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The Biden administration released its proposal for which struggling borrowers should qualify for its new student loan forgiveness plan.
It said that receiving a Pell Grant, having a disability and a person’s age could be factors signaling hardship.

President Joe Biden speaks about his economic plan at the Flex LTD manufacturing plant on July 6, 2023 in West Columbia, South Carolina.
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The Biden administration has released its proposal for which struggling borrowers should qualify for its new student loan forgiveness plan.
The Supreme Court’s conservative majority blocked President Joe Biden’s first aid package last year. In an effort to create a loan forgiveness program that is legally viable, the Biden administration is working to narrow the relief by focusing on certain groups of borrowers, including those with balances greater than what they originally borrowed and students from schools of questionable quality.

Its new proposal concerns borrowers experiencing financial hardship, the category that has remained the most vague.
The U.S. Department of Education outlined on Thursday a set of factors that could identify struggling borrowers, such as those with student loan balances and required payments that are unreasonable relative to their household income, and people with high child-care and health-care expenses. It also said that financial hardship could be based on other debt obligations, disability, or age, among other factors.
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“The ideas we are outlining today will allow us to help struggling borrowers who are experiencing hardships in their lives, and they are part of President Biden’s overall plan to give breathing room to as many student loan borrowers as possible,” Department of Education Undersecretary James Kvaal said in a statement.
At one point, it seemed possible that the “financial hardship” category had been dropped from what has become known as Biden’s Plan B for student loan forgiveness. While Biden first attempted to cancel student debt through an executive order, he has now turned to the rulemaking process.

Over three rulemaking sessions, the negotiators tasked with determining who will be eligible for the president’s revised relief plan identified several categories that could signal hardship. Those include borrowers who received a Pell Grant or qualified for a health insurance subsidy on the Affordable Care Act’s marketplace.
But the Education Department did not include language on borrowers in hardship in its relief proposal, and the negotiators didn’t get to vote on the category.

Shortly after the rulemaking sessions, lawmakers including Sen. Elizabeth Warren, D-Mass. and Rep. James Clyburn, D-S.C., wrote to U.S. Secretary of Education Miguel Cardona on Jan. 24., pressuring him to still consider struggling borrowers for relief.
“We are concerned that, without full consideration of cancellation targeted toward borrowers facing financial hardship, the rule will not provide adequate debt relief for the most vulnerable borrowers,” the lawmakers said.
The Biden administration seems to have heard those worries. The Education Dept. said it will hold an additional rulemaking session on Feb. 22 and Feb. 23, during which the negotiating committee will focus exclusively on financially strapped borrowers. Its own proposal suggests the category could cover millions of Americans.
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The Los Angeles Times, Google, Amazon, Macy’s, Paramount and other companies have recently shed substantial numbers of employees.
If you suspect layoffs are looming at your company, there are several things you should be doing to soften the blow and ease your transition to a new job.
Building an emergency fund, soliciting references and updating job hunt materials can be smart moves.

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It looks like 2024 could be the “Year of the Layoffs.”
The Los Angeles Times, Google, Amazon, Macy’s, Paramount and other companies have recently shed substantial numbers of employees.

Could your company be next? 
Over the past two decades in my work as an advisor, I have helped scores of our clients successfully navigate life-shaking layoffs. I have some advice for you: Act now.  
If you suspect layoffs are looming at your company, there are several things you should be doing to soften the blow and ease your transition to a new job before the pink slip comes.

1. Build an emergency fund, tighten up your budget

You should have at least enough money in your emergency fund to cover six months of living expenses. Review your budget (or create one) to get a handle on your finances and assess medical needs and job skills. I created a free resource at http://financialfirstaidkits.com/ full of steps you can take now. 

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2. Get ready for a job hunt

Even if you feel fairly secure in your job, it’s good to prepare for the search for a new job, just in case. Update your resume and LinkedIn profile and cover letter.

3. Customize your LinkedIn preferences

I’d even recommend starting with LinkedIn first, as the career network is rich with connections and tools and features to help you quickly advise the public that you’re available for work. LinkedIn has an #OpenToWork feature that you should set up quickly. Specify the types of job opportunities you’re interested in and your preferred location to tailor your job search. By using #OpenToWork, your profile becomes more visible in search results, making it easier for recruiters to find you. 
You have the control to choose who can see your job-seeking status. “All LinkedIn Members” includes recruiters and colleagues, and adds the #OpenToWork photo frame to your profile. If you choose “Recruiters Only,” your status is visible to LinkedIn Recruiter users, providing some privacy from colleagues at your current company. However, complete privacy cannot be guaranteed.

