designers believed that obstacles were appropriate. Anyone desperate enough should find a way to muddle through and prove their poverty, or so the logic went.

More recently, administrative burdens have resulted from the conviction that private sector actors — who are often seeking profits — would be the most efficient intermediaries between people and federal programs that involved money.

You see it in those Medicare Advantage Plans, and it was a feature of federal P.P.P. loans during the early stages of the pandemic. Rather than give employers money up front to keep people on the payroll, there were forgivable loans that required frazzled small business owners to beg a banker to bum rush a balky government website on their behalf.

And so it goes with the federal student loan system.

Both the income-driven repayment plans that have existed for years and a special debt cancellation program for public servants are already poster children for administrative burdens. Tracking your progress is a part-time job, complete with self-help Facebook groups of frustrated debtors and companies to help people manage the process.

And wouldn’t you know it? There are several third parties to which the federal government has outsourced the work of collecting student loan payments and enforcing the rules.

would go to 5 percent from 10 percent of discretionary income; the amount of a person’s income that doesn’t meet the definition of discretionary would rise; and there would be a new, more generous way of calculating how balances shrink or grow over time. There are plenty of reasons to be skeptical that something this complex would roll out smoothly or quickly.

And it would not be cheap. Estimates from the Penn Wharton Budget Model put the 10-year cost of the new repayment plan at anywhere from $70.3 billion to over $450 billion, depending on the implementation details and how students and schools change their borrowing and tuition-setting behavior. Again, it’s complicated.

By comparison, Mr. Biden had proposed spending $45.5 billion over five years to make up to six semesters of community college free nationwide. That would have paid for most of the cost, with states contributing the rest. No debt for tuition, no hoops to jump through.

Politics got in the way of free community college, and the Inflation Reduction Act that Mr. Biden signed last month did not include it. Instead, students who borrow would get a subsidy on the back end through the more generous repayment program, years later, if they know it exists, enroll without incident, clear every hurdle over a decade or two and their loan servicer doesn’t make a hash of it.

There are bad words and associated acronyms that we could use to sum all of this up as we scream into the void. But our framing could just as easily center on a single word: Respect.

Professor Herd surprised me this week when she said the word in passing. I asked her to elaborate.

“Respect includes everything from respecting people’s time to not treating them as if they are trying to cheat or game a system,” she said. “It’s about treating them as if they are full-fledged citizens and human beings who have basic rights to access services and benefits for which they’re eligible.”

It seems simple enough. But too much of our personal finance infrastructure becomes adversarial through its complexity. The “prove it” nature of Mr. Biden’s executive action, with its income measurements and repeated checking in with third-party servicers, does not help, as generous as it may turn out to be for people who would eventually pass muster.

Disrespect is calling student debt cancellation “forgiveness” when it’s really an apology for a dysfunctional higher education financing system. Disrespect is doing little to make tuition cheaper on the front end of this process. Disrespect is letting many for-profit schools continue to put people of color deep into debt for certificates or degrees that don’t mean much in the labor market.

Disrespect guarantees full-time employment for personal finance journalists, too. I’m lucky to have the work, but it shouldn’t be necessary in the first place.

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Prenups Aren’t All Bad. Here’s Why They’re Becoming More Common

Prenups can be a touchy subject, but the stigma is fading, with some experts saying it could be a smart move for anyone getting married.

Prenups, or pre-nuptial agreements, don’t always have the most positive connotation.

While they are legal agreements entered into by couples before marriage — often to keep finances separate despite being otherwise legally joined — they can be a touchy subject for couples starting to build a life together.

But that stigma seems to be fading away. A new report from The Harris Poll said that this year, 15% of U.S. adults surveyed signed a prenup, which is up from just 3% in 2010. It also found that 35% of unmarried people say they’re likely to sign a prenup in the future.

In the Americas, prenups go back to 17th century Canada, when French colonist men married women who came to the country with financial assistance from King Louis XIV. These women were so highly sought after that they were able to convince their husbands to sign prenups. This came at a time when men outnumbered women, so women had a leg up. Eventually that gender ratio evened out, and prenups went away.

They got popular again in the U.S. much later. A 1970 Florida case Posner v Posner ruled that prenups should be a standard practice.

One big possible factor in their usage today is the fact that millennials now have more debt than previous generations. One survey found that nearly three quarters of millennials have over $100,000 in debt on average, not including mortgages.

The most common debt is credit card debt followed by student loans. There’s also medical debt and personal loans.

Prenups can protect your partner from taking on your debt in the case of death of divorce. In some states, your spouse can be held accountable for all of your debt acquired during the marriage.

Kelly Chang Rickert is a family law attorney in California who specializes in prenups, and she sees debt come up in divorce cases all the time.

“It’s not unusual for me to have a divorce where one side has a Neiman Marcus card and charged up $70,000, and the other side… they are responsible for half the debt because it was acquired during the marriage,” Chang Rickert said.

