Investing

You may be able to finish paying off your student debt sooner than you thought, experts say.
They shared tips on how to make that happen.

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‘Even an extra $5 a month can make a big difference’

Paying just a little more than you owe each month on your student debt can reduce the amount you’ll pay overall and shorten your repayment timeline, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
“Even an extra $5 a month can make a big difference,” Mayotte said. (You’ll want to make sure to tell your servicer to direct the additional money to your principal, so it doesn’t just apply it to future interest and payments.)
To illustrate the impacts of throwing extra cash at your student debt each month, higher education expert Mark Kantrowitz provided an example.
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If someone owed $10,000, and had a 5% interest rate, an additional $50 a month would shave nearly 4 years off of a 10-year repayment timeline. The borrower would also save more than $1,000 in interest.
Kantrowitz’s student loan calculator lets you see how extra payment amounts can shorten your repayment term.
If you’re unsure how to get the extra cash to pay down your debt quicker, consider making a budget, said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.
“If paying off student loans is at the top of your list, scrutinize your monthly cash flow to see where you might have room to allocate more money towards them,” said Boneparth, who is a member of the CNBC Financial Advisor Council.

Consider auto-pay, avalanche method

Most student loan servicers offer borrowers a discount on their interest rate when they sign up for automatic payments, Kantrowitz said. An even slightly lower interest rate will help you pay your debt down faster.
Claiming the student loan interest deduction, meanwhile, on your federal income tax return can reduce your taxable income. Your lender reports your interest payments over a certain amount to the IRS on a tax form called a 1098-E, and should provide you with a copy, too. Depending on your tax bracket and how much interest you paid, the deduction could be worth up to $550 a year, Kantrowitz said.
If that results in a bigger refund, you can direct more money toward your education debt each year. You don’t need to itemize your taxes to claim the deduction, which can reflect up to $2,500 in interest payments on all federal and most private student loans.

Yet before you accelerate payments on your student debt, you want to first pay down any higher-interest loans, Kantrowitz said. Undergraduate federal student loans disbursed last summer had an interest rate of 5.5%, while the average interest rate on credit cards is more than 20%.
The tip above is an example of what is called “the avalanche method,” in the world of debt repayment, Mayotte said. It is when you pay the minimum due on all your loans, but send extra payments to the loan with the highest interest rate.
Of course, if your priciest debt is from your education, you can use the strategy on those loans (many student borrowers have multiple loans). You can learn your different interest rates with your servicer or at Studentaid.gov. Private student loans tend to have much higher rates than federal ones.
Unless you truly can’t afford to make payments on your student debt, you’ll also want to avoid deferments and forbearances, particularly if your goal is to get out of the debt sooner than later. These pauses stretch out your repayment timeline, and your balance can swell from interest accrual.
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With property prices in the city down 15-20% since their peak, Peter Churchouse of Portwood Capital said now may be a good time to buy a property in Hong Kong if you’re looking to own a home.
But “Hong Kong is not the place” if investors are looking for good rental yield, he said, adding that Australia and New Zealand markets look attractive.

Hong Kong residential prices could fall by another 10% in 2024, according to DBS Hong Kong.
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Hong Kong’s property market has plunged nearly 20% since its peak, and it may be a good time for homeowners to buy — but investors might want to think twice, according to Peter Churchouse, chairman and managing director of real estate investment firm Portwood Capital. 
With property prices in the city down 15-20% since their peak, Churchouse said now may be a good time to buy a property in Hong Kong if you’re looking to own a home, but investors hunting for yield should look at Australia and New Zealand instead.

Investors and homeowners have different priorities, Churchouse pointed out.
For homeowners looking to buy, “prices down this much is probably not a bad time to look to be buying” if you can afford to pay mortgage and down payment, he said Tuesday on CNBC’s “Squawk Box Asia.”
“There’s still a bit of downside risks … but perhaps the worst is over.”
Home prices in Hong Kong dropped for four months straight. The official housing price index stood at 339.2 in August, down 7.9% from a year earlier and 4.2% lower from April peaks.
“Hong Kong is probably the easiest place in the region to buy, and I would think that Japan is probably a close second,” he said.