4. Network and connect

Networking is something you should do regardless of your job status so it’s a good way to build connections without looking like you are job hunting. Make a list of former colleagues and bosses and reach out to them. Ask colleagues and work friends privately to give you leads on other jobs. Connect with your colleagues on your favorite social media accounts. 
I recommend starting with LinkedIn and checking out its global professional network, job and internship search, Networking Hub and skill development features.

5. Get your references in order

This can be tricky if you haven’t lost your job and aren’t sure you want to move on. But it’s good to have some references lined up so you don’t have to scramble if the pink slip arrives. 
Get a public endorsement aka recommendation. Your future employer will likely have multiple candidates vying for an attractive position. Make their job easier by getting a strong reference in writing and posted publicly on your LinkedIn profile.

6. Add to your skill set

Researching job skills and adding to your skill set can boost your career, regardless of whether you get laid off or not. Reviewing job descriptions in your field can tell you whether you need to learn new skills. Adding certifications or courses to your resume can be a good way to be more marketable — or promotable. 
You can check out your local community college’s offerings or LinkedIn Learning or other online course libraries. Several technology companies, including Microsoft, also offer certificate programs. Google offers several reasonably priced options as well. If you want to increase your artificial intelligence knowledge, Nvidia has courses, while Corsea has many free and paid programs. 

Getting your financial affairs in order is always a good idea.
Stressing less is good for your money and your mind. Even if it turns out a pink slip isn’t in your immediate future, making these proactive moves can help put you in a stronger position for career growth and planning for your future. You won’t be sorry.
— By Winnie Sun, co-founder and managing director of Irvine, California-based Sun Group Wealth Partners. She is a member of the CNBC Financial Advisor Council. More

Smart Tax Planning

House lawmakers are weighing relief for a “marriage penalty” that impacts the federal deduction limit on state and local taxes, known as SALT. 
The bill would temporarily double the SALT deduction limit to $20,000 for married couples filing together with an adjusted gross income of less than $500,000, starting after Dec. 31, 2022, and before Jan. 1, 2024.
While the bill doesn’t have broad support, it could help shape future tax policy discussions, experts say.

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House lawmakers are weighing relief for a “marriage penalty” that impacts the federal deduction limit on state and local taxes, known as SALT. While the bill doesn’t have broad support, it could help shape future tax policy discussions, experts say.
Enacted via the Republicans’ 2017 tax overhaul, there’s currently a $10,000 cap on the federal deduction for SALT, which has been a key issue for certain lawmakers in high-tax states, such as New York, New Jersey and California. Without changes from Congress, the $10,000 limit will sunset after 2025 and there will be no deduction cap.

Known as the SALT Marriage Penalty Elimination Act, the House bill would double the limit to $20,000 for married couples filing together with an adjusted gross income of less than $500,000. The change would be temporary and retroactive, starting after Dec. 31, 2022, and before Jan. 1, 2024.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Since 2018, filers who itemize deductions can’t claim more than $10,000 for SALT, which includes property and state income taxes —and some lawmakers argue this penalizes married couples who file joint returns since each taxpayer could claim $10,000 as single filers.
Lawmakers on Wednesday afternoon will cast a procedural vote on the bill for future House consideration. 
“There hasn’t been a lot of consensus on what the design of the SALT cap may look like post-2025,” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation. “This helps establish the beginning of the conversation.”
As discussions continue about expiring Tax Cuts and Jobs Act provisions, the SALT cap “is going to be one of the biggest sticking points,” he said.

SALT primarily benefits wealthy households

While supporters of SALT reform have touted the benefit for middle-class families, the current bill would primarily benefit wealthier households, according to a new Tax Policy Center analysis.
If enacted, more than 90% of the benefit from the temporary change would accrue to households making between $200,000 and $1 million, the findings show.
“The wealthy already came out pretty well from the Tax Cuts and Jobs Act and this is just giving them a little bit extra,” said John Buhl, senior communications manager at the Urban Institute.

The wealthy already came out pretty well from the Tax Cuts and Jobs Act and this is just giving them a little bit extra.

Senior communications manager at the Urban Institute

There were similar findings from a recent Tax Foundation analysis, which noted that taxpayers who itemize deductions and have more than $10,000 in SALT expenses are generally higher earners. 
The Tax Foundation analysis found the proposal would boost after-tax income for the top 20% of taxpayers by 0.3%, while the bottom 40% of households “would see little change.” More

Problems with the new FAFSA have frustrated many students and families. But that also makes this the year to ask for more money.
Schools are often receptive to appeals for more aid; they just don’t advertise it, experts say.

