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    Powell hints at potential interest rate cuts. What that means for homeowners hoping to refinance

    Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts in the near future during a speech on Friday.
    Mortgage rates closely track the 10-year Treasury yields, which are sensitive to changes in the economy, including monetary policy decisions.
    If the Fed does cut interest rates in September, “there could be some clear implications for mortgage interest rates,” said Jessica Lautz, deputy chief economist at the National Association of Realtors. 

    Chair of the US Federal Reserve Jerome Powell speaks during a news conference following the July 29-30 Federal Open Market Committee (FOMC) meeting in Washington, DC on July 30, 2025.
    Mandel Ngan | AFP | Getty Images

    Federal Reserve Chair Jerome Powell hinted at possible interest rate cuts in the near future during a speech on Friday at the central bank’s annual event in Jackson Hole, Wyoming. 
    “The shifting balance of risks may warrant adjusting our policy stance,” Powell said.

    That may bode well for homeowners who have been hoping to refinance mortgages with high rates, experts say.
    The central bank’s benchmark rate influences many borrowing costs for Americans. Mortgage rates closely track the 10-year Treasury yields, which are sensitive to changes in the economy, including monetary policy decisions.
    If the Fed does cut interest rates in September, “there could be some clear implications for mortgage interest rates,” said Jessica Lautz, deputy chief economist at the National Association of Realtors. 
    “That would certainly be good news,” she said. 
    More from Personal Finance:What’s keeping home buyers on the sidelinesMortgage rates have made a ‘substantial improvement’Student loan forgiveness remains unavailable under this repayment plan

    Lower mortgage rates often result in lower borrowing costs for home loans. For homebuyers who have struck out in the housing market due to a combination of high home prices and high interest rates, lower borrowing costs could help them secure better loan terms.
    Homeowners, meanwhile, “can refinance” to benefit from lower rates, Lautz said, or “they can also make a move” by becoming home sellers.
    Mortgage rates have generally declined in recent months despite some volatility. The average 30-year fixed rate mortgage was 6.58% for the week ended on Thursday, Aug. 21, flat from the week prior, according to Freddie Mac.
    Overall, experts say it is important for homeowners with higher-rate mortgages to start paying attention to interest rate movements, and preparing for opportunities to refinance.
    “Getting the preparation done beforehand will allow you to move quickly,” said Keith Gumbinger, vice president of mortgage website HSH.

    ‘You probably need to move quickly’

    Before you refinance, you want to make sure mortgage rates have “dropped sufficiently” for you to see real savings, Melissa Cohn, regional vice president of William Raveis Mortgage, recently told CNBC.
    There are different rules of thumb used to determine when rates have declined enough. According to Redfin’s Zhao, homeowners should consider a refi if rates are at least 50 basis points lower than their current rate.
    Rates can change fast, so it’s smart to know that target number and start preparing ahead of time, experts say.
    “If you’re looking to refinance, especially in this type of interest rate climate, you need to be opportunistic, which means you probably need to move quickly,” said Gumbinger. 
    Here are five key steps to take:

    1. Take a look at your credit reports

    First, pull your credit reports from all three bureaus — Equifax, Experian and TransUnion — to understand how information on them is influencing your credit score. You can request them from the major credit bureaus for free via annualcreditreport.com.
    Knowing this detail will help you get more accurate rate quotes from lenders, according to HSH. Unlike many other kinds of loans, with mortgages, lenders tend to look at scores from all three bureaus.
    If you notice any errors that could be inadvertently hurting your score, the sooner you fix them, the better, experts say. Reach out to the creditor as well as the credit reporting bureau, and explain the situation, said Gumbinger.
    However, it may take a bit of time to get the necessary parties involved and get the error fixed, he said. 

    2. Protect your credit score

    You want to protect your credit score as much as possible. Generally, the higher your credit score, the better terms and interest rates you qualify for.
    If you plan to refinance in the near future, avoid doing things that could hurt your score, such as applying for new credit cards or other lines of credit, or making sudden, big purchases that you can’t pay off quickly, and avoid making late payments.

    3. Estimate your level of home equity

    After checking your credit history, estimate how much equity you have in your home. If you have at least 20% equity in your home, you will get better loan terms from lenders, according to Bankrate.