But the breakdown of who’s responsible for what differs from state to state. For instance, some states are community property states, meaning unless you sign a prenup, everything acquired during the marriage must be split 50/50. That’s how things work in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

In other states, laws differ. There can be different rules around what makes prenups enforceable. For example, in Connecticut there’s a specific window of time between when the prenup is presented and when the marriage happens for it to hold up. So, it’s important to see what a state requires beforehand.

Another reason more people could be getting prenups is because they’re getting married later in life and have more assets to protect coming into the marriage. According to Pew, in 2019 the average age a man first got married was 30, and for women it was 28. That’s three years later for both men and women compared to 2003 and four years later than 1987.

“These days, a lot of people work for themselves,” Chang Rickert said. “If you’re a social media influencer or you’re an artist or you’re a writer, a lot of people make money off their creative efforts. So if they have a business coming into the marriage, a lot of them don’t want to share that in case it doesn’t work out.”

This leads to the question of how finances are split. This determines what a prenup could look like. In the 70s and 80s, it was common practice to put all your money into shared accounts with your spouse. But over the past several years, the number of married couples who keep some of their finances separate has risen.

Experts say if couples have a joint account for things they share, they can opt to keep everything else separate, and in the case of divorce, they’ll only have to worry about dividing the joint account. But it’s important to note that separate accounts won’t stay separate unless a prenup is signed stating that.

“Even if you don’t have a prenup, you kind of do: It’s called the law,” Chang Rickert said. “So if you don’t have a prenup, you’re just going by what your state law says. California says community property, so your debt is my debt. That’s what the state law says. So if you don’t like that, then you should craft your own.”

Rickert Chang recommends getting a prenup ideally a year before your wedding. She also points out a few pros of prenups. For one, the stereotypical scenario we see in movies where a rich guy asks his fiancé to sign a prenup — it could actually be a good thing.

“If you were smart about it, and the guy’s like, ‘I want you to sign a prenup saying I don’t want community,’ then what you could do is you can negotiate it,” Chang Rickert said. “You could be like, ‘Fine, I won’t touch your stuff, but in lieu of that, I would like 50,000 a year or 1,000, 100,000 a year,’ and that way you can negotiate, and you can actually get money by agreeing to sign a prenup.”

There’s also certain professions where it’s strongly encouraged to protect the other person.

“Definitely lawyers or doctors, I think you should always get prenup,” Chang Rickert said. “Not just only because it’s my business — I don’t want you taking half of it, but also it’s a business that I can get sued on. So, I would like to protect you from any lawsuits that I might get.”

As prenups have become more common, more people have dug into this topic on social media platforms like TikTok. Chang Rickert has an account of her own where she educates people on prenups to help break down myths and stigmas, including that they aren’t just for rich people and not just in case of divorce.

Now, there aren’t necessarily more divorces now. CDC data shows that divorces declined between 2000 and 2020.

However in the case of a divorce, not signing a prenup could really pile on to the cost of divorce, which can already be pretty high, costing between $15,000 to $20,000 on average.

Source: newsy.com

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Who Qualifies For Biden’s Student Loan Forgiveness Plan?

Many Republicans criticized the announcement, arguing it will make inflation worse by giving people more money to spend.

Millions of Americans could soon take advantage of President Joe Biden’s decision to provide student debt relief.

“All of this means people can start to finally crawl out from under that mountain of debt,” said President Biden.

And that means millions also have questions about how it all works. So, let’s break down four key elements, starting with the biggest headline — loan forgiveness.

The administration will eliminate $10,000 in student debt for people making up to $125,000 a year, or $250,000 for married couples. The debt forgiveness increases to $20,000 for anyone who received a Pell Grant. And parents who took out federal loans to pay for a child’s education will also qualify for relief.

The White House says 60% of borrowers received a Pell Grant, meaning a majority of people will be eligible for the maximum amount of relief.

But appearing on Newsy’s Morning Rush, Education Secretary Miguel Cardona said the plan has wider benefits for the nation.

“Everyone knows someone that right now is struggling with college debt. Lifting, helping those people up, it helps the whole community. And, you know, it’s helping other Americans and that’s what we’re trying to do here,” said Sec. Cardona.

Next, the Department of Education is temporarily changing the Public Service Loan Forgiveness program to make it easier to qualify.

That allows people who work for government organizations, military, or qualifying non-profits to have any remaining debt forgiven after they make 10 years of payments.

“Think of a service member who defers their student loan payment while they’re deployed. The system is so restrictive that their active-duty service didn’t count as ‘public service’ and their loan isn’t forgiven as promised. It’s outrageous,” said President Biden.

The Biden administration is retroactively expanding the type of payments that qualify. But eligible borrowers must apply before Oct. 31 this year to take advantage of the change.

Third, the Biden administration is proposing a change to income-driven repayment plans. Once finalized, the new rule will cap monthly payments at 5% of income left after taxes and essential living expenses. And the program will cover the loan’s monthly interest, ensuring your total balance due won’t increase as long as you’re making your monthly payments.

“We’re not going to ask folks to pay for more than they can afford; That’s going to make higher education much more accessible. And we’re going to cap the interest, too. I’ve heard from so many Americans that the interest is what kills them, it just keeps compounding. Well, we’re putting an end to that,” said Sec. Cardona.

