Finance

The Supreme Court struck down the Biden administration’s student loan forgiveness program on June 30.
Debt payments, paused for more than three years, will restart this fall.
Some groups are calling for policymakers to expand student loan-related tax breaks offered at work.
Many employers don’t offer workplace benefits to borrowers. Those that do often tie them to retirement savings in a 401(k).

Kate_sept2004 | E+ | Getty Images

As Americans with student loan debt brace for their monthly payments to restart and recover from the recent sting of the Supreme Court’s ruling against loan forgiveness, some groups are looking to the workplace as a firewall to funnel aid to borrowers.
SHRM, a group representing human resources professionals, called on Congress and state legislatures “to pass policies that support employees and employers,” according to a June 30 statement issued after the Supreme Court nixed the Biden administration’s debt cancellation plan.

Specifically, they want bigger tax breaks for workplace education benefits and an entrenchment of tax policy that’s otherwise slated to end in a few years. Advocates argue such tweaks would help put education on a more equal footing with mainstay benefits for retirement and health care, for which employers also get tax breaks.
More from Personal Finance:What to know about Biden’s new plan to forgive student debtFederal student loan repayment is about to change in a big wayIt’s official: Student loan payments will restart in October
SHRM also called for businesses to “support their workers as they navigate their student debt challenges.” Debt payments, which have been on pause for over three years, are poised to restart in October.
Cody Hounanian, executive director of the Student Debt Crisis Center, said he isn’t surprised to see an “all-hands-on-deck approach” given the current environment for borrowers, which he called “a recipe for a disastrous situation.”

17% of employers offer some kind of student loan aid

Few employers offer student loan benefits, which can take many forms.

Seventeen percent offer some type of student loan assistance, according to a 2021 survey by the Employee Benefit Research Institute. Another 31% planned to offer some type of assistance in the next year or two, the poll found.
The most popular workplace programs don’t offer direct relief for student loan payments.
For instance, about four in 10 employers that offer assistance do so via contributions into the 401(k) accounts of borrowers who are paying off student debt.

There are two other popular routes: debt payment counseling or education, and granting access to 401(k) loans — in essence, allowing an employee to borrow against their retirement savings to repay student debt.
“It seems like retirement savings is the constant here,” said Will Hansen, executive director of Plan Sponsor Council of America, a group that represents employers offering workplace retirement programs. “We’re now being used as the vehicle to assist with other financial habits, from student loans to emergency savings.”
Many workers, especially younger ones, prefer student loan payment assistance over more traditional benefits such as a 401(k) match, according to a Lending Tree survey.
More than half, 54%, of workers ages 18 to 24 held that opinion. The share declined to 45% for those ages 25 to 34, and to 39% for 55- to 64 year-olds, according to the poll, conducted in 2016.

There should be some type of assistance and support for employees to get out of this debt.

Derrick Johnson
president and CEO of the NAACP

There should be student-loan-related “enticements” in employee compensation packages, said Derrick Johnson, president and CEO of the NAACP, who called student loans “a personal crisis for far too many Americans.”
“Just like 401(k) and health benefits, there should be some type of assistance and support for employees to get out of this debt,” said Johnson. “There’s a role for the corporate community to step up and offer that level of support,” he added.
Of course, the best policy route would be for lawmakers to give financial assistance to student loan borrowers directly, instead of via workplace tax breaks, he added.  

A valuable tax break for borrowers will end in 2026

Luis Alvarez | Digitalvision | Getty Images

Some of the most valuable workplace benefits, experts said, were created by the CARES Act pandemic relief law in March 2020.
The law expanded an existing tax break for educational assistance by adding student loan repayment as a qualifying educational expense. That expansion — of Section 127 of the tax code — allows employers to pay up to $5,250 a year toward a worker’s student loans. The payments are tax-free for the employee and business.
About 8% of companies offer a student loan repayment plan, according to SHRM. By comparison, 48% pay tuition assistance for those enrolled in undergraduate or graduate school.
The expanded tax break for student loan payments is temporary, however. It will end in 2026, absent action from Congress.
SHRM is calling on lawmakers to make this tax break permanent. It also called for higher annual limits on the tax-free payments.