Buying elsewhere in the region is “fraught with all sorts of difficulties and legal issues … There are all sorts of banana skins,” Churchouse warned, explaining that home buyers in other countries either have to be a resident, permanent resident or an employee. 
“Often, you can’t own property as an investor,” he added.

Jeff Yau, Hong Kong property analyst at DBS Hong Kong, said prices in Hong Kong are expected to continue plummeting and could fall by another 10% in 2024.
In October, the Hong Kong government cut stamp duties for property buyers to help boost the city’s slumping real estate market. 
Among the relaxed levies, the stamp duty that non-permanent residents have to pay for property and another levy imposed on additional properties purchases by residents will each be halved to 7.5%. 
Despite the positive news for homebuyers, demand may not bounce back in full force as the higher cost of financing will remain a hurdle for potential homeowners, said Henry Chin, Asia-Pacific’s head of research at CBRE.

Best rental yield

For investors looking for high rental yield, “Hong Kong is not the place,” Churchouse said. “The yield today is less than the cost of capital, less than the interest rate you’re paying on your loan.”
Rental yield in Hong Kong is currently below 3%, while the effective mortgage rate exceeds 4.1%, implying a “negative rental carry,” DBS Bank’s Yau said.
“If the investors have their first property, they still need to pay New Residential Stamp Duty of 7.5% if they buy a second property,” Yau said. “It is not a good time to buy property for investment.”
Where can investors find good rental yield?
“The best yield in markets in this region, I tend to think, are Australia and New Zealand,” Churchouse said. Yield for residential property or commercial property there may be as high as between 6-8% — “maybe even higher,” he added.
In Japan as well, it’s common to find rental yields of about 5% or 6%, he added.
In a country where interest rates are “very, very low,” he said, “You can get a rental yield that higher than your interest costs in Japan.”
— CNBC’s Clement Tan contributed to this report. More

It can be easy for adults in their 20s to overlook retirement altogether.
About 66% of Gen Zers say they’re not sure they’ll ever have enough money to be able to retire, according to a recent study.
“Awareness is the first key. Some people have the ‘head in the sand mentality’ for too long for a lot of their 20s,” said Sophia Bera Daigle, a certified financial planner.

A young woman receives help from a financial advisor.
Richvintage | E+ | Getty Images

It can be far too easy for adults in their 20s to overlook retirement altogether.
After all, it’s still decades away, with many other shorter-term goals — such as buying a home or paying off student debt — closer on the horizon.

About 66% of Gen Zers, or those between ages 18 and 25, say they’re not sure they’ll ever have enough money to be able to retire, according to the recent Prosperity Index Study by Intuit.
Yet, for people in their 20s, it’s a powerful time to get started on saving and investing for retirement. With the right moves now, you can harness the power of compound interest and make the most of the decades ahead to set yourself up for success.

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“Awareness is the key. Some people have the ‘head in the sand mentality’ for too long for a lot of their 20s,” said Sophia Bera Daigle, a certified financial planner and the founder of Gen Y Planning in Austin, Texas. She is also a member of the CNBC Financial Advisor Council.
Here are some moves to get started:

1. Make the most of your 401(k)

If you work for a company that sponsors a retirement plan such as a 401(k) or 403(b), the first thing is to check if you’re eligible and if a company match is available, Daigle said.

If you do have access to an account, start contributing as soon as you can and always at least pay yourself what the company matches, said CFP Shaun Williams, partner and private wealth advisor of Paragon Capital Management based in Denver. The firm is ranked No. 57 on the 2023 CNBC FA 100 list.
The company match is almost like “free money” that can help boost your savings faster, especially at a time where you may not be able to set aside much.

2. Open and invest in a Roth IRA

When you open and contribute to a Roth Individual Retirement Account, you don’t pay taxes on the dollars you put into the account, allowing your savings to grow tax-free for decades.
While they may have income limits and other drawbacks, it’s a powerful tool for people in their 20s.
As you begin your career, you will likely have a lower income, putting you in a lower tax bracket. Use this to your advantage and consider opening a Roth IRA, in which your tax payments will be low.
Funds in a Roth account can also be withdrawn at any time without penalties, making them useful for other goals or even for emergencies.