And finally, the Biden administration is extending the pause on student loan payments one last time. No one is required to make a monthly payment on their student loans until January 2023.

Not everyone is happy with the president’s announcement. Some progressives wanted him to cancel more debt. Others argue he should be taking steps to reduce the cost of going to college.

Many Republicans criticized the announcement, arguing it will make inflation worse by giving people more money to spend, will increase the country’s debt, and is unfair to Americans who already paid off their loans.

“It’s very unfair to people who took other pathways in life that didn’t require them to take out a lot of loans, so maybe people that went into business immediately, people that went into trades, they made those decisions to not have that debt and now the debt’s being put on them,” said Florida Gov. Ron DeSantis.

The White House says if every eligible borrower applies, 43 million Americans will benefit from the student debt cancellation.

Source: newsy.com

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Pres. Biden Rallies For Democrats, Slams ‘Semi-Fascism’ In GOP

President Joe Biden compared Republican ideology to “semi-fascism” at a rally ahead of midterm elections.

President Joe Biden called on Democrats Thursday “to vote to literally save democracy once again” — and compared Republican ideology to “semi-fascism” — as he led a kickoff rally and a fundraiser in Maryland 75 days out from the midterm elections.

Addressing an overflow crowd of thousands at Richard Montgomery High School in Rockville, President Biden said: “Your right to choose is on the ballot this year. The Social Security you paid for from the time you had a job is on the ballot. The safety of your kids from gun violence is on the ballot, and it’s not hyperbole, the very survival of our planet is on the ballot.”

“You have to choose,” President Biden added. “Will we be a country that moves forward or a country that moves backward?”

The events, in the safely Democratic Washington suburbs, were meant to ease President Biden into what White House aides say will be an aggressive season of championing his policy victories and aiding his party’s candidates. He is aiming to turn months of accomplishments into political energy as Democrats have seen their hopes rebound amid the legacy-defining burst of action by Biden and Congress.

From bipartisan action on gun control, infrastructure and domestic technology manufacturing to Democrats-only efforts to tackle climate change and health care costs, President Biden highlighted the achievements of the party’s unified but razor-thin control of Washington. And he tried to sharpen the contrast with Republicans, who once seemed poised for sizable victories in November.

Just months ago, as inflation soared, President Biden’s poll numbers soured and his agenda stalled, Democrats braced for significant losses. But the intense voter reaction to the Supreme Court’s overturning of Roe v. Wade and a productive summer on issues of core concern to Democrats have the party feeling like it is finally on the offensive heading into the Nov. 8 vote, even as the president remains unpopular.

Ahead of the rally, President Biden raised about $1 million at an event with about 100 donors for the Democratic National Committee and the Democratic Grassroots Victory Fund in the backyard of a lavish Bethesda home.

After his speech at the rally, President Biden lingered with the largely mask-free crowd for nearly 30 minutes, diving back into the style of campaigning that had been disrupted for Democrats for more than two years by the COVID-19 pandemic. The president, who was identified as a close contact of first lady Jill Biden on Wednesday when she was diagnosed with a “rebound” case of the virus, did not appear to wear a face covering as he posed for selfies and hugged supporters.

President Biden’s Thursday events come a day after the president moved to fulfill a long-delayed campaign pledge to forgive federal student loans for lower- and middle-income borrowers — a move that Democrats believe will animate younger and Black and Latino voters.

Republicans, though, saw their own political advantage in the move, casting it as an unfair giveaway to would-be Democratic voters.

“President Biden’s inflation is crushing working families, and his answer is to give away even more government money to elites with higher salaries,” said Senate GOP leader Mitch McConnell. “Democrats are literally using working Americans’ money to try to buy themselves some enthusiasm from their political base.”

President Biden on Thursday expanded on his effort to paint Republicans as the “ultra-MAGA” party — a reference to former President Donald Trump’s “Make America Great Again” campaign slogan — opposing his agenda and embracing conservative ideological proposals as well as Trump’s false claims about the 2020 election.

“What we’re seeing now is either the beginning or the death knell of an extreme MAGA philosophy,” President Biden told donors at the fundraiser. “It’s not just Trump, it’s the entire philosophy that underpins the — I’m going to say something, it’s like semi-fascism.”

“I respect conservative Republicans,” President Biden said later. “I don’t respect these MAGA Republicans.”

The Republican National Committee called President Biden’s comments “Despicable.”

“Biden forced Americans out of their jobs, transferred money from working families to Harvard lawyers, and sent our country into a recession while families can’t afford gas and groceries,” said spokesperson Nathan Brand. “Democrats don’t care about suffering Americans — they never did.”

Since the June Supreme Court ruling removing women’s constitutional protections for abortion, Democrats have seen a boost in donations, polling and performance in special elections for open congressional seats. The latest came Tuesday in a Hudson Valley swing district that, in a Republican wave year, should have been an easy GOP win. Instead, Democrat Pat Ryan, who campaigned on a platform of standing up for abortion rights, defeated Republican Marc Molinaro.