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Above all else, the new Free Application for Federal Student Aid was designed to improve college access.
However, problems with the rollout have left many students and their families frustrated, with fewer students applying overall. As of the last tally, nearly 4 million students have submitted the 2024-25 FAFSA form so far.  

That’s a fraction of the 17 million students who use the FAFSA form in ordinary years, according to the U.S. Department of Education.
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Higher education already costs more than most families can afford, and college costs are still rising. Tuition and fees plus room and board for a four-year private college averaged $56,190 in the 2023-2024 school year; at four-year, in-state public colleges, it was $24,030, according to the College Board.
For most students and their families, the amount of financial aid offered and the breakdown between grants, scholarships, work-study opportunities and student loans are key to covering the tab.
This year, those award letters are likely to look a lot different — and those changes open the door for families to ask for more college aid, experts say.

“Every student should anticipate doing an appeal this year,” said Bethany Hubert, a financial aid specialist with Going Merry by Earnest, although not every student may need to submit one.

What’s changed with the new FAFSA

The simplified form now uses a new calculation called the “Student Aid Index” to estimate how much a family can afford to pay.
Under the new system, more low- and moderate-income students will have access to federal grants, but the changes will reduce eligibility for some wealthier families.
And, as part of the FAFSA simplification, families will no longer get a break for having multiple children in college at the same time, effectively eliminating the “sibling discount.”

‘Sibling discount’ change makes a ‘good case’ to appeal

The new FAFSA “is going to benefit low-income students, less so for wealthier students — that’s kind of the redistribution we would want, to some extent,” said Menaka Hampole, assistant professor of finance at Yale School of Management.
However, as a result, some families may find their financial aid award letter does not live up to their expectations, especially if there are other siblings in college.
“There is a good case” for making an appeal, Hampole said. “The question is whether people know that they can.”
Whether you are already enrolled in college or an incoming freshman, schools are often receptive to appeals for more aid; they just don’t advertise it, experts say.  

How to appeal for more college aid

“If the new FAFSA impacted you, for example, you no longer qualify for the sibling discount, colleges do have the ability to take that into account,” Hubert said. “That is something families can reasonably ask for.”
“The first step is always going to be: Reach out to the financial aid office and ask them about their process,” Hubert advised. Then, start preparing your appeal.
If there are need-based issues beyond what was noted in the financial aid paperwork, such as another sibling in college or changes in your financial circumstances, that should be explained to the school and documented, if possible.

Alternatively, if the financial aid packages from other, comparable schools were better, that is also worth bringing to the school’s attention in an appeal.
“When you combine that with a student showing a lot of interest, sometimes a school will be willing to adjust the financial aid package, particularly at private schools,” said Eric Greenberg, president of Greenberg Educational Group, a New York-based consulting firm.
“Most people would not even think of doing that,” he added, but “very often it’s helpful to appeal.”
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The share of homes owned by Black people remained about the same between 2021 and 2022, according to a recent study by LendingTree.
“The data indicates that Black folks are probably going to face disproportionately steep hurdles that stand in the way of them becoming homeowners,” said Jacob Channel, a senior economist at LendingTree.

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Homeownership is out of reach for many Americans — especially for Black Americans.
In the country’s largest metropolitan areas, Black people own a disproportionately small share of homes relative to population size, according to a new report from LendingTree.

In 2022, Black people made up an average of 14.99% of the population across the 50 largest metropolitan areas of the U.S., but owned an average of 10.15% of owner-occupied homes in such places, the report found. Those figures are roughly flat from 2021.
“Relatively speaking, Black people don’t own that many homes,” said Jacob Channel, a senior economist at LendingTree who authored the study.
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In Memphis, Tennessee, Black people make up nearly half the population, the largest share among all metros in the study. But they only own about 36% of homes in the area, LendingTree found.
LendingTree analyzed the U.S. Census Bureau’s 2022 American Community Survey with one-year estimates. The study ranks the nation’s 50 largest metropolitan statistical areas by the difference between the percentage of owner-occupied homes in a metro owned by those who identify as Black and the share of an area’s population that identifies as Black.

Black people face ‘disproportionately steep hurdles’

“The data indicates that Black folks are probably going to face disproportionately steep hurdles that stand in the way of them becoming homeowners,” said Channel.
One of the hurdles is the income disparity. The median income for Black U.S. households was $51,374, about $29,000 less than the $79,933 median income for white U.S. households, according to the latest U.S. Census Bureau data.
While 51% of Black U.S. households in 2022 made at least $50,000 a year, the shares dwindle as the salary increases, Pew Research Center found. About 34% of Black households made $75,000 or more while 22% made $100,000 or more.
“They tend to have less household wealth, less access to intergenerational wealth,” Channel said.
A lower income can make it harder to save for a down payment and to qualify for a mortgage, especially when both home prices and interest rates remain elevated despite subtle declines.