3. Build up emergency savings

It’s smart to have an emergency savings fund, especially as most emergencies can cost hundreds of dollars.
Before you really start paying down debt, get a handle on that emergency fund, said Williams. Building an emergency savings first can help you keep your retirement savings untouched should unexpected expenses arise.
You may want to have about six months of your spending needs in an emergency fund in case you lose your job, said Williams.
Look into products where you can earn more for your savings, said Daigle.

4. Invest with a long horizon in mind

You have four to five decades in your favor, Williams said. Use the markets for what they’re meant for and be fairly aggressive.
It can be strategic to allocate your assets in different investments, and your 20s is the time for you to take the most risk as an investor, such as focusing your portfolio on stocks.
If it seems daunting for you, you can stick to target date funds, which are the default investment vehicle for most employer-sponsored accounts.

5. Take advantage of your human capital

As someone who’s in their 20s, you have the highest amount of “human capital,” said Williams. Continue educating yourself and refining your skills during your 20s to increase your earnings potential, whether through graduate programs or certifications, Williams said.
“They have all the time. Increasing their earnings potential is one of the best retirement readiness things as well,” he said.
Boosting your income will help you keep up with your short-term goals while bulking your retirement savings.
Make yourself more marketable now in your 20s; that’s really going to pay on in your 40s and 50s, he added.

6. Get and stay out of debt

If most of your income is funneled into debt repayment, you might fall behind on saving for retirement. Therefore, the best thing you can do for yourself in your 20s is to stay out of debt, especially from credit cards, said Daigle.
“It’s so much easier to get started on the other things if you’re not starting in a hole,” she said.
However, if you do have debt, pay extra toward the highest-interest loan when you can, and make the minimum payment on the rest, said Williams.
If you have student loans, make sure you are in a repayment plan that works the best for you and don’t make extra payments until you bulked your emergency savings, experts say.
To keep out of debt, credit cards should be paid off in full, as those are likely to have higher interest rates.
“If you let your credit cards get out of hand from living beyond your means, that’s the No. 1 problem,” said Williams.

7. Live within your means

It’s important to understand where your money is going and get a handle on your budget, experts say, that way you can allocate a sustainable amount of your income for retirement.
Would-be investors in their 20s often put off saving for retirement for later on in their lives or when they become higher earners. This idea tends to fall through as “lifestyle creep” takes over.
Social media comparisons also don’t help adults in their 20s. Nearly 2 in 3, or 73%, of Gen Zers say social media makes them feel they’re tracking behind their life goals while peers seem to be succeeding, the Prosperity Index Study by Intuit found.
Don’t be influenced by what you see on social media apps such as Instagram, said Williams.
If you need to say no to certain things because you cannot afford it, say no.
“Laying the groundwork in your 20s is wonderful so that in your 30s, you can really turbocharge your financial goals,” Daigle said.Don’t miss these stories from CNBC PRO: More

GameStop announced Wednesday that company cash can now be used to buy equities instead of just short-term debt, and that Cohen is in charge of the investments.
Cohen became CEO in September after significant turnover among GameStop executives.
Shares of GameStop closed at $14.84 per share on Wednesday.

A GameStop store in a strip mall in Chicago on March 16, 2023.
Scott Olson | Getty Images

Struggling retailer GameStop is giving its CEO and chair Ryan Cohen even more control, including the ability to use company cash to buy other stocks.
In its quarterly report released Wednesday night, GameStop announced two changes to its corporate investment plan: company cash can now be used to buy equities instead of just short-term debt, and that Cohen is in charge of the investments.