“MAGA Republicans don’t have a clue about the power of women,” President Biden said, noting the resonance of the abortion issue with women voters as some in the GOP push a national ban on the procedure. “Let me tell you something: They are about to find out.”

The shift is giving Democrats a new sense that a Republican sweep of the House is no longer such a sure bet, particularly battle-tested incumbents polling better than President Biden work their districts.

Meanwhile, Democrats have benefited from Republican candidates who won primaries but are struggling in the general campaign. Trump-backed Senate candidates have complicated the GOP’s chances in battleground states like Pennsylvania, Georgia and Arizona, while several Trump-aligned candidates in House races were not always the party’s first choice.

Trump’s grip on the GOP remains strong and has perhaps even become tighter in the aftermath of the FBI search of his Mar-a-Lago home.

JB Poersch, the president of Senate Majority Project, an outside group that is working to elect Democrats to the Senate, said the Republican candidates are “getting caught up in the Trump tornado once again — that is exactly what voters of both parties don’t want.”

President Biden’s political event, sponsored by the Democratic National Committee, comes as the president and members of his Cabinet are set to embark on what the White House has billed as the “Building a Better America Tour” to promote “the benefits of the President’s accomplishments and the Inflation Reduction Act to the American people and highlight the contrast with Congressional Republicans’ vision.”

Meanwhile, the White House has benefited from a steady decline in gasoline prices, which, while still elevated, have dropped daily since mid-June.

“Our critics say inflation,” President Biden said, dismissing GOP attacks that his policies resulted in inflation being at a 40-year high. “You mean the global inflation caused by the worldwide pandemic and Putin’s war in Ukraine?”

In Maryland, President Biden was joined by gubernatorial candidate Wes Moore and a host of other officials on the ballot. Moore, introducing President Biden, said his Trump-backed rival “Dan Cox is not an opponent. He’s a threat.”

Months ago, Democratic lawmakers facing tough reelection fights sought to make themselves scarce when President Biden came to town, though White House aides said Biden could still be an asset by elevating issues that resonate with voters and sharpening the distinction with Republicans.

Now, allies see the fortunes beginning to change and the president as more of a direct asset to campaigns.

“Joe Biden is not the ballot technically,” said House Majority Leader Rep. Steny Hoyer. “But Joe Biden is on the ballot, and Joe Biden needs your support.”

Additional reporting by The Associated Press.

Source: newsy.com

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President Biden Kicks Off Midterm Rally As Democrats See Opening

Democrats have seen their political hopes rebound in recent months amid a legacy-defining burst of action by Congress and the president.

Aiming to turn months of legislative accomplishments into political energy, President Joe Biden will hold a kickoff rally Thursday to boost Democrats’ fortunes 75 days out from the midterm elections.

The event, in the safely Democratic Washington suburb of Rockville, Maryland, is meant to ease President Biden into what White House aides say will be an aggressive season of championing his policy victories and aiding his party’s candidates. It comes as Democrats have seen their political hopes rebound in recent months amid a legacy-defining burst of action by President Biden and Congress.

From bipartisan action on gun control, infrastructure and domestic technology manufacturing to Democrats-only efforts to tackle climate change and health care costs, President Biden is expected to highlight the achievements of the party’s unified but razor-thin control of Washington. And he will try to sharpen the contrast with Republicans, who once seemed poised for sizable victories in November.

Democrats, said Biden pollster John Anzalone, are “in a better position to compete because Joe Biden put us there.”

“It doesn’t mean that the wind’s at our back,” he added. “But we have more of a breeze than what felt like a gale hurricane in our face.”

President Biden’s Thursday event comes a day after the president moved to fulfill a long-delayed campaign pledge to forgive federal student loans for lower- and middle-income borrowers — a move that Democrats believe will animate younger and Black and Latino voters.

Republicans, though, saw their own political advantage in the move, casting it as an unfair giveaway to would-be Democratic voters.

Biden aides said he would continue to paint Republicans as the “ultra-MAGA” party — a reference to former President Donald Trump’s “Make America Great Again” campaign slogan — opposing his agenda and embracing conservative ideological proposals on abortion and Trump’s false claims about the 2020 election.

Since the June Supreme Court ruling, Democrats have seen a boost in donations, polling and performance in special elections for open congressional seats. The latest came Tuesday in a Hudson Valley swing district that, in a Republican wave year, should have been an easy GOP win. Instead, Democratic Ulster County executive Pat Ryan, who campaigned on a platform of standing up for abortion rights, defeated his Republican counterpart from Duchess County, Marc Molinaro.

The shift is giving Democrats a new sense that a Republican sweep of the House is no longer such a sure bet, particularly as polling better than President Biden and battle-tested incumbents work their districts

Trump’s grip on the GOP remains strong and has perhaps even become tighter in the aftermath of the FBI search of his Mar-a-Lago home.

It comes as the White House has benefited from a steady decline in gasoline prices, which while still elevated have dropped daily since mid-June.

Months ago, Democratic lawmakers facing tough reelection fights sought to make themselves scarce when President Biden came to town, though White House aides said President Biden was still an asset to them by elevating issues that resonate with voters and sharpening the distinction with Republicans.

