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    How to get your student debt forgiven under a state program. Some are ‘really generous,’ expert says

    With the fate of federal student loan forgiveness programs facing uncertainty, borrowers should explore the many state-level relief options available, experts say.
    “Most states have [a program], especially if you’re in health care,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.

    Halfpoint Images | Moment | Getty Images

    With the federal government’s ability to forgive student debt up in the air, experts say it would behoove borrowers to explore the many state-level relief programs available.
    “Most states have one, especially if you’re in health care,” said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit that helps borrowers navigate the repayment of their debt.

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    A student loan forgiveness initiative for nonprofit and hospital nurses in Minnesota has gotten some attention of late, because Vice President Kamala Harris’ running mate, Tim Walz, signed it into law last year. Under that program, registered nurses who work at a nonprofit or public hospital in Minnesota are eligible for up to $12,000 in student debt relief.
    Different states have programs focusing on various fields.
    “There’s a bunch for teachers and public defenders, and some oddball ones,” Mayotte added. “And some of them are really generous.”

    What’s happening with federal forgiveness programs

    Currently, the federal government’s ability to forgive student debt is in jeopardy.

    The Biden administration’s new repayment Saving on a Valuable Education plan, known as SAVE, that leads to expedited forgiveness for certain borrowers is on hold amid a barrage of Republican-led legal challenges. President Joe Biden’s broad-based forgiveness effort could be finalized this fall, but is likely to end up in court, too.

    State forgiveness often based on occupation

    Most state-level student debt forgiveness programs offer relief to borrowers in specific occupations, said higher education expert Mark Kantrowitz.
    “So they should look for forgiveness based on their job, especially for their state,” Kantrowitz said.
    For example, in California, licensed mental health professionals who work at certain facilities may be eligible for up to $15,000 in student loan assistance. (The next application deadline is Aug. 26.)
    The Maine Dental Education Loan Repayment Program offers a total of $100,000 in student loan repayment assistance to dentists in underserved areas of the state.

    One benefit of the state loan forgiveness programs, Mayotte pointed out, is that private student loans are often eligible. The federal government, meanwhile, excludes private loans from its relief.
    Other state programs may offer forgiveness based on your finances rather than your occupation.
    In New York, the Get On Your Feet Loan Forgiveness Program, rolled out in 2015, allows certain residents to get loan forgiveness for up to 24 months of their payments. Among other qualification requirements, borrowers must have an adjusted gross income of less than $50,000 a year.
    The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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    Social Security is a key issue for voters, CNBC poll finds. Take these 5 steps to maximize your benefits

    YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

    Most Americans rank Social Security as “one of the top” issues or a “very important” issue determining who they will vote for in the upcoming U.S. presidential election, according to a new CNBC poll.
    Research shows that many people don’t understand how the Social Security system works or how they can maximize their benefits.

    Jj Gouin | Istock | Getty Images

    Most Americans rank Social Security as “one of the top” issues or a “very important” issue determining who they will vote for in the upcoming U.S. presidential election, according to a new CNBC poll.
    Social Security reform is also a top concern, according to a separate survey from the Nationwide Retirement Institute. The majority of respondents said that a candidate’s stance on the topic would be a major factor in their vote.

    CNBC polled 1,001 registered voters July 31-Aug. 4. Nationwide’s poll, conducted April 19-May 13, surveyed 1,831 adults “who currently receive or expect to receive Social Security.”
    Absent action from Congress, the trust fund that pays Social Security benefits is due to run out in 2033. At that time, only 79% of benefits will be payable.
    With uncertainty about the future funding of this government program, which guarantees a lifetime income stream in retirement, 72% of adults worry the Social Security system will run out of funding in their lifetime, according to Nationwide.
    In the 11 years that Nationwide’s annual survey has been conducted, “we haven’t seen that level of interest in Social Security reform and in wanting to make sure that Social Security is going to be there again,” said Tina Ambrozy, a senior vice president at Nationwide. “That spans across generations; even millennials are one of the most concerned groups.”

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    Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

    Social Security benefits are a major source of income for nearly every retiree. This year, almost 68 million Americans will receive a monthly Social Security benefit, totaling about $1.5 trillion in benefits paid. Retired workers receive an average of $1,918 per month, according to the agency.