The American Federation of Teachers, a labor union, also hopes the tax break is extended, a spokesman said.
“We’ve negotiated tax-free employer paid assistance in Albuquerque, New Mexico, and in several of our health-care affiliates in Washington state,” AFT President Randi Weingarten said in an emailed statement. “And we are making these proposals elsewhere, including in Orange County, Florida.”
Starting in 2024, employers will also be allowed to pay a 401(k) match to borrowers making student loan payments, a provision enacted by a 2022 law known as Secure 2.0. Student debt payments are essentially treated like a 401(k) contribution, qualifying borrowers for a match.
About 2% of employers sponsoring a 401(k) plan intend to implement the policy, while another 9% will likely add or consider it, according to a Plan Sponsor Council of America poll. Twenty-two percent are unsure.

Retention tool or alienating policy?

Advocates for more student loan assistance at the workplace say that, in addition to helping employees relieve financial stress, which ultimately makes them more productive workers, such policies can help employee retention.
That may prove useful in a labor market in which job openings, which surged to record highs during the pandemic era, are still elevated and employers may have trouble hiring.
“With such a tight labor market, companies want to be creative in their benefit offerings to attract top talent,” Hansen said.
But there’s tension here: Such programs will appeal to certain employers and workforces over others, experts said.

Luis Alvarez | Digitalvision | Getty Images

Professional firms and others that hire large numbers of college graduates are likely to adopt the new 401(k) match provision as soon as possible, according to Fred Reish, a partner and retirement plan expert at law firm Faegre Drinker Biddle & Reath.
“It will message a concern for the benefit of those employees and an acknowledgement of their circumstances,” he wrote. “On the other hand, companies who primarily employ blue collar workers may not see a need to add this provision to their plans and to incur the resulting administrative complexity.”
Given that demarcation, individuals burdened most by student debt may not have access to any student-loan-related benefits at work, Johnson said.
Additionally, having a program might “generate resentment” among workers who don’t have student loans, which “could divide the workforce and create morale problems,” Lisa Porro, a human resources consultant at Inspiring HR, wrote last year in a SHRM opinion piece.
“Workers in jobs that don’t require a college degree won’t be helped,” Porro said. “Additionally, not all workers are able to attend college before starting their careers; some achieve success through experience and industry knowledge.” More

An Activision Blizzard’s Call of Duty: Modern Warfare video game is inserted into the Microsoft’s Xbox One video game console.
Michael Ciaglo | Bloomberg | Getty Images

Check out the companies making the biggest moves before the bell:
Activision Blizzard — The video-game maker popped 4% after Microsoft and Sony signed a deal to keep “Call of Duty” on Sony’s PlayStation gaming consoles following Microsoft’s acquisition of Activision Blizzard.

Chewy — Shares jumped more than 5% after Goldman Sachs upgraded them to buy from neutral. The firm said the e-commerce pet products company has an attractive risk-reward profile and could see margins expand.
PepsiCo — The beverage giant dropped 1.2% following a downgrade by Morgan Stanley to equal weight from overweight. Pepsi’s strong earnings report and potential upside are now priced into the stock, resulting in limited upside ahead, Morgan Stanley said.
Yelp — Shares gained 3.6% after being upgraded by Goldman Sachs to buy from neutral. The Wall Street bank also raised its price target to $47, suggesting 23.3% upside from Friday’s close. Goldman cited rising advertising trends, incremental margin opportunity and increased shareholder returns in the years ahead for the call.
Tesla — The electric-vehicle maker added nearly 2% in the premarket. On Saturday, the company said it built its first cybertruck after two years of delays.
Paramount Global — Shares of the entertainment company fell 2.8% in premarket trading after the latest installment in the “Mission: Impossible” franchise underperformed expectations at the box office. The movie earned $56.2 million domestically over the weekend — which was below the previous movie in the franchise — and $80 million over its first five days of release, according to Variety.

AT&T — Shares shed 1.5% following a downgrade by Citi to neutral from buy. The Wall Street firm cited the industry’s historical use of cabling sheathed in lead weighing on the company for at least a few months or potentially longer.
State Street — The financial giant slipped about 2% in premarket trading. The stock was downgraded by JPMorgan to underweight from neutral following State Street’s earnings release Friday. State Street’s second-quarter revenue missed estimates, sending shares 12.1% lower on Friday.
Figs — Shares of the apparel company fell 4.6% in premarket trading after Raymond James downgraded Figs to market perform from outperform. A slowing economy and the restart of student loan payments could hurt Figs’ growth in the near term, according to Raymond James.
— CNBC’s Jesse Pound, Hakyung Kim and Michael Bloom contributed reporting. More

Ripple is confident that U.S. banks will start wanting to use XRP for cross-border transactions after a judge gave the firm a partial victory in its fight against the SEC, General Counsel Stu Alderoty told CNBC.
A judge ruled that XRP, a cryptocurrency Ripple is closely associated with, was not in itself necessarily a cryptocurrency, in a development with major implications for the digital asset industry.
It wasn’t a total victory for Ripple, however – the judge also ruled that sales of XRP by Ripple to institutional buyers do count as unregistered sales of securities.