Now allies see the fortunes beginning to change and the president as more of a direct asset to campaigns.

In Maryland, President Biden was set to be joined by gubernatorial candidate Wes Moore and a host of other officials on the ballot. Sen. Chris Van Hollen, who is up for reelection, was missing it, according to a spokesperson, because of a long-planned wedding anniversary trip with his wife, but he recorded a video welcoming President Biden to his state that would play at the rally.

Cedric Richmond, the former Louisiana congressman and Biden senior adviser who now advises the Democratic National Committee, said if he were a candidate, he’d rush to have President Biden at his side.

“I’d get in front of the van and become the drum major and talk about all the accomplishments that have happened under the leadership of Biden,” Richmond said Wednesday. “You have a president who just keeps his head down and gets the work done and I think voters, as we kick off this campaign season, will see and appreciate that.”

He acknowledged some Democrats might opt against “bringing Washington to their district.”

“There are probably a few cases where that may make sense when you don’t even want to be associated with Washington,” Richmond said. “That has nothing to do with the president. That has everything to do with the typical dysfunction of Washington.”

He added, “The important point to stress is you don’t have that dysfunction right now because of President Biden.”

Additional reporting by The Associated Press.

Source: newsy.com

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Biden Announces Long-Awaited Student Debt Forgiveness Plan

President Biden is also extending a pause on federal student loan payments for what he called the “final time” through the end of 2022.

President Joe Biden on Wednesday announced his long-awaited plan to deliver on his campaign promise to provide $10,000 in debt cancellation for millions of Americans — and up to $10,000 more for those with the greatest financial need.

Borrowers who earn less than $125,000 a year, or families earning less than $250,000, would be eligible for the $10,000 loan forgiveness, President Biden announced in a tweet. For recipients of Pell Grants, which are reserved for undergraduates with the most significant financial need, the federal government would cancel up to an additional $10,000 in federal loan debt.

President Biden is also extending a pause on federal student loan payments for what he called the “final time” through the end of 2022. He was set to deliver remarks Wednesday afternoon at the White House to unveil his proposal to the public.

If his plan survives legal challenges that are almost certain to come, it could offer a windfall to a swath of the nation in the run-up to this fall’s midterm elections. More than 43 million people have federal student debt, with an average balance of $37,667, according to federal data. Nearly a third of borrowers owe less than $10,000, and about half owe less than $20,000. The White House estimates that President Biden’s announcement would erase the federal student debt of about 20 million people.

Proponents say cancellation will narrow the racial wealth gap — Black students are more likely to borrow federal student loans and at higher amounts than others. Four years after earning bachelor’s degrees, Black borrowers owe an average of nearly $25,000 more than their White peers, according to a Brookings Institution study.

Still, the action is unlikely to thrill any of the factions that have been jostling for influence as President President Biden weighs how much to cancel and for whom.

President Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in his decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss President Biden’s intended announcement ahead of time.

The continuation of the coronavirus pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.

Details of the plan have been kept closely guarded as President Biden weighed his options. The administration said Wednesday the Education Department will release information in the coming weeks for eligible borrowers to sign up for debt relief. Cancellation for some would be automatic, if the department has access to their income information, but others would need to fill out a form.

Current students would only be eligible for relief if their loans were originated before July 1, 2022. President Biden is also set to propose capping the amount that borrowers pay monthly on undergraduate loans at 5% of their earnings.

During the 2020 presidential campaign, President Biden was initially skeptical of student loan debt cancellation as he faced off against more progressive candidates for the Democratic nomination. Sens. Elizabeth Warren and Bernie Sanders had proposed cancellations of $50,000 or more.

As he tried to shore up support among younger voters and prepare for a general election battle against President Donald Trump, President Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap.

President Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay. But Democrats, from members of congressional leadership to those facing tough reelection bids this November, have pushed the administration to go as broad as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters this fall.

Democrats are betting that President Biden, who has seen his public approval tumble over the past year, can help motivate younger voters to the polls with the announcement.

Although President Biden’s plan is changed from what he initially proposed during the campaign, “he’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster who worked with President Biden during the 2020 election.

A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59% of those polled favored debt cancellation of some sort — whether for all borrowers or those most in need — although student loans did not rank high among issues that most concerned people in that age group.

Some advocates say President Biden’s plan still falls short.

“If the rumors are true, we’ve got a problem,” Derrick Johnson, the president of the NAACP, which has aggressively lobbied President Biden to take bolder action, said Tuesday.

“President Biden’s decision on student debt cannot become the latest example of a policy that has left Black people — especially Black women — behind,” he said. “This is not how you treat Black voters who turned out in record numbers and provided 90% of their vote to once again save democracy in 2020.”

John Della Volpe, who worked as a consultant on President Biden’s campaign and is the director of polling at the Harvard Kennedy School Institute of Politics, said the particulars of President Biden’s announcement were less important than the decision itself.

“It’s about trust in politics, in government, in our system. It’s also about trust in the individual, which in this case is President Biden,” Della Volpe said.