    4. Start gathering essential documents

    If you believe you’ll benefit from a refi soon, HSH recommends gathering the following documents:

    Proof of homeowners insurance
    Proof of income and assets
    The latest copy of your existing mortgage statement
    A copy of your property’s deed to show legal ownership
    The latest property tax statement
    The names and addresses of your employers for the past two years

    You can also start putting aside funds to cover upfront costs associated with a refi, including an appraisal and credit reports. An appraisal fee can cost roughly $300 to $500, while a credit check fee is typically less than $30, according to Bankrate.

    5. Start contacting mortgage lenders

    There’s an advantage to beginning to research different lenders and what they offer before you actually want to refinance because interest rates move pretty quickly, said Gumbinger.
    Rather than starting from scratch when you’re ready to refi, gathering contact information and learning about different loans, rates and terms ahead of time can be helpful, experts say.
    “You don’t have to actually contact the lenders, but you can do some advance research to speed things along,” said Gumbinger.
    Once you know you’re “actually ready to pull the trigger,” then you can seriously shop around, said Cohn.

    Start with your existing lender, as they have a record history with you and may be able to offer a streamlined process, Gumbinger said. Once you shop around, you’ll want to pick the lender that offers you the best terms, such as the lowest interest rate, experts say. 
    You could even start getting on their contact lists and ask them to reach out to you once it’s good for you to refinance, said Zhao. 
    If you do refinance and interest rates happen to decline further, you can always repeat the process.
    Just make sure “there’s a big enough gap to make it worthwhile,” Gumbinger said. More

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    Are you smart enough to invest in private assets? Designing an investor test is tricky, experts say

    Investors in private markets often must be “accredited,” a status that has traditionally been determined through a wealth test.
    Lawmakers have proposed a knowledge test to allow more investors to hold private assets.
    Yet, many people have trouble passing a basic financial knowledge test.

    D3sign | Moment | Getty Images

    If you want to access investments typically reserved for the wealthy, regulators may someday let you — provided you can pass a test.
    That in itself may not be easy, considering that many consumers can’t pass a basic financial literacy quiz. But coming up with an exam that helps protect investors is also more difficult than it sounds, experts say.

    Lawmakers and regulators have for years kicked around the idea of a knowledge test to become a so-called accredited investor. Accredited investors are allowed to invest in a wider range of assets, including pre-IPO companies, private credit and equity, venture capital and hedge funds.
    The latest effort, which the U.S. House of Representatives approved last month, proposes having the Securities and Exchange Commission devise a test to determine if an investor has the knowledge and sophistication to understand the valuation and risk of these investments.
    It comes amid a broader push to make private-market assets — that is, investments that are not publicly traded — available to more investors.
    Private-market investments can be debt or equity in early-stage companies or startups, or private equity deals. Private investors owned Figma before its IPO, for example. These types of investments may offer higher returns, experts say, but they are also higher risk. 
    The risks to investors can be systemic issues, like a lack of regulatory guardrails in private markets, and also unique to each individual. That’s hard to test for.

    “The devil is in the details,” said James Andrus, a member of the SEC’s investor advisory committee. “It’s incredibly difficult to create such a test, and it’s unclear whether it offers substantial investor protection.”

    How investors become accredited now

    Currently, to qualify as accredited, investors generally need an annual earned income of $200,000 for individuals, or $300,000 for married couples. Individuals or couples can also qualify with a total net worth of at least $1 million, not including the value of their primary residence.
    Those wealth test thresholds are not pegged to inflation and haven’t changed since they were first developed in the 1980s. As a result, more households have become accredited over the years as wealth and incomes grow.

    Licensed investment professionals can also qualify as accredited, having passed either the Series 7, 65 or 82 exams. Those tests are aimed at ensuring professionals understand how to comply with securities laws and regulations.

    Designing an investor test could be tricky

    Financial advisors and other experts say a test for becoming an accredited investor would need to gauge understanding of different types of securities as well as the risks associated with private assets, including their limited liquidity and disclosures, subjective valuations and longer investment horizons.   
    “The test would essentially need to assess whether this person has that knowledge and understanding to manage investments that do not come with a layer of professional oversight or regulatory protections to rely on,” said Yanely Espinal, a director of educational outreach at Next Gen Personal Finance.