In this photo illustration, a visual representation of the digital Cryptocurrency Ripple is displayed on January 30, 2018 in Paris, France. 
Chesnot | Getty Images

Blockchain startup Ripple is confident U.S. banks and other financial institutions in the country will start showing interest in adopting XRP in cross-border payments after a landmark ruling determined the token was not, in itself, necessarily a security.
The San Francisco-based firm expects to start talks with American financial firms about using its On-Demand Liquidity (ODL) product, which uses XRP for money transfers, in the third quarter, Stu Alderoty, Ripple’s general counsel, told CNBC in an interview last week.

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Last week, a New York judge delivered a watershed ruling for Ripple determining that XRP, a cryptocurrency Ripple is closely associated with, in itself was “not necessarily a security on its face,” contesting, in part, claims from the U.S. Securities and Exchange Commission against the company.
Ripple has been fighting the SEC for the past three years over allegations from the agency that Ripple and two of its executives conducted an illegal offering of $1.3 billion worth via sales of XRP. Ripple disputed the claims, insisting XRP cannot be considered a security and is more akin to a commodity.
Ripple’s business suffered as a result, with the company losing at least one customer and investor. MoneyGram, the U.S. money transfer giant, ditched its partnership with Ripple in March 2021.
Meanwhile, Tetragon, a U.K.-based investor that previously backed Ripple, sold its stake back to Ripple after unsuccessfully trying to sue the company to redeem its cash.
Asked whether the ruling meant that American banks would return to Ripple to use its ODL product, Alderoty said: “I think the answer to that is yes.”

Ripple also uses blockchain in its business to send messages between banks, kind of like a blockchain-based alternative to Swift.
“I think we’re hopeful that this decision would give financial institution customers or potential customers comfort to at least come in and start having the conversation about what problems they are experiencing in their business, real-world problems in terms of moving value across borders without incurring obscene fees,” Alderoty told CNBC Friday.
“Hopefully this quarter will generate a lot of conversations in the United States with customers, and hopefully some of those conversations will actually turn into real business,” he added.

Ripple now sources most of its business from outside of the U.S., with Alderoty previously telling CNBC that, “[Ripple], its customers and its revenue are all driven outside of the U.S., even though we still have a lot of employees inside of the U.S.,” he added.
Ripple has over 900 employees globally, with roughly half of them based in the U.S.
XRP is a cryptocurrency that Ripple uses to move money across borders. It is currently the fifth-largest cryptocurrency in circulation, with a market capitalization of $37.8 billion.
The company uses the token as a “bridge” currency between transfers from one fiat currency to another – for example, U.S. dollars to Mexican pesos – to solve the issue of needing pre-funded accounts on the other end of a transfer to wait for the money to be processed.
Ripple says XRP can enable money movements in a fraction of a second.
Still, the ruling did not represent a total win for Ripple. While the judge stated XRP was not a security, they also said that some sales of the token did qualify as securities transactions.
For example, about $728.9 million of sales of XRP to institutions the company worked with did qualify as securities, the judge said, stating there was a common enterprise, an expectation of profit.
Alderoty conceded it was not a total win for Ripple, and that the company would study the decision in due course to see how it affects its business.
“She [Judge Analisa Torres] found — although we had disagreed with her — that our earlier sales directly to institutional buyers had the attributes of a security and should have been registered,” he said.
He said Ripple’s business as it stands would be unaffected by that component of the ruling as its customers are primarily located outside of the U.S.
“We’ll study the the judge’s decision, we’ll look at our clients’ needs to look at the market, and see if there’s a situation here that complies with the four corners of what the judge found when it comes to institutions,” he said. More

Exchange-traded funds can still compete in today’s “stock picker’s” market, according to a top investor.
“A lot of money is moving into active ETFs, because it provides the benefits that you have from active management [or] from stock picking … but also all the tax benefits and cost benefits that you have in an ETF,” Avantis Investors Chief Investment Officer Eduardo Repetto told CNBC’s “ETF Edge” last week.

