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The Biden administration announced on Wednesday that it would forgive an additional $4.8 billion in student loan debt, for 80,300 borrowers.
The relief is a result of the U.S. Department of Education’s fixes to its income-driven repayment plans and Public Service Loan Forgiveness program.

U.S. President Joe Biden gestures as he delivers remarks on aid to Ukraine from the White House in Washington, U.S., December 6, 2023. 
Kevin Lamarque | Reuters

The Biden administration announced Wednesday that it would forgive an additional $4.8 billion in student loan debt, for 80,300 borrowers.
The relief is a result of the U.S. Department of Education’s fixes to its income-driven repayment plans and Public Service Loan Forgiveness program.

“Before President Biden took office, it was virtually impossible for eligible borrowers to access the student debt relief they rightfully earned,” U.S. Secretary of Education Miguel Cardona said in a statement. “This level of debt relief is unparalleled and we have no intention of slowing down.”

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More than $2 billion of the aid will go to nearly 46,000 borrowers enrolled in income-driven repayment plans. Those plans are supposed to lead to debt forgiveness after a set period, but this often didn’t happen because loan servicers failed to keep track of borrowers’ payments, experts say.
In addition, 34,400 borrowers who have worked in public service for a decade or more will receive $2.6 billion in loan cancellation, the U.S. Department of Education said. Borrowers in the Public Service Loan Forgiveness program have also struggled to get the debt erasure they’ve been promised due to errors in their payment counts and other issues.
The Biden administration has now cancelled nearly $132 billion in student debt for more than 3.6 million Americans.

Forgiveness may set Biden apart in election

The actions are likely to help President Joe Biden as he runs for reelection, said higher education expert Mark Kantrowitz.

“Biden has forgiven more student loan debt than any previous president,” Kantrowitz said. “It distinguishes him from other candidates.”
Republican nominees for president oppose student loan forgiveness.
Former New Jersey Gov. Chris Christie has said that Biden didn’t have the authority to cancel student debt without prior authorization from Congress.

“He knows he’s done something that is illegal and over the top,” Christie said on ABC’s “This Week” in 2022, shortly after Biden announced his sweeping debt forgiveness plan, which the Supreme Court ultimately rejected in June. At an estimated cost of about $400 billion, that plan would have been one of the most expensive executive actions in history. 
Former President Donald Trump sided with the Supreme Court.
“Today, the Supreme Court also ruled that President Biden cannot wipe out hundreds of billions, perhaps trillions of dollars, in student loan debt, which would have been very unfair to the millions and millions of people who paid their debt through hard work and diligence; very unfair,” Trump said at a campaign event in June.

Florida Gov. Ron DeSantis has said that it’s wrong to saddle taxpayers with the expense of student loan forgiveness.
“Why should a truck driver have to pay for somebody that got a degree in zombie studies?” DeSantis said at an Iowa event in early August. “It doesn’t make sense.”
Voters support forgiving at least some student loan debt by a 2-to-1 margin, according to a Politico/Morning Consult poll. Less than a third oppose the policy. More

The IRS is sending more than 20,000 rejection letters to taxpayers who wrongly claimed the employee retention credit, or ERC.
Starting this week, ineligible taxpayers will begin receiving copies of Letter 105 C for disallowed claims.
Later this month, the IRS will unveil a “voluntary disclosure program” for taxpayers with erroneous ERC filings.

IRS Commissioner Daniel Werfel speaks during an IRS event on August 2, 2023 in McLean, Virginia.
Alex Wong | Getty Images

The IRS is sending more than 20,000 rejection letters to taxpayers who wrongly claimed a pandemic-era tax break as the agency continues its crackdown on “dubious” filings.
Created to support small businesses during the Covid-19 pandemic, the employee retention credit, or ERC, is worth thousands of dollars per eligible employee. However, the tax break sparked a wave of companies pushing small businesses to wrongly claim the credit — and the agency temporarily stopped processing new filings in September amid a “surge of questionable claims.”

“With the aggressive marketing we saw with this credit, it’s not surprising that we’re seeing claims that clearly fall outside of the legal requirements,” IRS Commissioner Danny Werfel said in a statement Wednesday.
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Starting this week, ineligible taxpayers will start receiving copies of Letter 105 C for disallowed claims. Later this month, the IRS will unveil a “voluntary disclosure program” for taxpayers who wrongly claimed the credit. The agency is rejecting filings from entities that didn’t exist or didn’t have paid employees during the eligibility period.