Republicans, meanwhile, see a political upside if President Biden pursues a large-scale cancellation of student debt ahead of the November midterms, anticipating backlash for Democrats — particularly in states where there are large numbers of working-class voters without college degrees. Critics of broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress has never given the president the explicit authority to cancel debt on his own.

The Republican National Committee on Tuesday blasted President Biden’s expected announcement as a “handout to the rich,” claiming it would unfairly burden lower-income taxpayers and those who have already paid off their student loans with covering the costs of higher education for the wealthy.

President Biden’s long deliberations have led to grumbling among federal loan servicers, who had been instructed to hold back billing statements while President Biden weighed a decision.

Industry groups had complained that the delayed decision left them with just days to notify borrowers, retrain customer service workers and update websites and digital payment systems, said Scott Buchanan, executive director of the Student Loan Servicing Alliance.

It increases the risk that some borrowers will inadvertently be told they need to make payments, he said.

“At this late stage I think that’s the risk we’re running,” he said. “You can’t just turn on a dime with 35 million borrowers who all have different loan types and statuses.”

Additional reporting by The Associated Press.

Source: newsy.com

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Student Loan Help For Millions Coming From Biden After Delay

The precise details of President Biden’s plan were reportedly still not finalized on the eve of the announcement.

President Joe Biden on Wednesday is set to announce his long-delayed move to forgive up to $10,000 in federal student loans for many Americans and extend a pause on payments to January, according to three people familiar with the plan.

President Biden has faced pressure from liberals to provide broader relief to hard-hit borrowers, and from moderates and Republicans questioning the fairness of any widespread forgiveness. The delay in Biden’s decision has only heightened the anticipation for what his own aides acknowledge represents a political no-win situation. The people spoke on the condition of anonymity to discuss Biden’s intended announcement ahead of time.

The precise details of President Biden’s plan, which will include an income cap limiting the forgiveness to only those earning less than $125,000 a year, were being kept to an unusually small circle within the Biden administration and were still not finalized on the eve of the announcement.

Down-to-the-wire decision-making has been a hallmark of the Biden White House, but the particular delay on student loans reflects the vexing challenge confronting him in fulfilling a key campaign promise.

The plan would likely eliminate student debt entirely for millions of Americans and wipe away at least half for millions more.

The nation’s federal student debt now tops $1.6 trillion after ballooning for years. More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.

The continuation of the pandemic-era payment freeze comes just days before millions of Americans were set to find out when their next student loan bills will be due. This is the closest the administration has come to hitting the end of the payment freeze extension, with the current pause set to end Aug. 31.

Wednesday’s announcement was set for the White House after President Biden returns from vacation in Rehoboth Beach, Delaware. The administration had briefly considered higher education schools in the president’s home state for a larger reveal, but scaled back their plans.

President Biden was initially skeptical of student loan debt cancellation as he faced off against more progressive Sens. Elizabeth Warren, D-Mass., and Bernie Sanders, I-Vt., who had proposed cancellations of $50,000 or more, during the 2020 primaries.

As he tried to shore up support among younger voters and prepare for a general election battle against then-President Donald Trump, candidate Biden unveiled his initial proposal for debt cancellation of $10,000 per borrower, with no mention of an income cap.

President Biden narrowed his campaign promise in recent months by embracing the income limit as soaring inflation took a political toll and as he aimed to head off political attacks that the cancellation would benefit those with higher take-home pay. But Democrats, from members of congressional leadership to those facing tough re-election bids this November, have pushed the administration to go as broad as possible on debt relief, seeing it in part as a galvanizing issue, particularly for Black and young voters this fall.

The frenzied last-minute lobbying continued Tuesday even as President Biden remained on his summer vacation. Senate Majority Leader Chuck Schumer, D-N.Y., one of the loudest advocates in recent years for canceling student loan debt, spoke privately on the phone with Biden, imploring the president to forgive as much debt as the administration can, according to a Democrat with knowledge of the call.

In his pitch, Schumer argued to President Biden that doing so was the right thing to do morally and economically, said the Democrat, who asked for anonymity to describe a private conversation.

Inside the administration, officials have discussed since at least early summer forgiving more than $10,000 of student debt for certain categories of borrowers, such as Pell Grant recipients, according to three people with knowledge of the deliberations. That remained one of the final variables being considered by President Biden heading into Wednesday’s announcement.

Democrats are betting that President Biden, who has seen his public approval rating tumble over the last year, can help motivate younger voters to the polls in November with the announcement.

Although President Biden’s plan is narrower than what he initially proposed during the campaign, “he’ll get a lot of credit for following through on something that he was committed to,” said Celinda Lake, a Democratic pollster who worked with Biden during the 2020 election.

She described student debt as a “gateway issue” for younger voters, meaning it affects their views and decisions on housing affordability and career choices. A survey of 18- to 29-year-olds conducted by the Harvard Institute of Politics in March found that 59% of those polled favored debt cancellation of some sort — whether for all borrowers or those most in need — although student loans did not rank high among issues that most concerned people in that age group.

Some advocates were already bracing for disappointment.