    Yet research shows that many people don’t understand how the Social Security system works or how they can maximize their benefits. “When individuals don’t understand it, but yet they’re concerned about it, that creates an incredible amount of anxiety,” Ambrozy said.
    Here are five key steps to help ease the stress and help you plan how to maximize your Social Security benefits in retirement:

    1. Know your full retirement age

    Some people may confuse the full retirement age of Social Security — when you’re eligible for 100% of your benefits earned — with the Medicare eligibility age of 65. According to the Nationwide survey, one-third of Americans are uncertain about the age at which they are or were eligible for full Social Security retirement benefits. Here’s what you need to know:
    For most people retiring today, their full retirement age is somewhere between 66 and 67.

    If you were born between 1943 and 1954, your full retirement age is 66.
    If you were born in 1960 or later, your full retirement age is 67.
    The full Social Security retirement age gradually increases from 66 to 67 for people born between 1954 and 1960.

    2. Determine the impact of when you claim benefits

    The earliest age at which you are eligible for Social Security benefits is 62, but you won’t receive full benefits until your full retirement age. If you claim Social Security before that point, your benefits will be permanently reduced. For example, if you claim benefits at 62, and your full retirement age is 67, your benefit could be reduced by as much as 30%. By waiting until full retirement age, you can receive up to 100% of the benefits you’ve earned.
    Waiting until age 70 gets you the biggest benefit payments. If you delay claiming Social Security retirement benefits past your full retirement age and up to age 70, you could receive an 8% benefit increase each year. Still, some experts say waiting may not be wise if you’re in poor health or really need the money.

    3. Get a benefits estimate from ssa.gov.

    Only 11% of Americans who aren’t retired say they know exactly how much in benefits they stand to receive, according to new research from the National Institute on Retirement Security. Yet you don’t have to be retired or near retirement to start gauging how much income in Social Security benefits you may be eligible to receive.
    You can double-check your full retirement age and get a statement with your earnings history and estimated retirement benefits from ages 62 to 70 by creating a “My Social Security” account on the Social Security Administration’s website at ssa.gov. If you’re 60 or older and don’t have a “My Social Security” account, you’ll get a statement by mail three months before your birthday.
    Even if you’re decades away from retirement, this statement will still give you an idea of how much of your income may be replaced by Social Security, as long as you continue to work and make wages that are in line with inflation.
    “An exact amount can’t really be determined until you’re retired, but you can get a pretty reliable estimate each year from the Social Security Administration,” said NIRS research director Tyler Bond.

    4. Fix any errors in your earnings history

    One important reason to check Social Security benefit statements is to ensure that there are no errors in your earnings history. It’s a good idea to review your Social Security statement annually to double-check your wage history as it is updated, experts say. Mistakes may be less likely for W-2 workers, but if you are self-employed or hold multiple jobs in one year, errors can happen.
    To have your earnings record corrected, you can take your W-2 form, pay slip or tax return, including Schedule SE if you’re self-employed, to your local Social Security Administration office. To schedule an appointment or get help by phone, call the agency’s help line at 1-800-772-1213. You may also be able to request a correction online at ssa.gov.

    Before entering any information for the Social Security Administration online, make sure the link is to a secure “.gov” website. Don’t just click on email links; instead, enter “SocialSecurity.gov” or “SSA.gov” in the search address bar.

    5. Coordinate Social Security benefits with other assets

    It’s important to think about what role Social Security benefits will play in your life in retirement.
    List all the potential retirement resources available to you, including pensions, 401(k) or other workplace plan savings, individual retirement accounts, or IRAs, and other financial resources, such as proceeds from a home sale. That can help you figure out the role Social Security benefits will play in your overall picture for retirement.
    Some experts say 401(k), 403(b) and other workplace savings accounts can serve as a bridge to delay claiming Social Security benefits. For example, if you have a modest amount of 401(k) savings and you plan to withdraw about 4% a year from that account in retirement, you may choose to use that money to pay expenses for a few years and wait to claim your Social Security benefits.
    “If you can delay claiming until after your full retirement age, you’ll permanently lock in a higher benefit amount,” Bond said.
    If you’re married, it may be beneficial to consider whether it makes more financial sense for the higher-earning spouse to delay claiming Social Security or whether to take it early if one spouse is in poor health. Working through various scenarios with a financial professional may be helpful.