    More from Your Money:

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

    Pre-IPO, venture capital deals typically require minimums that can reach six figures. So an understanding of diversification, risk and how this type of investment should fit into a portfolio should be required knowledge, experts say. But it could be difficult to test for that understanding, they say.
    “We’ve been blessed with a lot of bull markets and high growth recently, but these things can go down and potentially default,” said certified financial planner Chelsea Ransom-Cooper, chief financial planning officer at Zenith Wealth Partners in Philadelphia. “I would just hope that whatever exams or structures are put in place are there to protect the end investor.”  
    Think about what it would mean to lose $20,00 in cash savings if your annual income is $80,610 (the median in the U.S.), said Espinal, a member of the CNBC Global Financial Wellness Advisory Board.
    “That would represent nearly a quarter of your annual income being lost to one investment,” she said. “That’s drastic.”
    Cryptocurrency adds another wrinkle. Crypto and private market assets are both considered alternative investments, and having a test for one but not the other may offer mixed messages for investors.
    “You cannot invest in a real company that happens to be private, but you can invest in something equally risky, crypto, because you don’t have the same accredited investor requirement,” said Andrus.

    Even basic financial literacy quizzes stump many

    Depending on how it’s written, an SEC knowledge test on private markets could be challenging for many people, if broader financial literacy tests are any indication.
    Take the FINRA Investor Education Foundation, which has a seven-question financial knowledge multiple-choice quiz, with questions about “fundamental concepts” including interest rates, inflation, debt and risk. More than 25,000 U.S. adults took the quiz as part of a broader financial capability study in 2024.
    Only 4% of respondents answered all seven questions correctly. Less than half, 46%, answered at least four correctly, little changed from 2021. 
    For example, when asked what happens to bond prices when interest rates increase — do they rise, fall or stay the same? — 42% of respondents said they didn’t know, while another 33% answered incorrectly. The correct answer is fall.

    Some accredited investors have ‘no freaking clue’

    Even investors who already qualify as accredited could welcome, and benefit from, such a test, experts say.
    “A lot of people with a lot of money do these deals and have no freaking clue what they’re getting into,” said Rich Diemer, the managing director of CAV Angels, a non-profit club housing an angel investment group catering to University of Virginia alumni. “They get in these deals because they know someone who’s in, or they know a group that’s in, or they heard of this unicorn or that unicorn.” 
    The CAV Angels club does a lot of work educating members, he said, helping them understand how to do due diligence and assess market potential, as well as what it takes to support an early-stage company. In the case of angel investing, companies often need additional funding.
    “It’s not like a one-and-done thing, said Diemer. “It’s a nursing along an early-stage company to a point where they then get handed off to VCs [venture capital firms].”
    Diemer said he supports the idea of a test to help younger people, who can demonstrate the knowledge but who haven’t built enough wealth, to qualify as accredited. More

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    How wealthy investors use ETFs to skirt capital gains taxes. The strategy is ‘like magic,’ advisor says

    ETF Strategist

    ETF Street
    ETF Strategist

    Wealthy investors avoid capital gains taxes by using a 351 conversion to transfer profitable assets to an exchange-traded fund.
    The strategy seeds ETFs before launch, and the original investor defers capital gains until selling their shares.
    The volume of 351 exchanges for ETFs has increased in recent years, but there are still limited options, experts say.

    PM Images | Getty Images

    After years of stock market growth, many investors are sitting on large profits in taxable accounts, which could trigger hefty capital gains when sold.  
    That bill can be significant for wealthy Americans, with a 20% top capital gains rate, plus 3.8% net investment income tax, depending on earnings.  

    One solution, known as a 351 conversion or exchange, allows higher earners to transform appreciated assets into shares of new exchange-traded funds. The strategy seeds ETFs before launch, and the original investor defers capital gains until selling their shares.
    For some investors, the strategy is “like magic,” said certified financial planner David Haas, president of Cereus Financial Advisors in Franklin Lakes, New Jersey.  

    More from ETF Strategist:

    Here’s a look at other stories offering insight on ETFs for investors.

    One of the benefits of the ETF wrapper is that fund managers can accept assets before launch, and later rebalance without incurring gains.
    While the volume of 351 exchanges for ETFs has increased in recent years, there are still relatively few public options, experts say.
    Haas has used 351 conversions for certain clients. But there are some downsides to consider, he said. Here are the key things to know. 

    How 351 conversions for ETFs work

    Many higher earners keep some investments in separately managed accounts, or SMAs, which are taxable, customized portfolios with an active manager.
    One benefit of SMAs is tax-loss harvesting, which uses losses to offset portfolio gains. But those opportunities “dwindle over time” as assets grow, said Daniel Sotiroff, a senior analyst for Morningstar Research Services.
    Eventually, “there are fewer losses to harvest” and you can’t change investments without incurring capital gains, he said.