He predicts actively managed ETFs will continue to gain traction through the second half of the year.
“We used to only have index ETFs,” Repetto noted. However, he emphasized this has changed over the past three years as the number of actively managed ETFs has grown.
Repetto’s firm is behind the Avantis U.S. Equity ETF, an actively managed portfolio of U.S. stocks. Its website shows the fund’s top holdings are Apple, Microsoft, Amazon, Meta Platforms and Alphabet.
As of Friday, the ETF is up 12% this year and 49% over the past three years.

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To understand the impact that artificial intelligence may have on the economy, consider the tractor. Historians disagree about who invented the humble machine. Some say it was Richard Trevithick, a British engineer, in 1812. Others argue that John Froelich, working in South Dakota in the early 1890s, has a better claim. Still others point out that few people used the word “tractor” until the start of the 20th century. All agree, though, that the tractor took a long time to make a mark. In 1920 just 4% of American farms had one. Even by the 1950s fewer than half had tractors. Speculation about the consequences of ai—for jobs, productivity and quality of life—is at fever pitch. The tech is awe-inspiring. And yet ai’s economic impact will be muted unless millions of firms beyond Silicon Valley adopt it. That would mean far more than using the odd chatbot. Instead, it would involve the full-scale reorganisation of businesses and their in-house data. “The diffusion of technological improvements”, argues Nancy Stokey of the University of Chicago, “is arguably as critical as innovation for long-run growth.” The importance of diffusion is illustrated by Japan and France. Japan is unusually innovative, producing on a per-person basis more patents a year than any country bar South Korea. Japanese researchers can take credit for the invention of the qr code, the lithium-ion battery and 3d printing. But the country does a poor job of spreading new tech across its economy. Tokyo is far more productive than the rest of the country. Cash still dominates. In the late 2010s only 47% of large firms used computers to manage supply chains, compared with 95% in New Zealand. According to our analysis, Japan is roughly 40% poorer than would be expected based on its innovation. France is the opposite. Although its record on innovation is average, it is excellent at spreading knowledge across the economy. In the 18th century French spies stole engineering secrets from Britain’s navy. In the early 20th century Louis Renault visited Henry Ford in America, learning the secrets of the car industry. More recently, former ai experts at Meta and Google founded Mistral ai in Paris. France also tends to do a good job of spreading new tech from the capital to its periphery. Today the productivity gap in France between a top and a middling firm is less than half as big as in Britain. During the 19th and 20th centuries businesses around the world became more “French,” with new technologies diffusing ever faster. Diego Comin and Martí Mestieri, two economists, find evidence that “cross-country differences in adoption lags have narrowed over the last 200 years.” Electricity swept across the economy faster than tractors. It took just a couple of decades for personal computing in the office to cross the 50% adoption threshold. The internet spread even faster. Overall, the diffusion of technology helped propel productivity growth during the 20th century.Since the mid-2000s, however, the world has been turning Japanese. True, consumers adopt technology faster than ever. According to one estimate TikTok, a social-media app, went from zero to 100m users in a year. Chatgpt itself was the fastest-growing web app in history until Threads, a rival to Twitter, launched this month. But businesses are increasingly cautious. In the past two decades all sorts of mind-blowing innovations have come to market. Even so, according to the latest official estimates, in 2020 just 1.6% of American firms employed machine learning. In America’s manufacturing sector just 6.7% of companies make use of 3d printing. Only 25% of business workflows are on the cloud, a number that has not budged in half a decade.Horror stories abound. In 2017 a third of Japanese regional banks still used cobol, a programming language invented a decade before man landed on the moon. Last year Britain imported more than £20m-($24m-) worth of floppy disks, MiniDiscs and cassettes. A fifth of rich-world firms do not even have a website. Governments are often the worst offenders—insisting, for instance, on paper forms. We estimate that bureaucracies across the world spend $6bn a year on paper and printing, about as much in real