Investing

Amid tariff volatility, older investors may consider a bond ladder to help preserve their nest egg.
The strategy, which includes an allocation of bonds with staggered maturities, can prevent selling assets when the stock market is down.
As bonds mature, you can use the proceeds to cover living expenses or reinvest the cash.

Robert Daly | Ojo Images | Getty Images

Manage the ‘sequence of returns’ risk

Typically, you should avoid selling assets when the stock market is down, especially during earlier retirement years. Those early withdrawals paired with market dips can stunt your long-term portfolio, known as the “sequence of returns risk.”
Negative returns are more harmful early in retirement than later because you could miss more years of compound growth, according to a 2024 report from Fidelity Investments.
That’s why flexibility is important when it’s time to pull funds from your retirement savings, Caswell said. 

Caswell recommends a bond ladder of Treasuries that mature every six months or one year for up to five years. You can also use the ladder method with certificates of deposit. 
As assets mature, you can use the proceeds to cover living expenses. Alternatively, you could reinvest part of the cash if you receive more than you need, he said.
The strategy provides “more transparency and control” of when you’re taking money out of that part of your portfolio, Caswell said.

Create a ‘TIPS ladder’

You could also weigh a ladder of so-called Treasury inflation-protected securities, or TIPS, according to Amy Arnott, a portfolio strategist with Morningstar Research Services.
Issued and backed by the U.S. government, TIPS can provide a hedge against inflation because the principal rises or falls based on the consumer price index. 
“Inflation and loss of purchasing power can be a risk with bonds, which is why a TIPS ladder can be attractive,” especially when you’re able to get a positive return, she said. More

New market turbulence may tempt investors to have more cash set aside.
But experts warn it’s possible to have too much money in savings.

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024.
David A. Grogen | CNBC

Warren Buffett is sitting on a record amount of cash.
That’s not necessarily something everyday investors should emulate. If you have money on the sidelines, it may be time to rethink your strategy, experts say.

Buffett’s conglomerate Berkshire Hathaway, with a diverse portfolio of businesses, was sitting on a record $334 billion in cash at the end of last year.
Yet in a February letter to shareholders, Buffett told shareholders that “despite what some commentators currently view as an extraordinary cash position,” the majority of the money invested in Berkshire is in equities.
“Berkshire will never prefer ownership of cash-equivalent assets over the ownership of good businesses, whether controlled or only partially owned,” Buffett wrote.
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In hindsight, Buffett’s cash position looks wise, as Trump administration tariff policies have caused market turbulence.

Investors have also been thought to have a cash cushion. There is $6.88 trillion in money market funds as of the week ending April 16, according to the Investment Company Institute — even though higher interest rates have made it possible to earn more on cash.
Yet even as the markets have flirted with bear territory, experts still say it’s possible to have too much money on the sidelines.

A 60/40 portfolio beats cash in the long run

Boy_anupong | Moment | Getty Images

A traditional portfolio comprised of 60% stocks and 40% bonds almost always outperforms cash in the long run, according to recent JPMorgan Asset Management.
That is based on a classic 60/40 portfolio comprised of the S&P 500 index and Bloomberg US Aggregate Bond Index versus cash based on Treasury bills or a certificate of deposit equivalent, according to Jack Manley, global market strategist at JPMorgan Asset Management.
In looking at data over 1995 to 2024, the 60/40 portfolio beat cash on a one-month basis roughly 65% of the time, Manley said. On a six-month basis, that increases to 75% of the time. For one year, that climbs to 80% of the time. And by the time you hit 12 years, it’s 100% of the time, he said.
Yet in times of uncertainty, investors often feel safer in cash.
“When we think about investors making the wrong decisions — investing with their guts, not with their brains, where they are going to if they’re panicking — they’re going to cash,” Manley said.

How to balance cash and investing

In the stock runup of 2024, a “plain-vanilla version” of a 60/40 portfolio gained about 15%, according to new Morningstar research. The portfolio includes a 60% weighting in the Morningstar US Market Index and 40% in the Morningstar US Core Bond Index.
Yet a diversified portfolio of 11 different asset classes only gained about 10%, the research found. That included larger cap domestic stocks, developed markets stocks; emerging markets stocks; Treasuries; U.S. core bonds; global bonds; high yield bonds; small cap stocks, commodities; gold and REITs.
Major shifts in U.S. tariff policy may change how well those strategies perform going forward. Thus far in 2025, a diversified portfolio has held up better, with gold gaining about 32% this year, according to Amy Arnott, portfolio strategist at Morningstar. Meanwhile, commodities, global bonds and real estate have held up better than U.S. stocks, she said.