“If the rumors are true, we’ve got a problem,” Derrick Johnson, the president of the NAACP, which has aggressively lobbied President Biden to take bolder action, said Tuesday. He emphasized that Black students face higher debut burdens than white students.

“It’s about trust in politics, in government, in our system. It’s also about trust in the individual, which in this case is President Biden.”

Combined with fears about expanding abortion restrictions and Trump’s reemergence on the political scene, Della Volpe said student debt forgiveness “adds an additional tailwind to an already improving position with young people.”

Republicans, meanwhile, see only political upside if President Biden pursues a large-scale cancellation of student debt ahead of the November midterms, anticipating backlash for Democrats — particularly in states where there are large numbers of working-class voters without college degrees. Critics of broad student debt forgiveness also believe it will open the White House to lawsuits, on the grounds that Congress has never given the president the explicit authority to cancel debt on his own.

“My neighbor, a detective, worked 3 jobs (including selling carpet) & his wife worked to make sure their daughter got quality college degree w/no student debt,” Rep. Kevin Brady, R-Texas, the top Republican on the House Ways and Means Committee, tweeted Tuesday. “Big sacrifice. Now their taxes must pay off someone else’s student debt?”

President Biden’s elongated deliberations have sent federal loan servicers, who have been instructed to hold back billing statements while he weighed a decision, grumbling.

It increases the risk that some borrowers will inadvertently be told they need to make payments, he said.

“At this late stage I think that’s the risk we’re running,” he said. “You can’t just turn on a dime with 35 million borrowers who all have different loan types and statuses.”

Additional reporting by The Associated Press.

Source: newsy.com

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Mental Health Curriculum In Schools For Children

The Biden administration is working with state school districts to offer mental health services to children K-12.

The Biden administration is looking to make good on a multi-million dollar promise to address the nation’s mental health care crisis, starting with young people. This week, thousands of students are heading back to the classroom and officials want to make sure schools have all the supplies they need and that goes beyond pencils and paper.

Monday in Delaware marked a call to action.

“This is a 911 moment,” said Senator Lisa Blunt Rochester.

At Nemours Children’s Health in Wilmington, administration officials and members of Congress heard from the people at the center of the mental health crisis.

“When my school counselors found out about the way that I was feeling, they provided me with weekly scar checks, instead of providing me with the counseling that I needed due to a lack of resources,” said Andrew Celio, a student.

The event is among a series of stops across the country, bringing attention to the $140 million set aside for schools to hire additional mental health professionals; hoping to meet kids where they are.

It was also a chance to hear some solutions being passed in the state, like a mental health curriculum for grades K-12.

Valerie Longhurst is a Delaware state representative.

“It starts in Kindergarten, if you provide the services as we understand them, we break that stigma. It is okay to not be okay,” Longhurst said.

While mental health challenges among young people have been on the rise for some time, the past few years have brought unique challenges.

“I remember what it felt like, Andrew, to be a teenager then, pre-social media, pre-pandemic, pre-George Floyd, us witnessing a murder in front of our eyes, bullying, cyber-bulling all of these things didn’t exist then and I knew how hard it was,” said Blunt Rochester.

According to the CDC, in 2021, 37% of high school students reported they experienced poor mental health during the COVID-19 pandemic, and 44% reported persistent feelings of sadness or hopelessness during the past year.

“Pretty clear message that we need help; we need you. We need you now. The beauty of what we heard is that we are listening,” said Xavier Becerra, the U.S. Secretary of Health and Human Services.

Besides the need for mental health care officials in schools; there is a specific need for bilingual and minority health providers. Senator Chris Coons told Newsy they hope to encourage more diverse students to pursue higher ed degrees in mental health, a long term goal that starts with helping people pay off student loans.

“Part of this is public service loan forgiveness. There is robust loan forgiveness available, the state of Delaware already has the inspired grants that make a 4-year education at Delaware State University almost free but there is more we can and should do,” said Coons.

Source: newsy.com

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How The Federal Reserve’s Rate Hikes Affect Your Finances

Answers to some of the most common questions about the impact of the rate hike.

Higher mortgage rates have sent home sales tumbling. Credit card rates have grown more burdensome, and so have auto loans. Savers are finally receiving yields that are actually visible, while crypto assets are reeling.

The Federal Reserve’s move last week to further tighten credit raised its benchmark interest rate by a sizable 0.75 percentage point for a second straight time. The Fed’s latest hike, its fourth since March, will further magnify borrowing costs for homes, cars and credit cards, though many borrowers may not feel the impact immediately.

The central bank is aggressively raising borrowing costs to try to slow spending, cool the economy and defeat the worst outbreak of inflation in two generations.

The Fed’s actions have ended, for now, an era of ultra-low rates that arose from the 2008-2009 Great Recession to help rescue the economy — and then re-emerged during the brutal pandemic recession, when the Fed slashed its benchmark rate back to near zero.

Chair Jerome Powell hopes that by making borrowing more expensive, the Fed will succeed in slowing demand for homes, cars and other goods and services. Reduced spending could then help bring inflation, most recently measured at a four-decade high of 9.1%, back to the Fed’s 2% target.