    For some, 351 conversions to ETFs could solve the problem, he said.
    Large financial planning firms that manage clients’ SMAs can create a private ETF via 351 conversions. More recently, smaller firms or SMAs can participate in publicly seeded ETFs. 
    “I wouldn’t be surprised if we see more,” Sotiroff said.
    However, minimum investments are still high. For example, Alpha Architect recommends a “minimum portfolio” of $1 million. Cambria Funds’ first 351 ETF conversion launch in December 2024 also had a $1 million minimum for individuals.

    Your 351 conversion must be ‘diversified’

    While deferring capital gains taxes on embedded profits may be attractive, 351 conversions to ETFs have specific rules, experts say.
    “You can’t just put one stock into a 351 exchange and get tax-deferred treatment,” Ben Henry-Moreland, a CFP with advisor platform Kitces.com, told CNBC.
    There are strict diversification requirements to qualify for deferred capital gains. Your transferred assets are only “diversified” if:

    A single stock or company isn’t more than 25% of the contributed assets
    The five largest assets aren’t more than 50% of the contributed assets

    Plus, certain assets, such as mutual funds or alternative assets such as private equity or cryptocurrency, may not be permitted for the transfer, Henry-Moreland wrote of 351 exchanges in March.

    Sean Anthony Eddy | E+ | Getty Images

    Your money could be ‘stuck’ 

    Before completing a 351 conversion, you should weigh the pros and cons and how it fits into your bigger financial plan. You’re swapping assets in exchange for the ETF shares, which may be different from your target allocation.
    CFP Charles Sachs, chief investment officer of Imperio Wealth Advisors in Coral Gables, Florida, doesn’t use the strategy because he said it could leave clients with fewer options.
    “You can do it, but you’re stuck in there,” Sachs said.
    While it’s possible to transfer the funds via another 351 conversion, “there aren’t many companies doing this,” said Haas, of Cereus Financial Advisors. And if you sell, you could see capital gains.
    “That’s super important to think about,” he said. “You have to be happy with the ETF.”   More

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    Doing these 5 key steps ‘will allow you to move quickly’ for a mortgage refinance, expert says

    Mortgage rates have declined in recent months, and with the potential for a Federal Reserve rate cut this fall, it’s smart for homeowners with high interest rates to start preparing for the opportunity to refinance, experts say.
    “Getting the preparation done beforehand will allow you to move quickly,” said Keith Gumbinger, vice president of mortgage website HSH.

    Sdi Productions | E+ | Getty Images

    Mortgage rates have declined in recent months, and with the potential for a Federal Reserve rate cut this fall, it’s smart for homeowners with high interest rates to start preparing for the opportunity to refinance, experts say.
    Last week, mortgage rates slightly edged higher. According to the Mortgage Bankers Association, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.68% from 6.67% for the week ending Aug. 15.

    But generally, rates have been edging down, reaching a 10-month low earlier in August.
    Lower mortgage rates often result in lower borrowing costs for home loans. Many homeowners have already jumped on the opportunity in recent weeks.
    More from Personal Finance:What’s keeping home buyers on the sidelinesMortgage rates have made a ‘substantial improvement’Student loan forgiveness remains unavailable under this repayment plan
    The refinance share of mortgage activity last week decreased to 46.1% of total applications from 46.5% the week prior, according to MBA data.
    Whether the Fed cuts rates in September, it remains unclear how mortgage rates will react, according to Chen Zhao, head of economics research at Redfin. While the federal funds rate influences borrowing costs for Americans, mortgage rates closely track the 10-year Treasury yields, which are sensitive to changes in the economy.

    Overall, experts say it is important for homeowners with higher-rate mortgages to start paying attention to interest rate movements, and preparing for opportunities to refinance.
    “Getting the preparation done beforehand will allow you to move quickly,” said Keith Gumbinger, vice president of mortgage website HSH.

    ‘You probably need to move quickly’

    Before you refinance, you want to make sure mortgage rates have “dropped sufficiently” for you to see real savings, Melissa Cohn, regional vice president of William Raveis Mortgage, recently told CNBC.
    There are different rules of thumb used to determine when rates have declined enough. According to Redfin’s Zhao, homeowners should consider a refi if rates are at least 50 basis points lower than their current rate.
    Rates can change fast, so it’s smart to know that target number and start preparing ahead of time, experts say.
    “If you’re looking to refinance, especially in this type of interest rate climate, you need to be opportunistic, which means you probably need to move quickly,” said Gumbinger. 
    Here are five key steps to take:

    1. Take a look at your credit reports

    First, pull your credit reports from all three bureaus — Equifax, Experian and TransUnion — to understand how information on them is influencing your credit score. You can request them from the major credit bureaus for free via annualcreditreport.com.
    Knowing this detail will help you get more accurate rate quotes from lenders, according to HSH. Unlike many other kinds of loans, with mortgages, lenders tend to look at scores from all three bureaus.
    If you notice any errors that could be inadvertently hurting your score, the sooner you fix them, the better, experts say. Reach out to the creditor as well as the credit reporting bureau, and explain the situation, said Gumbinger.
    However, it may take a bit of time to get the necessary parties involved and get the error fixed, he said. 