    If you’re divorced but were married to a higher-earning ex-spouse for at least 10 years, don’t forget that you may be entitled to the spousal benefit on their record — and you don’t even need to contact them to find out that amount.
    Although Social Security was never intended to be the sole source of retirement income, for many retirees it’s all the money they have. Factoring in other potential sources of retirement income should be a part of a broader financial plan that is in place long before you retire, Ambrozy said. “It’s never too early to have a plan.”
    SIGN UP: Money 101 is an eight-week newsletter series to improve your financial wellness. For the Spanish version, Dinero 101, click here. More

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    Trump and Harris both want no taxes on tips. Here’s why policy experts don’t like the idea

    Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
    In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
    If enacted, the plan could face administrative hurdles and be costly, experts say.

    U.S. Vice President Kamala Harris and Republican presidential nominee and former U.S. President Donald Trump.
    Brendan Mcdermid | Elizabeth Frantz | Reuters

    Former President Donald Trump and Vice President Kamala Harris both want to end taxes on tips — and some policy experts have already criticized the idea.
    Harris expressed support for tax-free tips at a rally on Saturday in Las Vegas. Her comments come roughly two months after Trump shared a similar idea, also at a rally in the service economy hotbed.

    Nevada is a key battleground state where the hospitality sector accounts for roughly one-quarter of the workforce, according to the state’s June employment data.
    “It is my promise to everyone here, when I am president, we will continue to fight for working families, including to raise the minimum wage and eliminate taxes on tips for service and hospitality workers,” Harris said at her rally.
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    In 2023, there were roughly 4 million U.S. workers in tipped occupations, representing 2.5% of all employment, according to estimates from The Budget Lab at Yale University.
    Generally, tipped workers are lower-income individuals, and some 37% weren’t subject to federal income tax in 2022, the report found. As a rule, employed workers who make less than their standard deduction don’t owe federal income taxes.

    Not taxing tips is “a fairly narrowly targeted tax exemption,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
    Still, the idea has some bipartisan support in Congress with a bill introduced in the Senate in July and a House companion bill.

    No tax on tips ‘fails every score’

    Despite support for no tax on tips from Harris and Trump, some experts have voiced concerns about future plans. 
    Experts consider equity, efficiency and revenue when weighing policy, explained Steve Rosenthal, senior fellow at the Urban-Brookings Tax Policy Center. “The striking thing about this proposal is it fails every score that you might make for tax policy.”

    If enacted, the idea could face administrative hurdles and possible abuse, experts say. For example, some workers could try to reclassify wages as tips to avoid the tax.
    After Harris’ weekend comments, a campaign official told CNBC that, if elected, Harris would work with Congress to enact a law with an income limit and requirements to prevent “hedge fund managers and lawyers from structuring their compensation in ways to try to take advantage of the policy.”
    Trump’s campaign did not respond to CNBC’s request for comment.

    The striking thing about this proposal is it fails every score that you might make for tax policy.

    Steve Rosenthal
    Senior fellow at the Urban-Brookings Tax Policy Center

    The idea of not taxing tips could also present a fairness issue for similar low-income workers who don’t earn tips, Rosenthal said.
    “Why should someone whose compensation is a mix of tips and wages be better off after taxes than somebody who just gets wages?” he added.

    The cost of no tax on tips

    There are also critiques about the cost of the idea, particularly amid concerns about the federal budget deficit.
    At Saturday’s rally, Harris called for no tax on tips and a higher minimum wage. The two ideas could collectively raise the deficit by $100 billion to $200 billion over 10 years, assuming the minimum wage increased from $7.25 to $15 per hour, according to an estimate from the Committee for a Responsible Federal Budget.

    It’s unclear whether Harris’ and Trump’s plans would include an exemption from payroll taxes or just federal income taxes, which could impact revenue.
    The cost could also be higher “depending on behavioral assumptions and avoidance questions,” Watson from the Tax Foundation said.

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    Home equity is ‘not like bread,’ expert says — ‘It won’t go stale.’ Here’s when it makes sense to tap it

    Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there,” he said.
    But if you do have major home improvements or repairs, tapping home equity is a viable solution, experts say.