terms as in the mid-1990s.Best and the restThe result is a two-tier economy. Firms that embrace tech are pulling away from the competition. In 2010 the average worker at Britain’s most productive firms produced goods and services worth £98,000 (in today’s money), which had risen to £108,500 by 2019. Those at the worst firms saw no rise. In Canada in the 1990s frontier firms’ productivity growth was about 40% higher than non-frontier firms. From 2000 to 2015 it was three times as high. A book by Tim Koller of McKinsey, a consultancy, and colleagues finds that, after ranking firms according to their return on invested capital, the 75th percentile had a return 20 percentage points higher than the median in 2017—double the gap in 2000. Some companies see huge gains from buying new tech; many see none at all. Although the economics can sound abstract, the real-world consequences are crushingly familiar. People stuck using old technologies suffer, along with their salaries. In Britain, average wages at the least productive 10% of firms have fallen slightly since the 1990s—even as average wages at the best firms have risen strongly. According to Jan De Loecker of ku Leuven and colleagues, “the majority of inequality growth across workers is due to increasing average wage differences between firms”. What, then, has gone wrong?Three possibilities explain lower diffusion: the nature of new technology, sluggish competition, and growing regulation. Robert Gordon of Northwestern University has argued that the “great inventions” of the 19th and 20th centuries had a far bigger impact on productivity than more recent ones. The problem is that as technological progress becomes more incremental, diffusion also slows, since companies have less incentive and face less competitive pressure to upgrade. Electricity provided light and energy to power machines. Cloud computing, by contrast, is needed only for the most intensive operations. Newer innovations, like machine-learning, may be trickier to use, requiring more skilled workers and better management. Business dynamism fell across the rich world in the first decades of the 21st century. Populations aged. Fewer new firms were set up. Workers moved companies less frequently. All this reduced diffusion, since workers spread tech and business practices as they move across the economy. In industries run or heavily managed by the government, technological change happens slowly. As Jeffrey Ding of George Washington University notes, in the centrally planned Soviet Union innovation was world-beating—think of Sputnik—but diffusion was non-existent. The absence of competitive pressure blunted incentives to improve. Politicians often have public-policy goals, such as maximising employment, that are inconsistent with efficiency. Heavily regulated industries make up a big chunk of Western economies today: such sectors, including construction, education, health care and utilities, account for a quarter of American gdp.Could ai break the mould, diffusing across the economy faster than other recent technologies? Perhaps. For almost any firm it is easy to dream up a use-case. No more administration! A tool to file my taxes! Covid-19 may have also injected a dose of dynamism into Western economies. New firms are being set up at the fastest pace in a decade, and workers are swapping jobs more often. Tyler Cowen of George Mason University adds that weaker firms may have a particular incentive to adopt ai, because they have more to gain.ai can also be built into existing tools. Many coders—maybe most—already use ai on a daily basis owing to its integration in everyday coding instruments through Github’s CoPilot. Word processors, including Microsoft Word and Google Docs, will soon roll out dozens of ai features. Not a dinner partyOn the other hand, the biggest benefits from new forms of ai will come when firms entirely reorganise themselves around the new technology; by adapting ai models for in-house data, for example. That will take time, money and, crucially, a competitive drive. Gathering data is tiresome and running the best models fearsomely expensive—a single complex query on the latest version of Chatgpt can cost $1-2. Run 20 in an hour and you have passed the median hourly American wage. These costs will fall, but it could take years for the technology to become sufficiently cheap for mass deployment. Bosses, worried about privacy and security, regularly tell The Economist that they are unwilling to send their data to modify models that live elsewhere. Surveys of small businesses are not encouraging. One, by GoDaddy, a web-hosting company, suggests that around 40% of those in America are uninterested in ai tools. The technology is undoubtedly revolutionary. But are businesses ready for a revolution? ■ More