“Mr. Cohen directs the investment activity of the Company in public and private markets pursuant to authority granted by the Board of Directors. Depending on certain market conditions and various risk factors, Mr. Cohen, in his personal capacity or through affiliated investment vehicles, may at times invest in the same companies in which the Company invests,” the filing said.
“Such investments align the interests of the Company with the interests of related parties because it places the personal resources of Mr. Cohen at risk in substantially the same manner as the Company in connection with investment decisions made on behalf of the Company,” the filing continued.
The company did not hold a quarterly conference call with Wall Street analysts, but Wedbush’s Michael Pachter called the decision “inane” and “alarming.”
“Investors have a myriad of investment vehicles available to them and therefore do not need GameStop to act as a mutual fund. If GameStop truly believes in the value of its shares, it should use its excess cash to buy back stock,” Pachter said in a note to clients.
The change comes as Cohen’s attempted turnaround at GameStop is floundering.

The company reported net sales of $1.08 billion for the quarter ending Oct. 28, down 9% year over year and off 25% since the same period in 2019. The company’s net loss did shrink year over year, but that was largely due to aggressive cost cuts, including closing stores in Europe.
Cohen, the co-founder of Chewy, bought shares in GameStop in 2020 and joined the board in 2021 as GameStop became one of the key stocks in the WallStreetBets meme trading phenomenon. Cohen’s e-commerce experience fueled hopes that he could help modernize the brick-and-mortar video game retailer.
But the company never released a detailed turnaround plan and has churned through executives. GameStop fired CEO Matthew Furlong in June, and the company’s chief financial officer resigned shortly thereafter. Cohen was appointed to the CEO role in September.
Shares of GameStop closed at $14.84 per share on Wednesday, down more than 80% from their meme-trade high in January 2021. The stock rose 10% Thursday.

Stock chart icon

GameStop’s stock is well below its meme stock era highs.

Cohen’s status as a celebrity investor for the retail trader crowd has extended beyond GameStop, most notably trading in and out of Bed Bath & Beyond. That retailer filed for bankruptcy protection in April.
Cohen’s RC Ventures still owns 12% of GameStop, making him the company’s largest shareholder, according to FactSet.Don’t miss these stories from CNBC PRO: More

Raising the Social Security retirement age was recently suggested at a Republican presidential candidates’ debate.
The retirement age has been raised before. In 1983, the full retirement age went from 65 to 67.
Experts say other adjustments may help beneficiaries wait, and therefore increase their income in retirement.

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There’s renewed focus on the Social Security retirement age, thanks to recent Republican presidential debates.
The Social Security board of trustees projects the program’s combined funds will run out in 2034, when just 80% of benefits may be payable. To prevent that, lawmakers may generally raise taxes, cut benefits or a combination of both.

One possible change — raising the retirement age — was debated when the Republican presidential candidates took the stage in November.
“What we need to do is keep our promises,” Republican presidential candidate Nikki Haley said. “Those who have been promised, should keep it. But for my kids in their 20s, you go and say we are going to change the rules, change the retirement age for them.”
The retirement age has been raised before. In 1983, when Social Security faced similar solvency issues, legislation was passed that made a host of changes, including boosting the full retirement age from 65 to 67. That change is still getting phased in today.
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Full retirement age is when beneficiaries may receive 100% of the benefits they have earned. Those who claim earlier than full retirement age will have their monthly checks permanently reduced.

Those who wait — up until age 70 — stand to receive up to an 8% boost for every year they wait past full retirement age.
“The difference between an age 62 benefit and an age 70 benefit is about a 77% increase,” said Jason Fichtner, chief economist at the Bipartisan Policy Center. “That’s huge.”
If the retirement age is raised again, that may make it so early claimants face a steeper cut.
Despite the benefits of waiting until age 70, almost 90% of today’s retirees claim earlier.
“For the vast majority of people, waiting longer to collect Social Security is your best financial deal, your best investment option,” said Teresa Ghilarducci, professor of economics at The New School for Social Research.
Experts say there are changes that may encourage beneficiaries to wait.

1.  Draw from other funds while delaying Social Security

Financial experts already recommend using other income sources, if possible, while waiting to claim Social Security benefits.
New research argues more can be done to encourage workers to rely on funds from retirement accounts such as 401(k) plans or individual retirement accounts — dubbed a Social Security bridge option — before claiming retirement benefits, according to the Schwartz Center for Economic Policy Analysis at The New School.
If a worker relies on their own savings until age 70, they may be able to boost their Social Security benefits by $1,000 a month from age 62, for a total of $2,480 per month, according to the research. But even waiting slightly longer, until age 63, for example, may result in benefits that are $100 higher per month.
The Social Security bridge option would be ideal for workers who have retirement accounts or extra income they may set aside. However, other policies would be needed to help those without retirement savings, according to the Schwartz Center for Economic Policy Analysis.