Another element that comes into play is the tax system.
The tax code has a mortgage interest deduction that “overwhelmingly benefits people who can already afford a home,” said Sarah Hassmer, the director of housing justice at the National Women’s Law Center, a nonprofit organization based in Washington, D.C.
“There are some localities [offering] down payment assistance programs, which are a promising practice, but that is not a lived reality in our federal tax code yet,” Hassmer said.
Down payment assistance is a form of direct payment program that can help people who can already afford a monthly mortgage payment. However, the initial down payment is often the barrier of entry, Hassmer said.
While there are many more structural hurdles that impede homeownership for Black people in the U.S., experts agree that it’s important to keep focus on the issue.
“It’s not going to disappear overnight,” Channel said. “We can’t just burry our heads in the sand and hope and pray one day racial inequality in the U.S. suddenly disappears. That’s obviously not going to happen unless we really work towards it.” Don’t miss these stories from CNBC PRO: More

The age at which you decide to claim Social Security benefits is one of the biggest decisions you will make in retirement.
Here’s what you need to know about getting the biggest benefit checks possible.

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How to find your Social Security full retirement age

If you were born between 1943 and 1954, your full retirement age is 66.

If you were born in 1960 or later, your full retirement age is 67.
The full Social Security retirement age gradually increases from 66 to 67 for people born between those years.

Social Security full retirement age

Year of birth
Social Security full retirement age

1943-1954
66

1955
66 and two months

1956
66 and four months

1957
66 and six months

1958
66 and eight months

1959
66 and 10 months

1960 and later
67

Source: Social Security Administration

For some people, this can come as a surprise, because they may still confuse their Social Security full retirement age with the Medicare eligibility age of 65, according to Elsasser.
Others are familiar with their full retirement age because they have been seeing it on their Social Security statement over the years, he said.
Social Security statements can be accessed online by creating a My Social Security account.

How Medicare can trip up retirees in other ways

It’s not just the Medicare eligibility age that can trip up prospective Social Security retirement beneficiaries, Elsasser noted.
Retirees may be tempted to sign up for Social Security when they become eligible for Medicare at 65 so they do not have to write checks to cover their premiums. Those payments for Medicare Part B — which covers doctor’s visits, outpatient care and preventive services — are typically deducted directly from Social Security benefit checks.
But tying those decisions to each other will result in permanently reduced Social Security benefits, since that would be before full retirement age.
“You really should make those decisions independently of each other,” Elsasser said.

Of course, not everyone can or should delay claiming Social Security retirement benefits. The earliest eligibility age is 62, and experts say claiming then may make sense for individuals in some circumstances, such as if they have a poor health prognosis.
By waiting until full retirement age, you can receive up to 100% of the benefits you’ve earned.
If you delay claiming past your full retirement age and up to age 70, you stand to get an 8% benefit increase per year.
A better way to think about it is that each month you delay is worth two-thirds of 1%, Elsasser said. Therefore, even delays of small increments can help increase your monthly checks over your lifetime.
The full retirement age may be subject to go up again, depending on whether Congress decides to include that change to shore up Social Security’s funding woes.
However, such a change would likely affect only prospective retirees ages 55 and younger, Elsasser predicted, and isn’t necessarily a sure thing, as life expectancy in the U.S. is no longer accelerating. More

Community college may not be the stepping stone to college many people think it is, new reports show.
Just 16% of students who start at a community college earn a bachelor’s degree within six years.
Research shows that students who complete an associate’s degree at a community college before transferring have higher success rates, as do students who start coursework in high school through dual enrollment.

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Going to community college and then transferring to a four-year school is often considered one of the best ways to get a degree for significantly less money.
More students are choosing community college at the outset. Enrollment last fall at community colleges rose 2.6%, far more than any other institution type, according to the National Student Clearinghouse’s latest research.

However, nationwide, only about one-third of students who start at community colleges ultimately transfer to four-year schools, and fewer than half of those transfer students earn a bachelor’s degree within six years.
That means just 16% of all community college students attain a bachelor’s degree, according to recent reports by the Community College Research Center at Columbia University, the Aspen Institute College Excellence Program and the National Student Clearinghouse Research Center.
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“Students often believe their chances of success are much greater than they are — that’s terribly unfortunate,” said Josh Wyner, executive director of the Aspen Institute College Excellence Program.
Further, among low-income students and students of color, the numbers are even more stark: 11% of low-income students transfer and complete bachelor’s degrees in six years, while for Black students, the share drops to just 9%.