    Iuliia Isaieva | Moment | Getty Images

    Homeowners are sitting on $17 trillion in equity as of the end of the first quarter of 2024, according to CoreLogic. The average homeowner gained $28,000 in equity compared to a year earlier.
    For many people, there’s no need to touch that money.

    Home equity is “not like bread,” said Greg McBride, chief financial analyst at Bankrate. “It won’t go stale if it just sits there.”
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    There is one exception, however: If you need to make major home improvements or repairs, tapping home equity can be a viable solution, experts say.

    Home equity is ‘a less expensive borrowing option’

    Among polled homeowners, 55% see home improvements or repairs as a good reason to tap home equity, according to a new survey by Bankrate. The site surveyed 2,294 U.S. adults, including 1,133 homeowners, in late June.
    Using home equity is “certainly a less expensive borrowing option than resorting to personal loans or credit cards,” McBride said. 

    As of Aug. 7, the current average home equity loan interest rate is 8.59%, according to Bankrate. The average HELOC interest rate is 9.37%.
    To compare, the average personal loan interest rate is 12.38% , Bankrate found. The average credit card interest rate stands at 24.92%, according to LendingTree.

    While cash from savings continues to be the most common way homeowners fund renovation projects, or 83%, credit card use has increased, according to the 2024 U.S. Houzz & Home Study. Houzz surveyed 33,830 homeowners of ages 18 and older from Jan. 19 to Feb. 27.
    About 37% of homeowners paid for their repair projects with credit cards, up from 28% who did so in 2022, Houzz found.
    While tapping equity is cheaper, it still has risks. Rates are higher given the Federal Reserve’s spate of rate hikes, and you need to go in with a plan to pay off the debt.

    Remodeling can add value

    Using home equity to invest in your home can make sense, said Jessica Lautz, deputy chief economist at the National Association of Realtors. Such projects not only help preserve the house, they may even enhance its value, boosting profits when you eventually sell.
    The highest percentage cost recovered for exterior projects was from new roofing, at 100%, according to the latest Remodeling Impact Report by NAR. For interior projects, the highest percentage cost recovered was from refinishing hardwood floors, at 147%, and installing new wood flooring, at 118%, NAR found.

    “We’ve found that hardwood floors have more universal appeal,” said Lautz. “For something like a roof, it’s a big project. … People may want to have that completed before they move into a home, make sure that the roof is in good working order.”

    Tapping home equity for vacations, big purchases

    More than 1 in 10 millennial homeowners said vacations or buying big-ticket items are good reasons to tap your home equity, according to Bankrate. But experts say this move is a “don’t.”
    “If you have to finance the cost of your vacation, you can’t afford the vacation,” McBride said.
    Plus, big-ticket items, such as a car or electronics, are depreciating in value from the point of purchase, he explained.
    “You’re not only buying a depreciating asset, but you’re financing the purchase of that depreciating asset,” McBride added.

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    FAFSA rollout was ‘a stunning failure,’ college aid expert says. Here’s how next year will compare

    While still resolving the challenges that have plagued this year’s rollout, the Education Department said the launch of the 2025-26 FAFSA will also be delayed.
    For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
    Reports show students and parents are turning to students loans even more.

    By most accounts, the rollout of the new Free Application for Federal Student Aid, better known as FAFSA, was disastrous from the start. Even now, some college students don’t know the status of their aid awards for the fall.
    “The Department’s poor planning has led to a stunning failure: Some college students might not have financial aid dollars in their hands in time to start classes in the next few weeks,” said Beth Maglione, interim president and CEO of the National Association of Student Financial Aid Administrators.

    To avoid the same issues going forward, the U.S. Department of Education recently announced that the launch of next year’s federal student aid application form will also be delayed.

    A ‘new approach’ for the 2025-26 FAFSA

    The 2025-26 FAFSA will be available to applicants on or before Dec. 1, following a phased rollout starting on Oct. 1 to “identify and resolve the kind of system errors that can derail millions of students,” the Education Department said. (Typically, students have access to the coming academic year’s form in October.)
    “Following a challenging 2024-25 FAFSA cycle, the Department listened carefully to the input of students, families, and higher education institutions, made substantial changes to leadership and operations at Federal Student Aid, and is taking a new approach this year that will significantly improve the FAFSA experience,” U.S. Secretary of Education Miguel Cardona said in a statement. 
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    Higher education expert Mark Kantrowitz said he is skeptical that the department will be able to address all of the challenges that have plagued this year’s federal student aid application in the months ahead, not to mention next year’s form.