    2. Protect your credit score

    You want to protect your credit score as much as possible. Generally, the higher your credit score, the better terms and interest rates you qualify for.
    If you plan to refinance in the near future, avoid doing things that could hurt your score, such as applying for new credit cards or other lines of credit, or making sudden, big purchases that you can’t pay off quickly, and avoid making late payments.

    3. Estimate your level of home equity

    After checking your credit history, estimate how much equity you have in your home. If you have at least 20% equity in your home, you will get better loan terms from lenders, according to Bankrate.

    4. Start gathering essential documents

    If you believe you’ll benefit from a refi soon, HSH recommends gathering the following documents:

    Proof of homeowners insurance
    Proof of income and assets
    The latest copy of your existing mortgage statement
    A copy of your property’s deed to show legal ownership
    The latest property tax statement
    The names and addresses of your employers for the past two years

    You can also start putting aside funds to cover upfront costs associated with a refi, including an appraisal and credit reports. An appraisal fee can cost roughly $300 to $500, while a credit check fee is typically less than $30, according to Bankrate.

    5. Start contacting mortgage lenders

    There’s an advantage to beginning to research different lenders and what they offer before you actually want to refinance because interest rates move pretty quickly, said Gumbinger.
    Rather than starting from scratch when you’re ready to refi, gathering contact information and learning about different loans, rates and terms ahead of time can be helpful, experts say.
    “You don’t have to actually contact the lenders, but you can do some advance research to speed things along,” said Gumbinger.
    Once you know you’re “actually ready to pull the trigger,” then you can seriously shop around, said Cohn.

    Start with your existing lender, as they have a record history with you and may be able to offer a streamlined process, Gumbinger said. Once you shop around, you’ll want to pick the lender that offers you the best terms, such as the lowest interest rate, experts say. 
    You could even start getting on their contact lists and ask them to reach out to you once it’s good for you to refinance, said Zhao. 
    If you do refinance and interest rates happen to decline further, you can always repeat the process.
    Just make sure “there’s a big enough gap to make it worthwhile,” Gumbinger said. More

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    Here’s what’s keeping homebuyers on the sidelines despite mortgage rates hitting a 10-month low

    Between the runup in home prices and high mortgage rates, housing affordability has taken a major hit in the last few years. 
    Even with rates drifting lower, many would-be homebuyers are unsure about their next move.

    Lorene Cowan, 44, thought she would own a home by now. However, in New York City, where Cowan lives and works, home prices have soared beyond reach.
    “I would love to buy a home. That’s the next step,” said Cowan, a business and life coach. But “in New York, the entry in became so much more difficult,” she said.

    In fact, New York notched the highest annual rise in home prices of all the metropolises in the latest Case-Shiller 20-city composite, up 7.4% in May compared with the prior year. The median listing price of a home in New York City is now more than $829,000, up 3.8% year over year, according to Realtor.com.
    More from Personal Finance:Mortgage rates have made a ‘substantial improvement’Fewer young adults reach key life and money milestones’Job hugging’ has replaced job-hopping, consultants say
    In recent years, rising prices across the country have made it harder for first-time homebuyers to enter the market, causing many millennials such as Cowan to delay that traditional milestone.
    Even a recent drop in mortgage rates has done little to change that affordability equation. Undersupply is contributing to high prices, “holding back first-time home buyers from entering the market,” Lawrence Yun, chief economist of the National Association of Realtors, said in a recent statement.

    The housing affordability problem

    In the U.S., the median age of first-time homeowners is 38 years old, an all-time high, according to a 2024 report by the National Association of Realtors. In the 1980s, the typical first-time buyer was in their late 20s. And first-time buyers currently make up just 24% of the market, the lowest share on record, according to NAR. 

    Millennials and Gen Z still believe in the dream of homeownership as a wealth-building opportunity and an achievement, said Matt Vernon, head of consumer lending at Bank of America. “It’s just taking longer for them,” he said.

