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The Biden administration restarted student loan bills for 40 million Americans this month.
So far, the transition is proving painful for many borrowers.

Education Secretary Miguel Cardona, at rear, listens as Vice President Kamala Harris speaks in Washington, D.C., June 2, 2022.
Olivier Douliery | Afp | Getty Images

Amberlee McGaughey, a librarian in Pennsylvania, was not worried about the restart of student loan payments. She was done with her debt, or so she thought.
In August, she applied for the Public Service Loan Forgiveness program with her loan servicer, MOHELA, or the Missouri Higher Education Loan Authority. The PSLF program allows those who have worked for certain nonprofits or the government to get their debt erased after 120 payments, or 10 years. McGaughey’s records, reviewed by CNBC, show that she’s made 125 qualifying payments.

Still, MOHELA sent her a bill for $675, due on Oct. 7.
“I panicked,” McGaughey, 36, said. “I wasn’t expecting to go into repayment, and I definitely couldn’t afford that.”
When she contacted MOHELA, she couldn’t get anyone on the phone.
“All of my wait times were over 100 minutes,” she said. “I tried sending email messages, and they went unanswered.”
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The Biden administration restarted student loan payments for some 40 million Americans this month, putting an end to the pandemic-era pause on the bills that had been in effect since March 2020.
So far, the transition back to payments is proving painful for many borrowers, who complain of long wait times trying to reach their servicers, errors with their bills, lost account information and denied relief for which they believed they were eligible.
These issues can have devastating impacts on household finances, consumer advocates say.
“Being forced to make incorrect monthly payments places additional strain on borrowers’ monthly finances and puts some in the position of being unable to keep up with their other bills,” said Ella Azoulay, a policy analyst at the Student Borrower Protection Center.
Outstanding education debt in the U.S. exceeds $1.7 trillion, burdening Americans more than credit card or auto debt. The average loan balance at graduation has tripled since the ’90s, to $30,000 from $10,000. Around 7% of student loan borrowers are now more than $100,000 in debt.

Changes add uncertainty for servicers, borrowers

Carolina Rodriguez, director of the Education Debt Consumer Assistance Program, a nonprofit in New York, said she’s never seen this kind of chaos in the student loan space before.
“Servicers are having a very hard time getting people back into repayment,” Rodriguez said.
In the calmest of times, the federal student loan system is famously complicated. There are some 12 plans for repaying your student loans, a web of forgiveness options, and a soup of wonky terms such as “forbearance” and “deferment.”

Recently, there have been a number of changes to the lending system, adding even more uncertainty for servicers and borrowers.
“The government has made all these announcements, and it’s really confusing to people,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
In August 2022, President Joe Biden announced that he’d forgive up to $20,000 in student debt for tens of millions of Americans. But that plan quickly faced a barrage of legal challenges, and the Supreme Court ultimately rejected it in June, ruling that the president didn’t have the authority to wipe out $400 billion in consumer debt without prior authorization from Congress.

After that setback, and with the 2024 presidential campaign looming, Biden quickly moved ahead to provide borrowers with a new set of relief options before payments restarted in October.
Those measures included a 12-month “on-ramp” period during which borrowers are shielded from the consequences of missed payments and a new income-based repayment plan, which the U.S. Department of Education touted as the “most affordable repayment plan ever.”

Flawed data affects SAVE applicants

Yet borrowers have had trouble benefiting from this new repayment option, called the Saving on a Valuable Education, or SAVE, plan.
Rodriguez said many borrowers are getting billed for different amounts than they expected. She said she worked with a borrower who anticipated a monthly payment of around $400 and then got a bill for $2,000.
Some of the problems with the SAVE plan, which may have affected hundreds of thousands of borrowers, are due to flawed data provided by the Education Department and loan servicers’ use of outdated figures.

But at what point do you start to question why the Biden administration is still contracting with MOHELA and servicers who have financial incentives to do the wrong thing?

Braxton Brewington
press secretary at the Debt Collective, which advocates for debt cancellation

Another issue is that some of the plan’s features — including the most beneficial one to borrowers, a drop in payments by almost half — won’t be available until next summer, due to the timeline of regulatory changes. Many borrowers didn’t realize this, experts say.
“The Department is working closely with student loan servicers to ensure that they are doing everything to provide borrowers the information they need when they need it and holding servicers accountable when they do not,” said a spokesperson for the federal agency.
For SAVE payment plan issues, the department directed servicers to notify affected borrowers and put them into an administrative forbearance until they were able to calculate the correct payment amount. It may also refund some borrowers, the spokesperson said.

‘It’s a very messy system’

Sarah Cluff
Courtesy: Sarah Cluff

Still, some borrowers are struggling to even access the new option.
In early October, Sarah Cluff tried to contact her student loan servicer, Nelnet, to apply for the SAVE plan. Under the program, borrowers’ payments are calculated based on their household size and income, and Cluff had a number of questions. She recently got married and is now pregnant.
Her original student loan bill of $483, which was listed as due on Oct. 20, wasn’t affordable for her.
“That is more expensive than our car payment,” said Cluff, 28.
She was on hold for two and a half hours with Nelnet and then was disconnected before she could speak with a representative, she said. She called back and was on hold for an hour and a half.
“The communication is very lacking,” she said. “It’s a very messy system.”