    “Given that there are still more than two dozen unresolved issues from the 2024-25 FAFSA, it remains to be seen whether the 2024-25 FAFSA will be fully implemented by October 1 — or December 1 — let alone the 2025-26 FAFSA,” Kantrowitz said. 
    “Just because the U.S. Department of Education says that it will get it done by December 1 doesn’t mean that they will get it done in time,” he added.

    Families ‘are falling back on borrowing for college’

    For many families, financial aid is crucial when it comes to covering college costs, which have now crept into the six figures.
    The FAFSA serves as the gateway to all federal aid money, including federal student loans, work study and especially grants — which have become the most crucial kind of assistance because they typically do not need to be repaid.

    In part because of issues with the new form, students are now relying on loans more, according to Sallie Mae’s recent How America Pays for College report. The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has also grown, other studies show.
    “We’ve really seen that in times of economic hardship, [families] are falling back on borrowing for college,” said Jennifer Berg, vice president of public affairs for market research firm Ipsos, which partnered with Sallie Mae on the report.
    “That’s when the FAFSA really plays a role,” Berg said.

    To that end, it’s more important that the FAFSA is fully functional for next year, even if it means another delayed start, most experts say.
    “The fact that we are still, to this day, dealing with the aftershocks of this year’s FAFSA rollout shows just how imperative it is that the process is thoroughly tested from end to end,” said the National Association of Student Financial Aid Administrators’ Maglione.
    Although a reliable FAFSA trumps the postponement, “we acknowledge this is a difficult trade-off between functionality and the release date,” added Kim Cook, CEO of the National College Attainment Network — but it’s worth it as long as the FAFSA is fully operable by Dec. 1.
    “Our students need to know they can afford college and stay on track to enroll,” Cook said.

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    Op-ed: Small caps could be in for a revival. Here’s why

    A long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
    The long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms.
    It could also be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from further rotations out of Big Tech.

    Traders work on the floor of the New York Stock Exchange during afternoon trading on July 26, 2024.
    Michael M. Santiago | Getty Images

    Stocks have endured a brutal stretch, with the Nasdaq now flirting with correction territory since reaching an all-time high on July 10. Even so, a long-awaited rotation out of tech and into small caps — a trend that kicked off a few weeks ago — could still have legs.
    While all indexes have taken a beating in recent trading sessions, the Russell 2000 had shown signs of life before the so-called carry trade and worries about the U.S. economy disrupted its best run in years. A small-cap revival would unequivocally be a positive thing.

    Indeed, coming after spikes in the S&P 500 and Nasdaq powered by a handful of companies perceived to benefit most from the boom in artificial intelligence, the increased market breadth may provide stocks the boost they need to overcome the recent rough patch.
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    Two things need to happen for small caps to regain momentum.
    The first is that the Federal Reserve will have to slash rates soon. That seems like a sure thing, with futures markets pricing in a probability of 100% of that happening in September. Notably, this level of certainty is largely responsible for sparking the rotation mentioned above in the first place. 
    Secondly, we’ll need to see continued economic growth. This is obviously less certain, with July’s labor market data raising some concerns. Yet, the report is not as bad as some have made it out to be. Remember, recessions typically start with layoffs, which is not what the jobs report showed. The issue was more related to demand.

    Therefore, the long-talked-about soft landing may still be possible and rate cuts could deliver a cyclical recovery that benefits small firms. The catch, though, is that these companies experience more volatility than their larger peers.
    That’s why a fund tracking small caps is a smart bet. The iShares Russell 2000 ETF (IWM) is the largest one, which, along with the fact that it includes diversified exposure to many small companies, means the ups and downs are more muted.
    However, it could be worth taking individual positions in a handful of midcap companies that have underperformed this year but could benefit from a further market rotation. One is Fabrinet (FN), a good way to play the increasing importance of data centers since it’s a leading contract manufacturer of optical components.
    Silicon Laboratories (SLAB) and Synaptics (SYNA) are also attractive. Each produces discrete semiconductors, which, unlike integrated circuits, are individual units that perform specific functions. That’s an advantage because they can be more easily customized. 
    Finally, Monday.com (MNDY) is also worth considering. It provides small- and medium-size businesses with a cost-effective, multipurpose alternative to expensive, single-use products such as Salesforce and QuickBooks.