Employer-sponsored retirement accounts could incorporate bridge payment plans that would distribute payments as long as the funds last or until a retiree turns 70, according to the Schwartz Center for Economic Policy Analysis. Alternatively, a separate account for bridging may be established by the Social Security Administration.
“Once they do the hard work of accumulating money in their retirement account, there really needs to be an easy, straightforward way for them to decumulate in the way that people want,” Ghilarducci said.
“People want lifelong guaranteed income,” she said.

2.  Make bridge annuities more accessible

When it comes to Social Security, even just waiting a year to three years longer — to age 63, 64, or 65 — can make a big difference, according to economist Fichtner.
To cover income needed while a beneficiary delays their monthly checks, a bridge annuity may help, said Fichtner, who also serves as a senior fellow at the Alliance for Lifetime Income, an educational organization focused on raising awareness of annuities in retirement.
Annuities are financial products that provide a guaranteed stream of income. However, they require consumers to part with a lump sum of money.
But the trade-off may be worthwhile, according to Fichtner, particularly if it lets a retiree access the guaranteed growth delaying Social Security benefits provides.
Consumers who want to pursue this strategy should consult with a financial advisor. Annuity options may also become available within 401(k) or 403(b) retirement plans. However, less than 10% of plans currently offer annuities, according to the Bipartisan Policy Center.
Annuitizing isn’t for everyone, Fichtner noted, especially those who don’t have access to employer-sponsored plans or who don’t have meaningful savings.

3.  Establish a Social Security bridge benefit

Some workers who have physically demanding jobs cannot wait until full retirement age to claim Social Security benefits.
The creation of a bridge benefit, which would start at age 62 and last until full retirement age, may help cushion the cut they may otherwise take to their monthly income, suggested a recent task force report from the National Academy of Social Insurance.
Workers would be able to apply for the bridge benefit based on a history of having physically demanding jobs. The requirements to obtain the benefit would be most stringent at age 62, while this would gradually ease up to full retirement age.
The bridge benefit would provide half the difference between what a worker would receive at full retirement age and their reduced age 62 benefit. For example, if someone is eligible for $1,000 per month in Social Security benefits at full retirement age, and a $700 reduced benefit at age 62, the bridge benefit may raise their income to $850 at 62.
The change would cut the early claiming penalty in half, members of the task force noted during a November presentation of the report. Other countries have implemented similar benefits.

4. Provide more generous minimum benefits

Social Security provides a special minimum benefit to replace more income for workers who have had low earnings for many years.
Yet over time, the value of those special minimum benefits has diminished. While regular Social Security benefits are linked to wages, the special minimum benefit is tied to prices. As wages have grown faster than prices, today’s minimum benefit has become “gradually irrelevant,” according to the Schwartz Center for Economic Policy Analysis.
The special minimum benefit may be improved by raising the benefit levels, re-indexing them or changing eligibility rules, the research suggests.
Creating a strong minimum benefit should coincide with any increases to the retirement age, Fichtner said, to prevent claimants who have no choice but to take retirement benefits at 62 from facing deeper benefit cuts. More

ETF Strategist

For a couple of years, stocks have largely had an inverse relationship with economic data. The better the numbers, the worse the market has performed.
It may take a while for good news to become good again.

Taiwanese woman walking down the city street with umbrella and coffee on a rainy day
Mixetto | E+ | Getty Images

For a couple of years, stocks have largely had an inverse relationship with economic data. The better the numbers have been — whether weekly jobless claims, consumer sentiment or housing starts — the worse the market has performed and vice versa.
The phenomenon showed up last month when manufacturing, services and employment data all undershot expectations within days of one another. That batch of bad news caused bond yields to plummet, and stocks responded by notching their longest winning streak in two years.

It all begs the question: When does good news become good again and bad news bad?
The short answer is that it may take a while.