Yet the risks are high. A series of higher rates could tip the U.S. economy into recession. That would mean higher unemployment, rising layoffs and further downward pressure on stock prices.

How will it all affect your finances? Here are some of the most common questions being asked about the impact of the rate hike:

I’M CONSIDERING BUYING A HOUSE. WHAT’S HAPPENING WITH MORTGAGE RATES?

Higher interest rates have torpedoed the housing market. Rates on home loans have nearly doubled from a year ago to 5.5%, though they’ve leveled off in recent weeks even as the Fed has signaled that more credit tightening is likely.

That’s because mortgage rates don’t necessarily move in tandem with the Fed’s increases. Sometimes, they even move in the opposite direction. Long-term mortgages tend to track the yield on the 10-year Treasury note, which, in turn, is influenced by a variety of factors. These factors include investors’ expectations for future inflation and global demand for U.S. Treasurys.

Investors expect a recession to hit the U.S. economy later this year or early next year. This would force the Fed to eventually cut its benchmark rate in response. The expectation that the Fed will have to reverse some of its hikes next year has helped reduce the 10-year yield, from 3.5% in mid-June to roughly 2.8%.

WILL IT BE EASIER TO FIND A HOUSE?

Sales of existing homes have dropped for five straight months, while new home sales plunged in June. If you’re financially able to go ahead with a home purchase, you’re likely to have more choices than you did a few months ago.

In many cities, the options are few. But the number of available houses nationwide has started to rise after falling to rock-bottom levels at the end of last year. There are now 1.26 million homes for sale, according to the National Association of Realtors, up 2.4% from a year ago.

I NEED A NEW CAR. SHOULD I BUY ONE NOW?

The Fed’s rate hikes typically make auto loans more expensive. But other factors also affect these rates, including competition among car makers, which can sometimes lower borrowing costs.

Wednesday’s rate hike won’t likely affect new-vehicle sales much because those buyers are mainly affluent customers who won’t be squeezed by a relatively small uptick in monthly payments, said Jonathan Smoke, chief economist for Cox Automotive. By contrast, he said, used-car buyers with weaker credit who pay higher loan rates could be hurt.

“Many used-vehicle buyers are already acutely feeling the impacts of higher prices for energy, food and rent,” Smoke said.

Used vehicle prices have begun to fall, he noted, and vehicle availability is beginning to return to normal levels.

The full amount of a Fed rate hike doesn’t always pass through to auto loans, according to Bankrate.com. New 60-month loans for new vehicles have risen about a percentage point this year to an average of 4.86%, Bankrate.com says, while a 48-month used-vehicle rate rose just under 1 point to 5.38%.

WHAT WILL HAPPEN TO MY CREDIT CARD?

For users of credit cards, home equity lines of credit and other variable-interest debt, rates would rise by roughly the same amount as the Fed hike, usually within one or two billing cycles. That’s because those rates are based in part on banks’ prime rate, which moves in tandem with the Fed.

Those who don’t qualify for low-rate credit cards might be stuck paying higher interest on their balances. The rates on their cards would rise as the prime rate does.

The Fed’s rate increases have already sent credit card borrowing rates above 20% for the first time in at least four years, according to LendingTree, which has tracked the data since 2018.

HOW WILL THIS AFFECT MY SAVINGS?

You can now earn more on bonds, CDs, and other fixed income investments. And it depends on where your savings, if you have any, are parked.

Savings, certificates of deposit and money market accounts don’t typically track the Fed’s changes. Instead, banks tend to capitalize on a higher-rate environment to try to boost their profits. They do so by imposing higher rates on borrowers, without necessarily offering any juicer rates to savers.

But online banks and others with high-yield savings accounts are often an exception. These accounts are known for aggressively competing for depositors. The only catch is that they typically require significant deposits.

HOW HAVE THE RATE HIKES INFLUENCED CRYPTO?

Like many highly valued technology stocks, cryptocurrencies like bitcoin have sunk in value since the Fed began raising rates. Bitcoin has plunged from a peak at about $68,000 to $21,000.

Higher rates mean that safe assets like bonds and Treasuries become more attractive to investors because their yields are now higher. That, in turn, makes risky assets like technology stocks and cryptocurrencies less attractive.

All that said, bitcoin is suffering from its own problems that are separate from economic policy. Two major crypto firms have failed. The shaken confidence of crypto investors is not being helped by the fact that the safest place you can park money now — bonds — seems like a safer move.

WILL MY STUDENT LOAN PAYMENT GO UP?

Right now, payments on federal student loans are suspended until Aug. 31 as part of an emergency measure that was put in place early in the pandemic. Inflation means that loan-holders have less disposable income to make payments. Still, a slowed economy that reduces inflation could bring some relief by fall.

Depending on the state of the economy, the government may choose at the end of summer to extend the emergency measure that’s deferring the loan payments. President Joe Biden is also considering some form of loan forgiveness. Borrowers who take out new private student loans should prepare to pay more. Rates vary by lender but are expected to increase

Additional reporting by The Associated Press.

Source: newsy.com

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