    One reason to doubt that a prolonged recovery for cyclically sensitive small caps is in the works: the price of copper. The metal usually goes up when cyclicals are poised for an extended rally. Copper prices, however, have fallen steeply since May.
    Still, the performance differential between the Russell 2000 and S&P 500 during the spring reached 30 percentage points, a record. Since then, it has only recouped about 6% of that. Moreover, outside of the “Magnificent Seven”, valuations are reasonable. 
    Therefore, once all the recent smoke clears and if it becomes apparent that policymakers can pull off a soft landing by cooling inflation and avoiding a recession, rates will come down and the rotation will continue, giving small and midcaps staying power.
    — Andrew Graham, founder and managing partner of Jackson Square Capital. More

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    ‘Record-breaking backlog’ leads to $1.1 billion in improper Social Security payments, report finds

    A “record-breaking backlog” of pending actions has led to an estimated $1.1 billion in improper beneficiary payments, according to a new report.
    Experts say the Social Security Administration needs more funding in its budget to properly address a “customer service crisis.”

    zimmytws | iStock | Getty Images

    The Social Security Administration faces a “record-breaking backlog” of open cases, leading to approximately $1.1 billion in projected improper payments to beneficiaries, according to a new report from the Social Security Administration Office of the Inspector General.
    The SSA OIG, which provides independent oversight of the agency’s programs and operations, found the agency’s backlog of so-called pending actions climbed to an all-time high of 5.2 million as of February.

    Of those that were improper payment cases, the average processing time was 698 days, according to a sample evaluated by SSA OIG.
    Improper payment includes overpayments, where beneficiaries are paid more than they should be, as well as underpayments, where payments to beneficiaries may be erroneously reduced.

    If the pending cases had been resolved immediately, about 528,000 beneficiaries would have been improperly paid about $534 million, the report estimated.
    After 12 months, that improper payment amount for those beneficiaries rose to about $756 million. At the time of the SSA OIG’s review, many of the cases had been outstanding for more than 12 months, bringing the improper payment amount to the reported $1.1 billion figure.

    Some overpayments may be preventable

    Earlier this year, the Social Security Administration put in place new policies to make it easier for beneficiaries to resolve overpayment issues with the agency, loosening previous rules that called for clawing back 100% of the money beneficiaries received.

    However, the agency’s workflow still makes it vulnerable to inaccurate payments, which is worsened by processing delays.
    The SSA OIG report’s findings are based on pending actions at the SSA’s processing centers, which handle appeal decisions, collect debt, correct records and process benefit decisions.
    “The longer it takes SSA to process [processing center] pending actions, the longer beneficiaries wait for underpayments due or they receive larger overpayments to pay back,” the SSA OIG report said.

    Some incidents of overpayments may be preventable in cases where beneficiaries do not provide necessary information to the Social Security Administration in a timely fashion, said Paul Van de Water, senior fellow at the Center on Budget and Policy Priorities.
    However, other cases are just due to slow processing times by the agency, he said.
    “Whatever the source of the problem, getting the claims and adjustments processed more quickly would be advantageous,” Van de Water said.

    Improvements depend on ‘sustained adequate funding’