Markets may cheer ‘slow trickle of slightly bad news’

Indeed, inflation remains elevated, and while there’s been speculation about when the Fed will pivot, most policymakers are committed, at least publicly, to keeping rates “higher for longer.”
Therefore, markets are likely to welcome a slow trickle of slightly bad news in the weeks to come. That will prevent the Fed from hiking rates further, likely prompting additional declines in bond yields, allowing stocks to continue to rally, with utilities and other bond proxies potentially doing well. The same goes for defensive groups like consumer staples and healthcare companies. 

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Nevertheless, bond yields getting too low is a problem because that would mean that the economic data is beginning to suggest that difficult-to-resolve challenges are right around the corner. All of this helps to explain why it’s tough to distinguish between a healthy slowdown (i.e., soft landing) and the initial stages of a recession — and why the next few job reports will be so significant.

The economy added about 150,000 jobs in October, a profound slowdown over the previous month. Nonetheless, investors cheered the report, believing it gave the Fed the ammunition it needed to hold off on further rate increases.

ETFs, small caps can offer buying opportunities

A more meaningful slowdown in new jobs over the coming months — 50,000 or below — would likely flip the bad-news-is-good-news script. Deep cyclical stocks that pay generous dividends would be attractive in such a scenario. But so would small caps.
In 2023, small, publicly listed companies have greatly underperformed, with the Russell 2000 lagging the S&P 500 by 13% year to date. The fact that small companies have struggled this year relative to the rest of the market is hardly surprising.  

Such firms tend to rely on floating-rate debt more than their larger peers, so their margins shrink when Fed policy is more restrictive. Complicating matters further are rising labor costs.
If the job market took a turn for the worse, many small caps — especially cyclically sensitive ones — would crater, eventually creating an attractive buying opportunity. The key would be to move before policymakers do because the market will have already reacted by the time the Fed officially pivots.  
The problem with small caps, however, is volatility: The ups and downs of smaller companies are more frequent and pronounced. That’s why it isn’t easy to feel good about taking individual positions in this segment of the market.
The alternative is to gain exposure via exchange-traded funds. One option is the iShares Russell 2000 ETF (IWM). Another fund that may underperform during a slowdown or recession but jump during the early stages of a recovery is the iShares Russell Mid-Cap Value ETF (IWS). 

Today’s bad-news-is-good-news dynamic might seem unique, but it isn’t. As with most things with the markets, it’s cyclical.
The good news is that a soft landing can happen if core inflation continues to trend toward the Fed’s 2% target and payroll growth remains positive. Yet those are far from sure things.
Indeed, if job creation comes to a screeching halt instead, look for small caps and deep cyclicals to suffer losses. At the same time, they could lead the markets higher during the initial bounce back. 
— Andrew Graham, founder and managing partner of Jackson Square Capital More

Supplemental Security Income, or SSI, provides monthly benefit checks to individuals who are elderly, blind or disabled and have little to no income or resources.
Because the program has not been updated in four decades, beneficiaries have low asset limits that hinder their ability to save in a 401(k) plan or earn raises.
At Wednesday’s Senate Banking Committee hearing, Wall Street CEOs including JPMorgan Chase CEO Jamie Dimon expressed their support for updating the program’s rules.

Morsa Images | Digitalvision | Getty Images

Current SSI asset limits ‘lock people in poverty’

Current SSI asset limits are extremely low — $2,000 for individuals and $3,000 per couple. Those thresholds apply to all kinds of assets, including cash, bank accounts, investments and household goods. Beneficiaries who go over the limits are suspended or terminated.
“The problem is SSI’s eligibility rules haven’t been updated by Congress — that’s on us — in 40 years,” Sen. Sherrod Brown, D-Ohio, said during Wednesday’s Senate Banking Committee hearing with leaders of Wall Street firms.
“They are now so outdated they lock people in poverty,” Brown said.
Experts from the Bipartisan Policy Center, Center on Budget and Policy Priorities and Century Foundation have called the program’s rules the “most regressive, anti-saving provisions in federal law.”