    Higher mortgage rates have also helped keep first-time homebuyers on the sidelines. 
    Although mortgage rates fell recently to their lowest level since October, the average rate for a 30-year, fixed-rate mortgage is still just above 6.5%, according to Freddie Mac — a big leap from the under 3% levels near the start of the pandemic.

    “The American consumer has gotten very used to the low-rate environment that has spanned over a decade,” said Vernon.
    According to Bank of America’s latest homebuyer insights study, 60% of current homeowners and prospective buyers — a three-year high — said they’re unsure whether now is the right time to buy.
    “Not knowing if rates are going to come down or go up is adding to the uncertainty in the marketplace,” Vernon said.

    The housing lock-in effect 

    Where rates could be headed is key.
    Federal Reserve Chair Jerome Powell said at a news conference in July that the Fed hadn’t yet determined whether it would cut its benchmark interest rate at its September meeting.
    However, even if the central bank does cut rates, “it’s not a guarantee that mortgage rates are going to fall and make housing more affordable,” said Ashley Weeks, a wealth strategist at TD Wealth.
    “Mortgage rates are more directly tied to the 10-year Treasury, so it’s entirely possible mortgage rates remain flat or even increase regardless of where the Fed moves in September,” Weeks said.

    Still, many prospective homebuyers believe lower rates will come and that will help ease the housing affordability problem.
    Roughly 75% of prospective homebuyers expect home prices and interest rates to fall and are waiting until then to buy a new home, Bank of America also found in its survey of 2,000 adults in March and April.
    About one-third, or 32%, of Americans said they would need mortgage rates to fall below 6% to feel comfortable buying this year, according to another recent report by Bankrate.
    However, more than half — 51% — of those polled said they wouldn’t buy this year at any mortgage rate, a whopping 13 percentage point jump from Bankrate’s 2024 survey.
    Subscribe to CNBC on YouTube. More

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    Student loan forgiveness remains unavailable under popular repayment plan

    Student loan borrowers enrolled in the Income Based Repayment, or IBR, plan remain blocked from debt forgiveness after the Trump administration instituted a pause on the relief.
    Here’s what to know about the delays in debt cancellation, and what you can do about it.

    Students study in the Perry-Castaneda Library at the University of Texas at Austin on February 22, 2024 in Austin, Texas.
    Brandon Bell | Getty Images

    The Trump administration paused student loan forgiveness on a popular plan earlier this summer. It has not yet resumed the debt cancellation, and this week, lawmakers urged it to do so.
    The U.S. Department of Education said earlier this summer that it was pausing the loan discharge component on the Income Based Repayment, or IBR, plan. That freeze remains in place.

    It’s a setback to families who have been expecting — and are legally entitled to — the aid, lawmakers, including Sen. Bernie Sanders, I-Vt., wrote to Education Secretary Linda McMahon on Monday.
    “At a time when Americans across the country are struggling to meet the costs of health care, food, housing, child care and other basic needs, it is unacceptable for the Trump administration to take any action that delays or denies legally mandated debt relief,” the lawmakers wrote.
    More from Personal Finance:Trump floats tariff ‘rebate’ for consumersStudent loan forgiveness may soon be taxed againStudent loan borrowers — how will the end of the SAVE plan impact you? Tell us
    There are currently 1.97 million federal student loan borrowers enrolled in IBR, according to higher education expert Mark Kantrowitz.
    Here’s what borrowers should know about the plan’s paused loan cancellation.

    How IBR forgiveness usually works

    IBR is one of the Education Department’s income-driven repayment plans, also called IDRs.
    Congress created the first IDR plans in the 1990s with the goal of making student loan borrowers’ bills more affordable. Historically, the plans cap people’s monthly payments at a share of their discretionary income and cancel any remaining debt after a certain period, typically 20 years or 25 years.
    IBR will be one of only a few manageable repayment options left to millions of borrowers, after recent court actions and the passage by Congress of President Donald Trump’s “big beautiful bill.” That legislation phases out several income-driven repayment plans.

    Under the terms of IBR, borrowers pay 10% of their discretionary income each month — and that share rises to 15% for certain borrowers with older loans.
    Debt forgiveness is supposed to come after 20 years or 25 years, depending on when you took out your loans. (Older loans are subject to the longer timeline.)