“The action we are taking today is part of an initial set of steps in our compliance work in this area,” Werfel said. “More letters will be going out in the near future, including both disallowance letters and letters seeking the return of funds erroneously claimed and received.”
The announcement comes less than two months since the IRS unveiled a special withdrawal process for small businesses that wrongly claimed the credit to avoid repayment, interest and penalties.

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The Fed could begin to cut interest rates in 2024 after 18 months of hikes, experts say, so it’s important to take advantage of financial products that benefit from high interest rates while you can.
“A lot of people are leaving free money on the sidewalk when they walk by,” said Stacy Francis, a CFP and president and CEO of Francis Financial.

Shoppers walk with items during Black Friday deals at a Target store in Westbury, New York, U.S., November 24, 2023. 
Shannon Stapleton | Reuters

After more than a year of dealing with rapid inflation, consumers have become numb to higher prices. But as inflation cools, experts say there are strategies that can help you weather current conditions and prepare for a shift in interest rates.
The October consumer price index increased 3.2% on an annual basis, according to the Bureau of Labor Statistics’ monthly inflation report, down from a Covid-era peak of 9.1% in June 2022. The personal consumption expenditures price index — the Federal Reserve’s preferred gauge — also shows signs of inflation cooling.

CNBC spoke with several financial advisors about how consumers can make the most of their money as the market anticipates the end of the Fed interest rate hike cycle and inflation declines closer to its target rate of 2%. The first place to look: your savings account.
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“The no brainer, and quite frankly, easiest thing to do is take that money that you have sitting in cash and make sure that you’re getting the most from it,” said certified financial planner Stacy Francis, the president and CEO of Francis Financial in New York City. Francis is also a member of CNBC’s FA Council.
Here’s how you can benefit from that move and others.

Get your cash working for you

The Fed could begin to cut interest rates in 2024 after 18 months of hikes. So it’s important to take advantage of financial products that benefit from high interest rates while you can, said CFP Marguerita Cheng, the CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. Cheng is also a member of CNBC’s FA Council.

Certificates of deposit, for example, are offering higher yields than high-yield saving accounts. While your savings account rate can change at any time, CDs let you lock in a rate for a set period — which can be beneficial now ahead of any Fed rate cuts next year.
With CD ladders, investors can divide equal amounts of cash across a range of CDs that each have a different maturity date. When the CDs with shorter terms expire, those proceeds can be invested into CDs with a longer maturity.

“If you start locking in some higher rates now [as CD ladders allow for], that might be a good thing,” said Cathy Curtis, a CFP and the founder and CEO of Curtis Financial Planning in Oakland, California. Curtis is also a member of CNBC’s FA Council.
Money market funds, which are mutual funds that are usually invested in short-term, lower-credit-risk debt, may also appear like a “no brainer” way to outpace inflation, given many funds are currently paying well over 5%, Francis said.

Add ‘engines’ to your investment portfolio

As those higher-yield opportunities begin to wane, a higher percentage of equities in your investment portfolio “is a good place to be right now,” Curtis said.
Inflation hurt some stock prices during the Fed’s hiking cycle because investors deemed the risk of equities not worth it while cash was generating 5% to 6%. But a steady pace of inflation helps capital assets grow, increasing the benefits of a healthy allocation of equities in your investment portfolio. And as the Fed is poised to start cutting rates next year, equities’ risk profile improves. Recent stock outperformance — tech stock were up 10% last month alone — is in part a reflection of this changing market outlook.
Above all, “engines” like equities allow consumers to have a longer-term horizon that can better ride out inflation, Francis said.
Examples include consumer staples stocks that pay consistent dividends, and mutual funds and ETFs whose dividends can be reinvested in stock portfolios to minimize the downside of the current volatility, Cheng said. Real estate investment funds are also positioned especially well to outperform following the end of the rate hike cycle, said Shon Anderson, a certified financial planner at Anderson Financial Strategies in Dayton, Ohio.

Making the most of your workplace retirement plan can also serve as an engine. Take advantage of “free money” in the form of the employer match, Francis said — make sure you’re contributing enough to get the full match.
“A lot of people are leaving free money on the sidewalk when they walk by,” Francis said.