With interest rates higher, cash has been a better portfolio diversifier than Treasuries in recent years, according to Morningstar’s research.
Notably, those cash allocations are best held outside the portfolio in an emergency fund or for any large expenses that may come up in the next two years, Arnott said. Current retirees may want to have at least one to two years’ worth of portfolio withdrawals in cash, she said.
With current turmoil and market uncertainty, it’s important to remember that making radical shifts to your portfolio can often backfire, Arnott said.
“If you’ve had an asset allocation that was a good fit for your time horizon and your investment goals previously, it’s probably not a good idea to be making dramatic changes to that just because of all the uncertainty that’s going on right now,” Arnott said.

Investors who have an ample cash position to fit their needs do tend to feel more confident now, said Adrianna Adams, a certified financial planner and head of financial planning at Domain Money.
However, for those who already have a sufficient emergency fund, the best use for extra cash is typically in the markets, Adams said.
“I wouldn’t recommend holding cash if we’re using that account or allocation towards our long-term goals,” Adams said. “If we’re going to need the money in the next two years, then absolutely, we should keep it in cash.”
High-yield savings accounts tend to be a favorite among consumers for emergency funds, Adams said. However, individuals in high-income tax brackets may want to consider municipal money market funds that help limit the tax bills they will pay on the interest they earn on that money, she said. More

While Americans are increasingly concerned about their financial standing, consumer spending has picked up.
Even though spending is higher now, financial constraints coupled with expectations that the economy is weakening will cause consumers to cut back in the months ahead, experts predict.
“That is a self-fulfilling prophecy,” says Wharton’s assistant professor of finance Sasha Indarte.

While many Americans are worried about where the U.S. economy is heading, few have changed their spending habits in anticipation of a slowdown.
Nearly three-quarters, or 73%, of adults said they are “financially stressed,” with most pointing to the tariff wars as the culprit, according to a recent CNBC/SurveyMonkey online poll.

And yet, consumer spending has remained remarkably resilient.
In part because of looming tariffs, shoppers are panic buying. In fact, consumer spending was even stronger than expected in March, according to the Commerce Department and ticked up again in April, data released Wednesday from J.P. Morgan showed.
J.P. Morgan also raised its odds for a U.S. and global recession to 60%, by year end, up from 40% previously.More from Personal Finance:Cash may feel safe when stocks slide, but it has risksWhat higher stagflation risks mean for your moneyShould investors dump U.S. stocks for international equities?

Setting the stage for a slowdown

Consumer spending is considered the backbone of the economy because it represents a significant portion of Gross Domestic Product and fuels economic growth.
In a speech earlier this month before business journalists in Arlington, Va., Federal Reserve Chair Jerome Powell said “the economy is overwhelmingly driven by consumer spending.” Powell also said that he expects President Donald Trump’s tariff policies to raise inflation and lower growth.

Most experts agree that in the face of higher prices for many consumer goods, Trump’s tariffs are igniting a fresh wave of declining sentiment, which plays a big part in determining where the economy is headed.
The Conference Boards’ expectations index, which measures consumers’ short-term outlook, plunged to its lowest level in 12 years and well below the recession threshold, signaling heightened recession risk. The University of Michigan’s consumer survey also showed sentiment sank by more than 30% since December among persistent worries of a trade war.
“On-again, off-again rising tariffs and resulting turmoil in the stock market and world economy are clearly impacting consumer concerns about higher prices and future consumer spending growth,” Jack Kleinhenz, chief economist of the National Retail Federation, said in a statement.

How tariffs impact household budgets

The Trump administration’s tariffs on a host of other countries are currently in the middle of a 90-day pause, with a 10% baseline tariff rate instead applying to all imported goods across the board. The pause is due to expire on July 9, with Trump touting a series of rate negotiations with foreign leaders between now and then.
According to an analysis by the Urban-Brookings Tax Policy Center, if the lower tariff rates in effect during the 90-day pause remain in effect permanently, it could reduce real income for the average taxpayer by about $3,100 in 2026. A separate study by the Budget Lab at Yale estimates that tariffs could cost the average household roughly $3,800 per year.
“Household budgets remain under pressure and highly sensitive to further price increases,” said Greg McBride, chief financial analyst at Bankrate. “Inflation will continue to be central to how consumers feel about their finances, and their capacity for additional spending.”