    Why IBR loan forgiveness is paused

    The U.S. Department of Education told CNBC it paused loan forgiveness under IBR while it responds to recent court actions involving the Biden administration-era SAVE, or Saving on a Valuable Education, plan.
    The department said that the 8th U.S. Circuit Court of Appeals decision in February, which blocked the SAVE plan, had other impacts on student loan repayment. For example, under the rule involving SAVE, certain periods during which borrowers postponed their payments would count toward their forgiveness timeline. With SAVE blocked, borrowers no longer get credit during those forbearances.
    Ellen Keast, deputy press secretary at the Education Department, said in a late July statement that IBR discharges would resume “as soon as the Department is able to establish the correct payment count.”
    The department did not immediately respond to questions about why the pause continues.
    “The federal government does not move very quickly, but I would have expected some progress by now,” said Kantrowitz.

    What borrowers can do in the meantime

    The hold on IBR discharges shouldn’t impact student loan borrowers who are still years away from debt forgiveness, experts said. 
    In fact, since IBR became available only in 2009, the soonest many borrowers could qualify for forgiveness would be 2034, Kantrowitz said. The current delay in debt erasure would most likely impact borrowers who’d previously been enrolled in another IDR plan — Income-Contingent Repayment, or ICR — and later switched to IBR.

    I would have expected some progress by now.

    Mark Kantrowitz
    higher education expert

    If you’re pursuing debt forgiveness under IBR, your payments made under the plan (or another income-driven repayment plan) will still be bringing you closer to debt cancellation, as long as you are enrolled in IBR when you become entitled to that relief.
    If you expected your debt to be forgiven shortly, you should continue making payments, Kantrowitz said. You don’t want to be flagged as late, and any overpayments should be refunded to you, he added.

    Don’t miss these insights from CNBC PRO More

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    Trump’s new tax law expands 529 savings plan uses as families gear up for back to school

    Most parents pay for their children’s expenses, including education, using traditional checking and savings accounts, according to a new Vanguard survey.
    Only 10% of parents leverage 529 plans for their child’s education, the survey found.
    Under the new federal tax law, qualified expenses for use of 529 plan funds have expanded beyond college costs to cover licensing, tutoring, continuing education and dual enrollment courses for high school students. 

    A student studies in the Perry-Castaneda Library at the University of Texas at Austin, Feb. 22, 2024.
    Brandon Bell | Getty Images

    As back-to-school season gets underway, parents have many more ways they can spend funds in 529 college savings plans this year, due to President Donald Trump’s “big beautiful bill.”
    Yet a new survey shows only a fraction are utilizing these accounts.

    About 69% of parents stash money for their children’s education-related expenses in traditional checking or savings accounts, according to a Vanguard survey of 1,005 parents with children ages 17 and under living at home. 
    Only 10% of parents leverage 529 savings plans for education expenses for their children, the survey found. Among millennial parents, 8% do, and Gen Z, 6%.
    That’s a big miss, experts say — especially for big-ticket, long-term goals like paying for a child’s college tuition.

    The national average rate on an interest-bearing checking account is only 0.07%, and 0.39% on a savings account, according to Federal Deposit Insurance Corp. data as of Monday. Meanwhile, top rates on a high-yield savings account can have rates over 4%, according to Bankrate.
    That’s far less than the potential returns from a 529 plan. Monthly contributions of $250 with an average annual return of 7% could grow to more than $96,000 in 17 years, according to CNBC calculations. (These figures don’t account for inflation.)

    “If you have the means, and you’ve done the emergency savings thing, you’ve put away money for retirement, looking at 529 accounts can be a huge benefit for parents — and the benefits for your children will pay off for decades,” said Kate Byrne, head of Vanguard Cash Plus Distribution.
    Contributions to 529 plans generally are invested in mutual funds that contain a mix of stocks, bonds and cash-like investments. Often, that mix becomes more conservative as your child ages.
    The funds grow tax-free, and withdrawals for qualified education expenses are tax-free. Plus, you may get a state tax deduction or credit for your contribution. 

    New tax law expands eligible expenses for 529 plans 

    A person walks on campus at Muhlenberg College in Allentown, Pennsylvania, U.S. March 26, 2025. 
    Hannah Beier | Reuters

    Under new provisions in the “One Big Beautiful Bill Act” that Trump signed into law in July, there are many more eligible expenses for using funds from 529 plans. The accounts are useful whether or not college is in your family’s plan, and you can use them on far more than tuition, room and board or textbooks. 
    Under the new law, withdrawals from 529 plans can now be used for:

    Qualifying credentialing and vocational programs, for trades such as welding, HVAC work, or cosmetology.