Revisit spending habits and large expenses

While the worst of inflation may be behind the U.S. economy, consumers still feel its pinch when shopping for everyday goods and paying regular expenses. That’s because inflation is declining gradually, which means prices are still rising but at a slower pace. (Although, a few products have seen prices fall year over year.)
Re-evaluating spending habits to see where you can save money is always wise, especially during the holiday season, experts said. Walmart chief financial officer John David Rainey recently told CNBC consumers are “leaning heavily” into major promotions as they watch their spending and search for deals. 
Adjust your shopping habits by visiting grocery stores in your area that carry the best deals, Curtis said.
Francis’ family is focusing on buying experiences — such as a cooking class — rather than gifts for the holidays, given that experiences have not seen as much inflation.

If your budget is strained, it may also still worth assessing more significant changes. Some people may consider downsizing their house or moving to a more affordable area, Francis said.
“Of all the things, I see what people are most hesitant to do is downsizing. But I will also tell you that it’s one of the moves that can give you the most the most peace of mind,” she said. More

Americans have racked up a record-breaking $1 trillion in credit card debt.
As consumers struggle to pay down high balances at more than 20% interest, 39% of adults now say credit card debt is their biggest obstacle to building wealth, according to a new Edelman Financial Engines report.
Credit card rates have spiked along with the Federal Reserve’s string of 11 rate hikes, including four in 2023.

Consumer spending has remained remarkably resilient in the face of persistent inflation — but that has come at a cost.
To keep up with higher prices, Americans racked up more credit card debt than ever this year. Not only are balances higher, about half, or 47%, of cardholders are carrying debt from month to month, creating a cycle that’s particularly hard to break.

“Credit card debt is easy to get into but hard to get out of,” said Ted Rossman, senior industry analyst at Bankrate.
Now, 39% of adults said credit card debt is “their biggest threat to building wealth,” according to a new Edelman Financial Engines report. Even among wealthy respondents, or those between the ages of 45 and 70 with household assets of up to $3 million, 32% said the same.
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Unlike other types of debt, such as a mortgage or even student loans, “credit card debt is not secured by an asset that potentially gains value over time,” said Rod Griffin, senior director of consumer education and advocacy for Experian.
“For that reason, taking on too much credit card debt can chip away at a person’s financial health.”

Yet, a prolonged period of higher prices has caused consumers to spend down their savings and lean on credit anyway.

Credit card debt spikes as APRs rise

Collectively, Americans now owe a record-breaking $1.08 trillion on their credit cards, according to a November report from the Federal Reserve Bank of New York.

At the same time, credit card rates have spiked along with the Federal Reserve’s string of 11 rate hikes, including four in 2023. The average annual percentage rate rose from less than 15% as recently as last year to more than 20% today — also an all-time high.
Despite the steep cost, consumers often turn to credit cards, in part because they are more accessible than other types of loans, according to Matt Schulz, chief credit analyst at LendingTree.
But that spending comes at the expense of other long-term financial goals.
“If you are not grounded in long-term goals, short-term budgeting can get away from you,” said Kelly O’Donnell, chief client officer at Edelman Financial Engines. Instead, “set up long-term goals and work backwards.”

Credit cards can be a valuable tool

“However, when credit cards are used well, they can help achieve financial goals,” Experian’s Griffin said.
For example, consumers who pay their balances in full and on time every month and keep their utilization rate, or the ratio of debt to total credit, below 30% of their available credit, can benefit from credit card rewards and a higher credit score, which paves the way to lower-cost loans and better terms. That can be significant when it comes to major milestones, such as buying a house or qualifying for an apartment rental.
“In the end, it’s the decisions the consumer makes about how they use the credit card that determine whether it becomes a financial threat to building wealth or a tool in helping them achieve their financial goals and dreams,” Griffin said.
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The Supreme Court on Tuesday is hearing oral arguments for Moore v. United States, a case that could affect broad swaths of the U.S. tax code.
The case involves a Washington couple who own a controlling interest in a profitable foreign company affected by a tax enacted via former President Donald Trump’s 2017 tax overhaul.
The ruling could affect future taxation of so-called pass-through entities, such as partnerships, limited liability corporations and S corporations.

People exit the Supreme Court building in Washington, D.C. on Tuesday, June 27, 2023.
Minh Connors | The Washington Post | Getty Images

The Supreme Court is set to hear oral arguments Tuesday on a case that could affect broad swaths of the U.S. tax code and federal revenue.
The closely watched case, Moore v. United States, involves a Washington couple, Charles and Kathleen Moore. They own a controlling interest in a profitable foreign company affected by a tax enacted via former President Donald Trump’s 2017 tax overhaul.