    Notably, the Social Security Administration met its performance measure goals for pending processing center actions in four of the six fiscal years between 2018 and 2023, according to the report.
    However, the agency was not able to meet its goals in two of the fiscal years in that time period due to unexpected staff reductions, increased workloads and less than expected overtime funding, according to the Social Security Administration.
    “The number of beneficiaries continues to grow while we have the lowest staffing levels across the agency in 25 years,” Dustin Brown, acting chief of staff at the Social Security Administration, wrote in a letter in response to the SSA OIG report.
    The Social Security Administration has more than 650 fewer employees working on processing center workloads than it did eight years ago, Brown added. During that time, the number of beneficiaries who rely on Social Security benefits has risen to almost 72 million, up from about 64 million, he said.
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    The Social Security Administration agreed with the recommendations that came out of SSA OIG’s report to develop a workload and staffing plan, to create performance measures for pending actions and to establish time frame targets to handle those workloads.
    However, the agency’s ability to successfully implement those recommendations will depend on “sustained adequate funding” to pay for hiring, overtime and improved technology, Brown wrote in his letter.
    The Social Security Administration has faced a “customer service crisis” that has prompted long phone hold times and waits for disability determinations in addition to inaccurate payments, Van de Water said.
    Unless the agency is given an adequate amount of funding in its budget, that crisis could worsen, Van de Water predicts.
    While a Senate proposal calls for increased funding for the agency for the fiscal year starting in October, a House version instead calls for cutting the agency’s funding.
    “Everyone wants to get rid of these long processing delays, but as long as the budget is so tightly constrained, that’s going to be very difficult to do,” Van de Water said. More

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    Vance wants to raise the child tax credit to $5,000. Here’s why that could be difficult

    Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, wants to raise the child tax credit to $5,000.
    Vance’s plan would be a “relatively large expansion” compared with the current benefit, worth $2,000 per eligible child for 2024, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
    Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.

    The Republican vice presidential candidate, Sen. JD Vance, speaks at a campaign rally at NMC-Wollard Inc. / Wollard International in Eau Claire, Wisconsin, Aug. 7, 2024.
    Adam Bettcher | Getty Images

    Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, wants to more than double the child tax credit. But the increase could be difficult to enact, policy experts say.
    “I’d love to see a child tax credit that’s $5,000 per child. But you, of course, have to work with Congress to see how possible and viable that is,” he said Sunday on CBS’ “Face the Nation.”

    Vance’s idea would be a “relatively large expansion” compared with the current benefit, worth up to a maximum of $2,000 per child for 2024, according to Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
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    Without action from Congress, the maximum child tax credit will drop from $2,000 to $1,000 once Trump’s 2017 tax cuts expire after 2025.
    During the pandemic, lawmakers temporarily increased the maximum child tax credit from $2,000 to either $3,000 or $3,600, depending on the child’s age. Families received up to half via monthly payments for 2021.
    The child poverty rate fell to a historic low of 5.2% in 2021, largely due to the credit’s expansion, according to a Columbia University analysis.

    Senate blocks a child tax credit expansion

    Vance’s comments come less than two weeks after Senate Republicans blocked an expanded child tax credit that passed in the House in January with bipartisan support.
    If enacted, the bill would have improved child tax credit access and retroactively boosted the refundable portion of the tax break, which could have triggered refund checks from the IRS.
    Democrats held the vote partially in response to Vance, who has positioned himself as a pro-family candidate. But the bill was expected to fail without a consensus from Senate Republicans on credit design.

    Vance wasn’t present for the recent Senate vote but described it as a “show vote” during the CBS interview, noting that it wouldn’t have passed even if he were there.
    Meanwhile, President Joe Biden and Vice President Kamala Harris will “continue to fight for an expanded child tax credit,” National Economic Advisor Lael Brainard said in a statement.
    Trump’s campaign did not immediately respond to CNBC’s request for comment.

    How Vance’s $5,000 child tax credit might work

    “The child tax credit is obviously a priority of Democrats across the country,” said Richard Auxier, a principal policy associate for the Urban-Brookings Tax Policy Center.
    However, Vance’s idea for expansion could be challenging as lawmakers face growing concerns over the federal budget deficit.
    Increasing the child tax credit to $5,000 could cost “somewhere in the neighborhood of about $3 trillion” over 10 years, the Tax Foundation’s Watson said.
    “The immediate question is, of course, how to navigate the cost,” on top of other proposed changes, including extensions for Trump’s expiring tax cuts, he said.
    There are also questions about Vance’s proposed child tax credit design, how Vance’s idea might work, including eligibility, work requirements and income phase-outs.
    “Many Republicans are very skeptical of moving the child tax credit in a direction that would remove the work requirements of the phase-in,” meaning they only want employed families to claim the credit, Watson said.
    Vance’s proposal could revive this debate within conservative and Republican circles as the 2025 deadline approaches, he said. More