    Tuition, books, and fees related to professional licensing programs, including exam preparation and review materials, for fields like law, accounting or finance.

    Required continuing education courses to maintain licensing or certification, which might apply to real estate agents, nurses, teachers and financial advisors, among others.   

    Also, under the new tax law, expenses related to K-12 education have been expanded beyond tuition to include tutoring, standardized test prep (such as for ACT, SAT or AP exams) and educational therapy. 

    More from Your Money:

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

    With tutoring, test prep and support for students with learning differences, they’ll be “better prepared for their post-secondary journey,” said Patricia Roberts, chief operating officer at Gift of College, a gifting platform for higher education and workplace benefits, in an email. They may even be in a better position to receive merit aid for college, she said.
    Plus, “being able to use a 529 plan now to pay for (high school/college) dual enrollment courses can help a student get a head start on college coursework and begin their college journey with credits in hand — which may lower costs by shortening the time it takes to graduate,” Roberts said. 

    Trump accounts invest for newborns

    Starting in July 2026, parents will have another option to save and invest for their children. The new tax law created a provision for so-called Trump accounts.
    These are investment accounts that allow parents to contribute up to $5,000 a year, after-tax money, for a child under the age of 18. Employers could make contributions of up to $2,500 a year.
    A pilot program will allow newborns, U.S. citizens born from 2025 through 2028, to receive an initial, one-time contribution of $1,000 from the federal government.
    Retirement plan consultant Denise Appleby says electing to receive the $1,000 seed contribution is a no-brainer if you qualify. “Why would you say no to free money that’s starting to fund your child’s retirement account?” she asks. 
    Appleby says to consider a 529 plan before making a contribution to a Trump account.
    With a Trump account, withdrawals aren’t allowed until the child turns 18. At that age, the money will be rolled into a traditional IRA, and funds withdrawn before age 59½ may typically be subject to a 10% penalty and taxed at the beneficiary’s income tax rate.
    “In a 529 plan, money comes out tax-free if it’s used for qualified education expenses,’ she said. “Not only that, in a 529 plan, after you’re done with school and you have an excess amount, you can move up to $35,000 to a Roth IRA account,” where withdrawals are also tax-free.
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    Crypto stocks tumble as investors go into risk-off mode

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    Idrees Abbas | Sopa Images | Lightrocket | Getty Images

    Crypto stocks suffered Tuesday as investors fled tech stocks and riskier corners of the market.
    Among crypto exchanges, Coinbase and eToro fell more than 5% and 6%, respectively, while Robinhood and Bullish both dropped more than 6%. Crypto financial services firm Galaxy Digital tumbled 10%. In the burgeoning sector of crypto treasury firms, Strategy lost 7%, SharpLink Gaming slid 8%, Bitmine Immersion slumped 9% and DeFi Development tumbled 13%. Stablecoin issuer Circle lost 4.5%.

    Meanwhile, the price of bitcoin pulled back nearly 3% to just over $113,000. Ether was down more than 5% to the $4,100 level, according to Coin Metrics.

    Stock chart icon

    Bitcoin over the past day

    Investors appeared to rotate out of tech names Tuesday. The sector had seen a boost last week as traders weighed the prospect of more interest rate cuts. Also, bitcoin touched an intraday all-time high near $125,000 last week.
    On Tuesday, the Nasdaq Composite was down more than 1%, weighed down by declines in Nvidia and other tech heavyweights.
    The crypto market tends to be vulnerable to moves in tech stocks due to their growth-oriented investor base, narrative-driven price action, speculative nature and tendency to thrive in low interest rate environments.
    This week, investors are watching the Federal Reserve’s annual economic symposium in Jackson Hole, Wyoming, for clues around what could happen at the central bank’s remaining policy meetings this year. If Fed Chair Jerome Powell signals more dovish policy could be ahead, crypto may bounce.

    “With Powell speaking at Jackson Hole, we typically see profit-taking ahead of his remarks,” said Satraj Bambra, CEO of hybrid exchange Rails. “Any time there’s communication uncertainty from the Fed, you can generally expect some profit-taking as traders de-risk their positions.”
    Crypto stocks have had a solid run in recent months — thanks to the addition of Coinbase in the benchmark S&P 500 index, the successful IPO of Circle and the GENIUS Act stablecoin framework becoming law. However, investors expect a pullback in August and through the September Fed meeting, where they hope to see central bank policymakers implement rate cuts.

    Don’t miss these cryptocurrency insights from CNBC Pro: More