According to Main Management CEO Kim Arthur, global markets will meaningfully struggle due to the softening greenback.
On Friday, the U.S. dollar index hit a 15-month low.

Investors may want to reduce international exposure right now and stick with the home court.
According to Main Management CEO Kim Arthur, global markets will meaningfully struggle due to the softening greenback.

“One of the highest predicting factors for [the] future performance of international stocks versus U.S stocks is what the U.S dollar does,” Arthur told CNBC’s “ETF Edge” this week. “From 2011 to 2022, the dollar was in a straight bull market, so you were gonna lose in international equities no matter what you did.”
On Friday, the U.S. dollar index hit a 15-month low. It comes about 10 months after it hit a 10-year high.
“The dollar topped last September, okay? So you really have to have an opinion on where the dollar is going. We personally think the dollar is heading down,” said Arthur.
Arthur, who was head of Bank of America’s institutional sales and trading department, believes the dollar will eventually return to a period of strengthening.
“We are way ahead of the rest of the world in terms of fighting inflation. Our inflation numbers are lower than the rest of the world. Our interest rates are higher than the rest of the world,” said Arthur. “So what does that mean? That’s a perfect setup where we’re going to be cutting rates before the rest of the world. And that differential leads to a stronger dollar.”

ETF Action Founding Partner Mike Akins cites another market dynamic that could hurt global stocks: the strong appetite for U.S. mega-cap technology stocks.
“You see more and more flows continuing to go into U.S. stocks. … Very little money is going into the international marketplace. And that kind of just creates itself,” Akins said. “I’m not sure what the catalyst is there, other than to say that it has to start with those big names: Microsoft, Apple, Amazon, Tesla, now Google [Alphabet]. Those names that are creating this multiple expansion for the broader S&P 500 because they make up such a large percentage of it. That’s where the catalysts will have to be to see value come back, to see international come back [and] to see emerging come back.”
As of Friday’s close, the iShares MSCI Emerging Markets ETF is up 8% this year. Meanwhile, the S&P 500 is up 17%. More

A UnitedHealth Group health insurance card is seen in a wallet, Oct.14, 2019.
Lucy Nicholson | Reuters

Check out the companies making headlines in midday trading.
JPMorgan Chase — Shares inched 0.6% higher after the bank reported stronger-than-expected results for the second quarter, as it benefited from higher interest rates and better-than-expected bond trading.

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3 hours ago

2 days ago

Wells Fargo — Wells Fargo shares dipped slightly even after the Wall Street firm topped second-quarter expectations. The bank also said it anticipates higher-than-expected net interest income this year.
UnitedHealth — The health-care giant popped 7.2% after topping expectations for the second quarter on both the top and bottom lines. UnitedHealth also upped the lower end of its full-year guidance. Other health-care stocks rose in sympathy, with Cigna and Elevance Health last up more than 4% each.
Citigroup — Shares of the New York-based lender fell 4% even after the firm reported second-quarter earnings and revenue that topped expectations. Despite the beat, Citi’s revenue fell 1% from a year ago as the decline in markets and investment banking businesses weighed on its results.
JetBlue Airways, American Airlines — JetBlue Airways and American Airlines slid 3.8% and 1.7%, respectively. The two airlines are no longer selling seats on each other’s flights after Thursday, following a court ruling in May that they end their more than two-year partnership.
Microsoft — The software stock finished 0.8% after UBS upgraded it to a buy rating, saying its artificial intelligence opportunity and recent underperformance make it too attractive to ignore.

AT&T — The telecommunications stock sank 4.1% after JPMorgan downgraded it to neutral from overweight, citing competition concerns. The Wall Street firm also said AT&T’s exposure to cable may limit the upside for shares.
State Street — Shares slumped 12.1% after the financial giant’s second-quarter revenue of $3.11 billion missed analyst estimates of $3.14 billion, per Refinitiv. However, State Street beat on earnings, reporting earnings per share of $2.17, versus the $2.10 expected by analysts.
Blackrock — Shares of the asset manager lost 1.6% after reporting second-quarter results. Earnings topped Wall Street’s expectations, but net inflows came up short and showed a decline.
Alcoa — The aluminum stock fell 5.9% following a downgrade to neutral from overweight by JPMorgan. The firm said the stock could struggle as the price for the metal faces downward pressure.
Progressive — Progressive shares gained 1.8%, reversing prior losses, after Wells Fargo downgraded the insurance company to equal weight from overweight, citing growth concerns.
Eli Lilly — The pharmaceutical stock rose 3.5% in midday trading. Eli Lilly said it plans to acquire privately held obesity drug maker Versanis for $1.9 billion.
— CNBC’s Yun Li, Alex Harring, Sarah Min and Michelle Fox contributed reporting. More

Summer 2023 is the most expensive on record to fly to Europe.
Buying a round-trip international flight to Europe for travel in the fall can yield savings of $500 a ticket, on average, relative to summer departure, according to Hopper.
The “shoulder season” around September and October is generally less expensive.
Cities such as Rome, London, Paris and Barcelona have been top destinations for Americans. Travel abroad ramped up as Covid-19 restrictions eased.