The Moores are fighting a levy on company earnings that weren’t distributed to them — which challenges the definition of income — and could have sweeping effects on the U.S. tax code, according to experts.
“This could have the biggest fiscal policy effects of any court decision in the modern era,” said Matt Gardner, a senior fellow at the Institute on Taxation and Economic Policy, who co-authored a report on the case.
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The case challenges a levy, known as “deemed repatriation,” enacted via the 2017 Tax Cuts and Jobs Act. Designed as a transition tax, the legislation required a one-time levy on earnings and profits accumulated in foreign entities after 1986.
While the 16th Amendment outlines the legal definition of income, the Moore case questions whether individuals must “realize” or receive profits before incurring taxes. It’s an issue that has been raised during past federal “billionaire tax” debates and could affect future proposals, including wealth taxes.

Former House Speaker Paul Ryan, who helped draft the Tax Cuts and Jobs Act, said at a Brookings Institution event in September that the goal was to “finance a conversion from one system to another, and it wasn’t to justify a wealth tax.”
Ryan, who doesn’t support a wealth tax, said using the Moores’ argument to block one would require getting rid of “a third of the tax code.”

Pass-through businesses could be affected

Depending on how the court decides this case, there could be either small ripples or a major effect on the tax code, according to Daniel Bunn, president and CEO of the Tax Foundation, who has written about the topic.
If the court decides the Moores incurred a tax on unrealized income and says the levy is unconstitutional, it could affect the future taxation of so-called pass-through entities, such as partnerships, limited liability corporations and S corporations, he said. 

“You’ve got to pay attention to the way the rules are going to impact your business, especially if you’re doing things in a cross-border context,” Bunn said.
There’s also the potential for a “substantial impact” on federal revenue, which could influence future tax policy, Bunn said. If deemed repatriation were fully struck down for corporate and noncorporate taxpayers, the Tax Foundation estimates federal revenue would be reduced by $346 billion over the next decade.
However, with a decision not expected until 2024, it’s difficult to predict how the Supreme Court may rule on this case. “There’s a lot of uncertainty about the scope of this thing,” Gardner added.
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Homeowners have mostly stayed put in 2023 amid high mortgage rates.
Yet, those homeowners may be willing to move for the right opportunity, a new survey shows.
Prospective buyers are more willing to take a chance.

itsskin | Getty

Why many homeowners are ‘staying put’

Last week, the average interest rate for certain 30-year fixed-rate mortgages decreased to 7.37% from 7.41% the prior week, in the fourth successive week of declines. Lower mortgage rates have prompted mortgage applications to pick up.

Yet, about 80% of outstanding U.S. mortgages have interest rates below 5%, according to Bank of America’s research. Even the recent decline in mortgage rates may not provide incentive for homeowners to move.

“The story for 2023 has been one of homeowners staying put,” said Daryl Fairweather, chief economist at Redfin.
Factors that have contributed to that immobility have recently started to ease, though it remains to be seen whether that will last.
The median monthly mortgage payment is down more than $150 from the peak, marking the lowest level in three months, Redfin’s Nov. 30 research found. Monthly payments are falling as mortgage rates come down from their peak.
The weekly average 30-year mortgage rate fell to 7.29% in late November, down from a 7.79% high in October, according to Redfin.
Those declining rates have offset rising home prices, with the median sale price up 4%. The number of new listings, which is up 6%, has had the biggest year-over-year increase since 2021, according to Redfin.

More prospective buyers willing to take a risk

More prospective homebuyers may be willing to take a chance to reach their goal, with 62% indicating they are waiting for prices and/or rates to fall before buying a home, down from 85% who said the same six months ago, according to Bank of America.
Major life events tend to prompt people to move, according to Skylar Olsen, chief economist at Zillow.
“The problem is, right now, the finances block people from following that major fundamental change,” Olsen said.

For example, they may choose to struggle through a long commute to a new job while they wait for lower home prices, she said.
That may be poised to start to shift in 2024, but it will likely be very gradual, Olsen said.
Zillow’s forecast has called for mortgage rates improving very slowly, which means the number of new listings may also improve very gradually, she said.
Prospective buyers who are hoping for a big drop in home prices will be disappointed, Olsen said.
Rather than a dramatic decline, there will likely be slower home price growth over the next five years, she said, barring any big changes to current dynamics.Don’t miss these stories from CNBC PRO: More

Your Money

A lot of people feel stretched too thin, but when broken down by gender, 59% of women are living paycheck to paycheck, compared to only 41% of men, a recent report found.
Of those who are considered financially fragile, 67% are women.