Other Wall Street executives show support

JPMorgan Chase Chairman and CEO Jamie Dimon speaks next to Bank of America Chairman and CEO Brian Thomas Moynihan and Citigroup CEO Jane Fraser during the U.S. Senate Banking, Housing and Urban Affairs Committee oversight hearing on Wall Street firms, on Capitol Hill in Washington, U.S., December 6, 2023.
Evelyn Hockstein | Reuters

Wells Fargo & Co. CEO Charles Scharf indicated the firm would be open to looking at the reform proposal.
“It sounds like something we would be willing to support,” Scharf said. “We would like to take a look at it.”
Citigroup CEO Jane Fraser said she supports the proposed changes “fully and wholeheartedly.”
All of the other Wall Street executives present affirmed their support, including Bank of America CEO Brian Moynihan, State Street CEO Ronald O’Hanley, BNY Mellon CEO Robin Vince, Goldman Sachs CEO David Solomon and Morgan Stanley CEO James Gorman.

It will take Congress’ vote to push the changes through, however.
Senate lawmakers who support the bill have vowed to attach it to any piece of moving legislation, Rebecca Vallas, a distinguished fellow at the National Academy of Social Insurance, noted during a November presentation of the nonprofit organization’s recent task force report.
“This is something that needs to happen, not just to support workers, but also to remove barriers to economic growth,” Vallas said.
Moreover, “huge numbers of employees” cannot participate in a 401(k) plan or cannot take raises because of SSI’s current asset limits, she said. More

As it stands, the new FAFSA is set to launch with outdated consumer price index figures from 2020, which don’t account for the recent runup in inflation.
Because of this oversight, experts say, millions of students could get less financial aid than they deserve.
This is just the latest complication in a rollout that has already proven problematic.

A simplified Free Application for Federal Student Aid is set to roll out by the end of the month.
However, the new FAFSA may launch with outdated inflation figures, which could mean many students “will get less financial aid than they deserve,” according to higher education expert Mark Kantrowitz.

“It is a pretty big deal,” he said. “We are talking about thousands of additional dollars that families will have to pay for college.”
While it’s hard to quantify exactly how many will be affected, “millions of students could receive less aid,” according to Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.”

A problem with the FAFSA affordability calculation

The new, simplified FAFSA form uses a calculation called the “Student Aid Index” to estimate how much a family can afford to pay. But as it stands, the forthcoming FAFSA relies on old consumer price index figures from 2020, which don’t account for the recent runup in inflation.
More from Personal Finance:Fewer students are enrolling in collegeThe new FAFSA will be available by Dec. 31What to consider before refinancing a student loan
The Consolidated Appropriations Act stipulated that the U.S. Department of Education is required to update the SAI tables every year based on the latest CPI data.

This year, though, the Secretary of Education didn’t make those updates in time.
The Department of Education has said that it doesn’t plan to update those tables this year, but will update them for the 2025-26 aid cycle.
“In prior years it wouldn’t matter all that much because inflation was low,” Chany said. In this case, “the numbers are significantly understated.”
“Given the high inflation in the past few years, the tables should be adjusted by a tad more than 18%,” he added.

All families of four in this application cycle with adjusted available income over $35,000 will be affected by the failure to make inflationary adjustments, with middle- and higher-income students the hardest hit, according to Kantrowitz. There will be less of an effect on lower-income students whose expected family contribution was already $0.  
For example, a typical family in New York with adjusted available income of $100,000 could be expected to contribute $12,943 instead of $9,162 toward their annual college costs — a difference of nearly $4,000 in aid, according to calculations by Kantrowitz.

Issues mount ahead of the new FAFSA’s launch

“The FAFSA simplification, in part, was intended to expand eligibility,” Kantrowitz said. “This fumble with the formula, among other changes … makes it harder, especially for middle-income families,” he said.
For instance, the Department of Education also said it will no longer give families a break for having multiple children in college at the same time, effectively eliminating the “sibling discount.”
Experts say this is just the latest complication in a process that has already caused confusion and frustration. And there may be additional issues when the form finally launches online on or before Dec. 31 after a significant delay.
“This is not going to be streamlined,” Chany said. “It’s going to be very messy.”
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