Jose A. Bernat Bacete | Moment | Getty Images

Airfare to Europe hit an all-time high this summer. But those dissuaded by the sticker shock can still travel overseas in coming months and cut costs by perhaps hundreds of dollars a ticket.
Flying to Europe from the U.S. during the fall “shoulder season” — in September and October — instead of in the summer will save the average traveler $500 per round-trip ticket, according to data from Hopper, a travel app.

Europe is the most popular overseas destination for U.S. tourists this summer. But travelers to top European cities would save 34%, on average, by going in the fall instead of June, July or August, Hopper found.
More from Personal Finance:Canceled or delayed flight? What to know about your rightsU.S. passport delays may be months longTravel to Europe is no longer a ‘screaming, bargain-basement’ deal
Consider these examples: Airfare to Rome is $1,284, on average, this summer. It’s $736 this fall, a 43% reduction, or $548 of savings per ticket.
Likewise, those venturing to London would pay $693 in the fall, 32% less than summer’s $1,025. In Barcelona, visitors would fly for $757 in the fall, versus $1,193 in the summer, a 37% savings.
“There is some good news in sight,” Hayley Berg, Hopper’s lead economist, said of prices.

Shoulder-season travel is typically less expensive

Shoulder season is generally a less expensive time to travel. But the savings may be especially noteworthy to prospective buyers due to recent nosebleed costs, experts said.
The price dynamic is guided by supply and demand: Fewer people typically travel in the fall, as kids return to school, for example.
That also means not everyone — such as families with kids, or workers such as teachers whose vacations revolve around summer months — may be able to take advantage of a bargain.  
But those who can travel during the shoulder season would likely get a better overall experience due to milder weather and reduced crowds, said Sally French, a travel expert at NerdWallet.

Why international travel costs are so high

Tourists and locals at the crowded El Postiguet Beach in Alicante, Spain, July 9, 2023.
Marcos Del Mazo | Lightrocket | Getty Images

Costs to travel abroad have soared in 2023 as people who put off international trips during the Covid-19 pandemic indulge their pent-up wanderlust. There has been historic demand for passports and applications for federal travel programs such as Global Entry.
Many Covid-era restrictions have eased, making it easier to go overseas. For example, the U.S. ended a testing requirement for international travelers in June 2022.
Some countries’ borders were still closed last summer, especially those in Asia. Now, just seven nations have some kind of travel restriction in place for vaccinated American travelers, according to Kayak. For unvaccinated American travelers, the number rises to 23.
“This is the first year people don’t have many Covid requirements at all,” French said.

The Colosseum at sunrise in Rome.
Alexander Spatari | Moment | Getty Images

As a result, summer 2023 is the most expensive time on record to travel to Europe, Hopper said. The average ticket costs about $1,200, eclipsing the previous high in 2018 by $50 a ticket.
In Asia, the No. 2 most-popular destination for Americans, average prices are 64% higher than pre-pandemic levels, Berg said.
It’s not just airfare. Staying at a European hotel this summer costs $205 a night, a 37% increase from last year. Cities such as Rome and Madrid have seen prices jump 63% and 41%, respectively, over the last year, Hopper said.

Price doesn’t seem to have dissuaded travelers, in the aggregate, from travel abroad, however.
That makes sense from a money standpoint. The typical American tourist going abroad tends to be wealthier — with an average household income of $110,000 relative to $83,000 for all travelers — and much more optimistic about their personal finances, spilling over into a greater willingness to spend on leisure travel, according to a recent poll by Destination Analysts, a tourism market research firm.

Other travel tips to scout a good deal

Senja island, Norway.
Roberto Moiola / Sysaworld | Moment | Getty Images

Aside from traveling during the off-season, here are some general tips from travel experts on finding a good deal.

Be flexible. Travel midweek (e.g., Tuesday and Wednesday) instead of during the weekend. Consider alternate locations, perhaps a destination such as Scandinavia instead of the most popular cities such as Paris and Rome. Play around with dates and locations using tools such as Google Flights and Explore.
Don’t book flights at the last minute. Book an international flight a few months ahead, if possible.
Use rewards. Now is a good time to use, and not hoard, any frequent flier miles or other benefits.
Leverage credit card benefits. Your credit card may have perks for travel or rental-car insurance, or another benefit. Purchase part or all of a vacation with that card, and you may not need to buy separate insurance.
Keep other costs in mind. If you find a good deal on airfare, don’t overlook other costs such as lodging before booking. They may amount to a bigger cost than airfare, depending on the length of stay and destination. More