A looming drop off

Financial constraints coupled with expectations that the economy is weakening will eventually cause consumers to spend less, which can cause businesses to cut back or lay off workers, according to Sasha Indarte, an assistant professor of finance at University of Pennsylvania’s Wharton School. “That is a self-fulfilling prophecy.”
“Even a small initial cutback in spending gets amplified,” she said. “One person’s spending becomes another person’s income — you can get this echo effect.”
But basic economic theories don’t tell the whole story, Indarte added.
Even when consumers intend to cut back, they don’t always scale back their spending as much as they want to, or should. Behavioral biases and inertia also play a role, according to Indarte.

“Even when our environment is changing, we are happy doing what we used to be doing. People are used to going to the same restaurants, or driving the same car, we aren’t used to making adjustments,” she said. “There’s a preference for sameness.”
However, once household budgets reach their limits, consumers will no longer be able to afford the lifestyle they were accustomed to — that’s “when the shock materializes,” she said.
At that point, consumers will have to reign in their spending, whether they want to or not, she said, which could lead to an economic drop-off in the months ahead. That prediction was also recently shared by JPMorgan analysts in a research note on Wednesday and Federal Reserve Bank of Chicago President Austan Goolsbee on Sunday.
“We should be worried,” Indarte said.  
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In some California metro areas, a third of 25- to 34-year-olds live with their parents, according to Pew Research Center.
Young adults stand to save about $13,000 a year by living at home, according to a Federal Reserve report.
Demographics — and their interplay with personal finances — appear to be the primary driver of high shares of young adults living with their parents in certain metros, Pew found.

Catherine Falls Commercial | Moment | Getty Images

In some California cities, it’s common for parents to have roommates: their adult children.
Three California metro areas host the highest shares of 25- to 34-year-olds living in a parent’s home relative to other U.S. metros, according to a new analysis by Pew Research Center, a non-partisan research organization.

In the Vallejo and Oxnard-Thousand Oaks-Ventura metros, 33% of young adults were living with their parents in 2023, Pew found. (Those metros are in the San Francisco Bay Area and outside Los Angeles, respectively.)
In El Centro, east of San Diego near the U.S.-Mexico border, 32% of young adults live at home, according to Pew.
Those shares are significantly higher than the 18% U.S. average. In some metros, the share is as low as 3%.
Young adults can save about $13,000 a year by living with their parents, according to a 2019 Federal Reserve analysis. About half of those savings — $6,400 — is from housing and utility costs, it found.
Nationally, 50% of parents with a child older than 18 provide them with some financial support, averaging $1,474 a month, according to Savings.com.

Metros with high, low shares of young adults at home

These are the 10 metro areas with the highest shares of 25- to 34-year-olds living with their parents in 2023, according to Pew:

Vallejo, Calif. — 33%
Oxnard-Thousand Oaks-Ventura, Calif. — 33%
El Centro, Calif. — 32%
Brownsville-Harlingen, Texas — 31%
Riverside-San Bernardino-Ontario, Calif. — 30%
Merced, Calif. — 30%
McAllen-Edinburg-Mission, Texas — 29%
Naples-Marco Island, Florida — 29%
Racine-Mount Pleasant, Wisconsin — 29%
Port St. Lucie, Florida — 29%

These are the 10 metro areas with the lowest shares of 25- to 34-year-olds living with their parents in 2023, according to Pew:

Odessa, Texas — 3%
Lincoln, Nebraska — 3%
Ithaca, New York — 3%
Bloomington, Indiana — 3%
Bozeman, Montana — 4%
Cheyenne, Wyoming — 4%
Wausau, Wisconsin — 5%
Midland, Texas — 5%
Manhattan, Kansas — 6%
Bismarck, North Dakota — 7%

Demographics are a driving force

Demographics — and their interplay with personal finances — appear to be the primary driver of high shares of young adults living with their parents in certain metros, said Richard Fry, a senior researcher at Pew and co-author of the analysis.
There are fewer white young adults and more Hispanic, Black and Asian young adults in the top 10 metro areas with the largest proportions of 25- to 34-year-olds living at home, Fry said. (The one exception is Racine, Wisconsin.)
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“Areas where there are more minority young adults tend to have more young adults living at home,” Fry said. “That’s not always the case, but it is a pattern.”
Black and Hispanic young adults are less likely to have a college degree and tend to have lower earnings as a result, Fry said.
“Being able to live independently may be more of an issue for them,” he said.
The typical Black or Hispanic worker, age 25 to 34, earned about $46,000 a year in 2022, according to the National Center for Education Statistics. The typical white young adult worker earned $58,000.
Part of the reason may also be cultural, Fry said. There are likely other factors at play like cost of living, though the correlation isn’t as strong, he said.