Meanwhile, 69% of students who start at a four-year public university complete their degree within six years. At four-year private schools, the completion rate is 78%.
“Too many students are failed by policies and practices that dictate whether and how effectively students transfer from community colleges to universities, particularly students from historically underserved groups,” said Tatiana Velasco-Rodriguez, lead author of the reports and a research associate at the Community College Research Center.

When transferring from community college works

The transfer process can work, experts also say.
Research shows that students who complete an associate’s degree at a community college before transferring have higher success rates, as do students who start coursework in high school through dual enrollment.
Students who begin on a more structured pathway and who benefit from additional resources and advice ultimately do better, according to Velasco-Rodriguez.
To improve transfer outcomes across the board, “we need to apply that to other students,” she said.
However, that responsibility should fall on colleges and universities, rather than high school seniors and college-level freshmen, she added. “This is a call to the higher education system to figure out how to serve your students.”

State-based policies can help

Some states already have better systems in place to support the transfer process and at least 35 states even have policies that guarantee that students with an associate’s degree can then transfer to a four-year state school as a junior.

“There are states like Florida that have very good transfer policies and they tend to do better than the national average,” said the Aspen Institute’s Wyner.
To transfer to the University of Central Florida, for example, community college students sign up for a program called UCF Connect, and they are guaranteed admission if they earn their associate’s degree.
Still, many states don’t track how students are doing once they transfer to a four-year institution, the experts also noted, which is key for improving outcomes across the board.
“The real question is how community colleges and four-year universities can partner to make good on their promise,” Wyner said.
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Smart Tax Planning

Recent IRS enforcement has targeted high-income individuals, large corporations and complex partnerships.
However, average taxpayers could still face an IRS audit for certain tax issues, experts say.

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As Americans file returns this season, some worry about IRS audits amid agency efforts to ramp up service, technology and enforcement.
Recent IRS enforcement has targeted high-income individuals, large corporations and complex partnerships. But everyday filers could still face an audit — and certain issues are more prone to IRS scrutiny, experts say.

You don’t want to face the “audit lottery,” warned Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik.

More from Smart Tax Planning:

Here’s a look at more tax-planning news.

Audit rates of individual income tax returns decreased for all income levels from tax years 2010 to 2019, largely due to lower IRS funding, according to a report from the Government Accountability Office.
The IRS audited 3.8 of every 1,000 returns, or 0.38%, during fiscal year 2022, down from 0.41% in 2021, according to a 2023 report from Syracuse University’s Transactional Records Access Clearinghouse.
But many Americans could have a “false sense of comfort” about their personal audit risk, according to Mark Steber, chief tax information officer at Jackson Hewitt.
Here are some of the biggest IRS audit red flags. 

1. Missing income

For many taxpayers, missing income is easy for the IRS to catch because of so-called information returns, which are tax forms that employers and financial institutions send to the agency.
For example, you may have freelance income reported via Form 1099-NEC or investment earnings on Form 1099-B.
Steber said “mismatched data” is the No. 1 thing that gets taxpayers into trouble. “If you leave stuff off [your return], that could get a question,” he said.

2. Unreasonable tax breaks

Another red flag could be excessive deductions compared to what’s considered normal for your income level, according to Losi.
For example, if your adjusted gross income is around $100,000, but you’re claiming itemized deductions — such as the charitable deduction — similar to million-dollar filers, that could raise eyebrows, he said.
“You need detailed substantiation,” because if you can’t prove you qualify for a tax break during an audit, you could lose the deduction, Losi said.

You need detailed substantiation.

Executive vice president of Piascik

3. Round numbers

Accuracy is critical when filing your return and experts recommend using actual expenses rather than estimates for tax breaks.
When claiming four- or five-digit deductions, it’s “very unlikely” your expenses will be round numbers, Losi said. “You’re opening yourself up to be part of the audit lotto when you do that,” he said.

4. Earned income tax credit

The earned income tax credit, a tax break for low- to moderate-income workers, has historically been scrutinized “because the refundable part attracts certain bad actors,” said Steber.
It’s a complex credit with a high “improper payments rate,” National Taxpayer Advocate Erin Collins wrote in her 2023 Purple Book of legislative recommendations.
While higher earners are more likely to face an audit, EITC claimants have a 5.5 times higher audit rate than the rest of U.S. filers, partly because of improper payments, according to the Bipartisan Policy Center.
However, starting in fiscal 2024, the IRS said it would “substantially” reduce the number of correspondence audits, or audits by mail, for filers claiming the earned income tax credit. More