The number of Americans who say they are stretched too thin has remained stubbornly high.
Amid a prolonged period of high inflation, more than 60% of Americans are living paycheck to paycheck.

However, women are “significantly more likely” than men to have a hard time making ends meet, according to a recent report from Varo Bank.
About 59% of women are living paycheck to paycheck, compared to 41% of men, Varo Bank found. Further, 67% of women consider themselves financially fragile, or say they have little financial slack or support.

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‘We start with less money in our pockets’

Due to a persistent gender wage gap, women still earn only 80% of what their male counterparts do. They are also more likely to be caregivers, which causes them to take breaks from their careers or work part time.
That contributes to a growing wealth discrepancy, which is especially difficult to manage for those nearing retirement, according to Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York.
“Not only do we start with less money in our pockets, but we also live longer and our costs in retirement are higher,” Francis said, who is also a member of the CNBC Financial Advisor Council.

Financial literacy is ‘the No. 1 thing’

Francis advises her female clients to consider that at some point, “they are going to be on their own.”
To get on solid financial ground, “financial literacy is the No. 1 thing women can do today,” said Maggie Wall, head of diverse growth markets at Citizens, which could include meeting with a financial advisor to go over short- and long-term plans.  

Women are achieving increasing levels of education, earning more and becoming the primary breadwinners, yet many also say they are less engaged when it comes to financial decision-making compared to men, according to a separate Own Your Worth report by UBS.
“That’s a big problem,” Francis said.
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Since 2013, there has been a significant increase in the number of states requiring students to take a personal finance course before graduation, according to a report from Champlain College.
The report showed Alabama, Iowa, Mississippi, Missouri, Tennessee, Utah and Virginia all earned an “A” grade because those states required 2023 high school graduates to take a personal finance course. 
In the next five years, more than 4 out of 10 high school students in the U.S. will be enrolled in high schools where a personal finance course will be required before graduating.

High schools have been buzzing about financial education.
The latest “report card” from the Center for Financial Literacy at Champlain College in Burlington, Vermont, shows seven states — Alabama, Iowa, Mississippi, Missouri, Tennessee, Utah and Virginia — made the top grade. They earned an “A” because in those states, high school graduates in the class of 2023 were required to have taken a personal finance course before graduation. 

By 2028, when new laws and policy changes are fully implemented, 23 states are projected to earn an “A,” according to the report.

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‘Not a day will go by that you don’t think about money’

In the next five years, more than 4 out of 10 high school students in the U.S. will be enrolled in high schools where a personal finance course will be required before graduating.
They will be learning lifelong lessons. 
“Once you graduate from high school, not a day will go by that you don’t think about money, how to make it, how to spend it, how to save it. You will be thinking about this until the day you die,” said John Pelletier, director of Champlain College’s Center for Financial Literacy. 

Although some schools and school districts have mandated students receive financial education, experts say the recent increase in the number of states that now guarantee high school students will take a financial literacy course before they graduate is partly due to the Covid-19 pandemic, which underscored the financial fragility of many Americans.  

“If you leave it up to local control, the districts most likely to unilaterally do this locally, they’re white, and they’re rich. So you would argue the folks that need it the most are the least likely to get it unless the state requires everyone gets it,” Pelletier said. 
Studies show personal finance education can make a significant difference in young adults’ financial behaviors, from improving credit scores and lowering loan delinquency rates to reducing payday lending and helping students make better decisions about college loans.

A few states still have ‘virtually no requirements’

Meanwhile, four states — California, Connecticut, Massachusetts and South Dakota — as well as Washington, D.C., got failing grades, receiving “F”s in this report because they have “virtually no requirements” for personal finance education in high school. Still, advocates in “failing” states, such as California, are working to change the laws to ensure students are guaranteed financial education. 

“We are currently collecting signatures in support of financial education for all high schoolers,” said California resident Tim Ranzetta, co-founder of Next Gen Personal Finance, a financial literacy advocacy organization. “We are far outpacing our estimates, demonstrating what we all inherently know: that personal finance is an impactful and easy-to-implement course with strong demand from both students, parents and the general public.”
The momentum for guaranteeing students receive personal finance education is gaining steam in other states, too.
Wisconsin could soon become the 24th state on track to earn an “A” grade from the Center for Financial Literacy. This week, the governor of Wisconsin is expected to take action on a bill requiring a personal financial literacy course for high school graduation.
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