Many of the metros with low shares of young adults living at home are college towns, Fry said.
For example, Ithaca, New York, hosts Cornell University, and Bloomington, Indiana, has Indiana University, Fry said. Many young adults here are likely university graduates who are well-educated and opt to stay there after they graduate instead of moving home, he said.
Nationally, the share of young adults living at home climbed starting in the early 2000s, peaking at 20% in 2017, according to Pew. (It declined to about 18% in 2023.)
Unemployment spiked during the Great Recession and it took many years for the labor market to heal, Fry said. Meanwhile, young adults today are more likely than older generations to be saddled with student debt. More

The Trump administration is cracking down on federal student loan borrowers who fell behind on their bills.
At the same time, new borrowers are preparing to enter the student loan system.
A recent study found that incoming college freshmen could rack up $40,000, on average, in education debt by graduation.

Valerie Plesch | The Washington Post | Getty Images

The U.S. Department of Education is taking aggressive steps to restart collections on federal student loans that are in default — just as current high school seniors are set to rack up new balances on their path to a college degree.
Currently, around 42 million Americans hold federal student loans and more than 1 million high school graduates will take out new education debt in the months ahead, according to higher education expert Mark Kantrowitz.

By the time they graduate college, these students could each borrow as much as $40,000, on average, in federal and private aid to earn a bachelor’s degree, according to a new NerdWallet analysis of data from the Education Department, up from $37,000 the year before.
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The college affordability problem

Every year, new students are pumped into the student loan system while many current borrowers struggle to exit it. Despite historic student loan forgiveness efforts under former President Joe Biden, the country’s education debt tab has mostly ticked higher.
“We haven’t been able to get our arms around the college affordability problem more broadly,” said Michele Zampini, senior director of college affordability at The Institute for College Access & Success. “There are new enrollments every semester and the pile up continues.”

Around 45% of 2025 high school graduates will go on to a four-year college, according to NerdWallet, and more than one-third of them will take out student loans to help cover the tab.

College tuition costs have risen significantly in recent decades, averaging a 5.6% annual increase since 1983, outpacing inflation and other household expenses, according to a separate report by J.P. Morgan Asset Management. And families now shoulder 48% of college expenses, up from 38% a decade ago.
“Most people don’t have the money to make those payments out of pocket,” Zampini said.
To bridge the gap, students and their families have been borrowing more, which has boosted total outstanding student debt to more than $1.6 trillion.

In a Wall Street Journal op-ed Monday, U.S. Secretary of Education Linda McMahon said that some institutions make “empty promises to students while pocketing their loan dollars.”
“Colleges and universities call themselves nonprofits, but for years they have profited massively off the federal subsidy of loans, hiking tuition and piling up multibillion-dollar endowments while students graduate six figures in the red,” she wrote.

Deep cuts in state funding for higher education have also contributed to significant tuition increases and pushed more of the costs of college onto students, other reports show.
These days, tuition accounts for about half of college revenue, while state and local governments provide much of the rest, according to the Center on Budget and Policy Priorities. But roughly three decades ago, the split was much different, with tuition providing just about a quarter of revenue and state and local governments picking up the bulk of the difference.
“We’ve haven’t actually seen a good faith effort to work through that comprehensive problem,” Zampini said. “What we’ve seen instead is a bit of an attack strategy on higher education in general.”
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President Donald Trump in a recent Fox interview said “there is a chance” that tariff revenue could replace the federal income tax.
However, some policy experts are skeptical of the idea, based on the potential tax base and other factors.
There’s currently a universal tariff rate of 10% on imports from most countries and 145% on imports from China.

A forklift transports shipping containers among stacks of containers in Hamburg Port in Hamburg, Germany, April 15, 2025.
Sean Gallup | Getty Images

Tariff tax base is ‘a lot smaller’ than income tax

Some policy experts have questioned how much revenue the duties could bring in, compared with the federal income tax. 
“The tariff tax base is a lot smaller than the income tax base,” Kimberly Clausing, a senior fellow at the Peterson Institute for International Economics, told CNBC.
In 2023, the U.S. imported $3.1 trillion of goods, according to a report Clausing co-authored in June. By comparison, the government levied tax on more than $20 trillion in income, the report said.
White House trade advisor Peter Navarro in late March estimated tariffs could raise roughly $600 billion a year.
But that figure “is not even in the realm of possibility,” Mark Zandi, chief economist at Moody’s, told CNBC earlier this month. “If you get to $100 billion to $200 billion, you’ll be pretty lucky.”
To compare, the IRS has collected $1.14 trillion in individual income taxes for fiscal year 2025 through March 31, according to Treasury data.

“Tariff rates would have to be implausibly high on such a small base of imports to replace the income tax,” Clausing co-wrote in the Peterson Institute’s report.
Plus, at higher tariff rates, people will buy fewer imported goods, which reduces revenue, Clausing told CNBC: “That’s part of the point of the policy.”
The Trump administration did not respond to CNBC’s request for comment.

Other factors can lower tariff income

As tariff rates increase, other factors can decrease how much revenue the U.S. ultimately collects, experts say.
“The administration seems to think that every time it raises the tariff rate that it can collect more revenue,” the Tax Foundation’s Durante said. “And that’s not always the case.”
Direct tariff revenue is lowered by behavioral and other economic factors, according to a Tax Foundation report published April 15.

The Tax Foundation estimates that a 10% universal tariff would raise $2.2 trillion through 2034. However, the same tariff would reduce U.S. gross domestic product by 0.4%, which affects revenue, it said.
The International Monetary Fund on Tuesday reduced 2025 U.S. growth projections to 1.8% from 2.7% based on trade tensions. More

A majority of Americans, 85%, have concerns about tariffs, a new NerdWallet survey finds. Other data points to plummeting consumer confidence.
As financial uncertainty looms, individuals are making different choices with their money.
Experts say it would be wise to start with bulking up emergency savings.

The Apple Fifth Avenue store in New York, U.S., on Monday, Feb. 24, 2025.
Michael Nagle | Bloomberg | Getty Images

Even as a pause on reciprocal tariffs has been put into effect, consumers are already anticipating the pressures of higher prices.
A majority of Americans — 85% — have concerns about the tariffs, according to a new NerdWallet survey of more than 2,000 individuals conducted this month.

Among top concerns of consumers is that the new policies will impact their ability to afford necessities and that the U.S. economy will fall into a recession.
Meanwhile, cracks in consumer confidence are showing elsewhere.
The University of Michigan’s consumer survey shows sentiment has dropped by more than 30% since December among persistent worries of a trade war. The latest reading for April fell 11% from the previous month, which was worse than expected.
The worries are not unfounded, experts say. Tariffs could cost the average household $3,800 per year, the Budget Lab at Yale University estimates.
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“Most Americans are worried about tariffs, and it’s actually impacting their spending plans,” said Kimberly Palmer, personal finance expert at NerdWallet.
In the next 12 months, a significant portion of individuals surveyed by NerdWallet plan to make changes to their spending habits, with a notable shift towards saving more.
Specifically, 45% plan to spend less on non-necessities, 33% intend to spend less on necessities, and 30% plan to save more money in an emergency fund. However, a smaller percentage, 14%, anticipate paying less on their debts.
The tariffs come as consumers were already struggling to pay for groceries and other essentials amid higher prices, according to Palmer.
“These tariffs are adding to that financial stress and basically forcing people to make some difficult decisions,” Palmer said. That includes scaling back on travel and planned big-ticket purchases like a car.

Emergency savings is ‘most important’ priority: expert

New economic pressures may prompt income to be eaten up by rising prices and competing interests, according to Stephen Kates, a certified financial planner and financial analyst at Bankrate.
Consumers may have to make tough choices between saving, investing and paying down debts.
“If you have nothing [saved], start with the emergency fund,” Kates said.
Individuals should strive to have at least one month of essential expenses set aside at the very minimum, Kates said. Ideally, that would be more like three to six months’ living expenses, he said.

That way, if a job or other income loss happens, consumers can protect themselves from going into debt, Kates said.
For individuals who already have racked up debt balances, prioritizing emergency savings still makes the most sense, Kates said. And if you’re choosing between emergency savings or saving for retirement, emergency savings should still be the highest priority, he said.
To be sure, that doesn’t necessarily mean individuals should ignore their other goals.
Kates discussed using what is called the “debt avalanche” strategy.
The focus is on paying down the debt with the highest interest rate first — while paying minimums on the others — then move on to the account with the next highest rate, and so on. That can provide an immediate return and help free up money in household budgets, Kates said.
When it comes to retirement savings, it’s important to make sure individuals are contributing enough to take advantage of a match, if their employer offers one, he said. More

In an op-ed Monday, Secretary of Education Linda McMahon explained the Education Department’s decision to resume “involuntary collections” of federal student loans that are in default.
Within weeks, borrowers should contact the government’s Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. 
Borrowers who remain in default may eventually have their wages automatically garnished.

U.S. Secretary of Education Linda McMahon smiles during the signing event for an executive order to shut down the Department of Education next to U.S. President Donald Trump, in the East Room at the White House in Washington, D.C., U.S., March 20, 2025. 
Carlos Barria | Reuters

In a Wall Street Journal op-ed, U.S. Secretary of Education Linda McMahon explained the U.S. Department of Education’s decision to restart collections on federal student loans that are in default — and what comes next for Federal student loan borrowers who are behind on their bills.
“On May 5, we will begin the process of moving roughly 1.8 million borrowers into repayment plans and restart collections of loans in default,” McMahon wrote in the op-ed Monday.

“Borrowers who don’t make payments on time will see their credit scores go down, and in some cases their wages automatically garnished,” McMahon wrote.

Next steps for borrowers

Federal student loan borrowers in default will receive an e-mail over the next two weeks making them aware of this new policy, the Education Department said.
These borrowers should contact the government’s Default Resolution Group to make a monthly payment, enroll in an income-driven repayment plan, or sign up for loan rehabilitation. 
The Education Department said it is extending the Federal Student Aid call-center operations with weekend hours as well updating a “loan simulator” to help borrowers calculate their repayment plans. There is also an artificial intelligence assistant, dubbed Aidan, to help with a financial strategy.
“We are committed to ensuring that borrowers are paying back their loans, that they are fully supported in doing so, and that colleges can’t create such a massive liability for students and their families, jeopardizing their ability to achieve the American dream,” McMahon wrote.

‘Be proactive’

Those borrowers who are behind in their required payments should avoid being placed in default by taking advantage of various options currently available to them to manage their education loans, advised Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”
“Be proactive,” he said. “Best to take care of this as soon as possible, as the loan servicers’ and the U.S. Department of Education’s customer support will get busier the closer it gets to May 5.”

The Education Department has not collected on defaulted student loans since March 2020. After the Covid pandemic-era pause on federal student loan payments expired in September 2023, the Biden administration offered borrowers another year in which they would be shielded from the impacts of missed payments. That relief period officially ended on Sept. 30, 2024.
“President Biden never had the authority to forgive student loans across the board, as the Supreme Court held in 2023,” McMahon wrote. “But for political gain, he dangled the carrot of loan forgiveness in front of young voters, among other things by keeping in place a temporary Covid-era deferment program.”
McMahon said restarting collections of loans in default was not meant “to be unkind to student borrowers.” Rather, the new policy intended to protect taxpayers. “Debt doesn’t go away; it gets transferred to others,” she said. “If borrowers don’t pay their debts to the government, taxpayers do.”
Currently, around 42 million Americans hold federal student loans and roughly 5.3 million borrowers are in default.
“It really is time to start repaying again,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget said in a statement. “While a short repayment pause was justifiable early in the pandemic, that was five years ago — and it makes no sense today.”
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President Donald Trump in March signed an executive order aimed at dismantling of the Education Department after nominating McMahon for Education secretary. Trump suggested that she would help gut the agency. As part of this overhaul, federal student loan management was then shifted to the Small Business Administration.
Along with changes to the student loan system, the Trump administration revised some of the Department of Education’s income-driven repayment plans, which put at-risk borrowers in “economic limbo,” according to Mike Pierce, executive director at the Student Borrower Protection Center.
“For five million people in default, federal law gives borrowers a way out of default and the right to make loan payments they can afford,” Pierce said in a statement. “Since February, Donald Trump and Linda McMahon have blocked these borrowers’ path out of default and are now feeding them into the maw of the government debt collection machine.”
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