Servicers face challenges going into ‘repayment surge’

Some of the issues at servicers are due to changes in the space over the last few years.
Around 16 million borrowers were transferred to a new servicer during the pandemic, after several companies dropped out of the business. Servicing federal student loans became less profitable when borrowers weren’t making payments.
In a September letter to the student loan servicers, Sen. Elizabeth Warren, D-Mass., and other lawmakers wrote that they were “deeply worried about your preparedness for this unprecedented return to repayment.”
In response, the servicers admitted that they were concerned, too.
MOHELA wrote that when payments restart it is “anticipating extended wait times and servicing delays.”

In January, Nelnet made deep cuts to its staff. Joe Popevis, executive director of NelNet, wrote that these reductions “would significantly impact our ability to rapidly ramp back up for return to repayment.”
“Though we are attempting to rehire many of the customer service agents whose employment we previously terminated, we will not be able to hire the staff needed for the repayment surge,” Popevis wrote to the lawmakers.
Servicers have indeed been given a daunting task in restarting the payments of tens of millions of Americans, said Braxton Brewington, press secretary for the Debt Collective, an organization that advocates for debt cancellation.
Still, the long wait times and incorrect information are inexcusable, Brewington said. These companies have had months to prepare, he said. He also said that long before the pandemic, the servicers had a record of mishandling borrowers’ accounts.

All my wait times were over 100 minutes.

Amberlee McGaughey
student loan borrower

“I wish I could chalk it all up to incompetence,” Brewington said. “But at what point do you start to question why the Biden administration is still contracting with MOHELA and servicers who have financial incentives to do the wrong thing?”
Jane Fox, the Legal Aid Society chapter chair at the Association of Legal Aid Attorneys in New York, said the main issue with the federal student loan system is that servicers are paid a fee per borrower, which leaves them little incentive to resolve issues or deliver on promised debt relief.
“They are not interested in getting you forgiven sooner,” Fox said. “They want to keep you in repayment.”
Buchanan, at the Student Loan Servicing Alliance, the servicers’ trade group, blamed many of the current issues at servicers on the “funding limitations of the government.”
“We look forward to being able to add additional resources whenever the government chooses to invest more in customer service for their borrowers,” Buchanan said.

Rocky restart could leave lasting financial scars

Partly in anticipation of these issues, the Biden administration promised federal student loan borrowers that they’ll be spared most of the penalties of missed or late payments until Sept. 30, 2024, through its 12-month “on-ramp” to repayment.
Yet it is uncertain if borrowers are even able to rely on this relief.
Brewington said some customer service staff at the servicers don’t seem properly trained to present borrowers with their options.

“If they can reach the servicer to begin with, they don’t know about the on-ramp or Public Service Loan Forgiveness,” Brewington said.
Meanwhile, as McGaughey, the librarian, tries to get the student loan forgiveness to which she’s entitled, her account is showing up as past due. During her calls to MOHELA, they warn her that they’re trying to collect a debt.
This is especially worrying to her because she’s currently trying to assume the mortgage on her house after a divorce.
“My credit is good, and I don’t want a negative mark,” she said. More

A sign bearing the logo for communications and security tech giant Cisco Systems Inc. is seen outside one of its offices in San Jose, California, Aug. 11, 2022.
Paresh Dave | Reuters

The market’s volatility as of late is making dividend-paying stocks seem all the more appealing to investors in search of some stability.
Investors must check the fundamentals of the dividend-paying company and its ability to sustain those payments over the long run before adding the stock to their portfolio.

Bearing that in mind, here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Civitas Resources  

First on this week’s dividend list is Civitas Resources (CIVI), an oil and gas producer focused on assets in the Denver-Julesburg and Permian Basins. The company paid a dividend of $1.74 per share in late September, which included a quarterly base dividend of 50 cents per share and a variable dividend of $1.24.  
Civitas recently announced an agreement with Vencer Energy to acquire oil-producing assets in the Midland Basin of West Texas for $2.1 billion. The acquisition, anticipated to close in January 2024, is expected to boost CIVI’s free cash flow per share by 5% in 2024.  
Jefferies analyst Lloyd Byrne has a constructive view on the acquisition, as it enhances the company’s scale in the Midland at a relatively low price.
“We believe CIVI acquired one of the few Permian privates remaining that is accretive to asset quality,” said Byrne.

In line with his optimism on the deal, Byrne raised his price target for CIVI to $102 from $100 and reiterated a buy rating, saying that the stock remains cheap given an estimated free cash flow yield of about 23% in 2024.
Byrne ranks No. 64 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each delivering an average return of 32.1%. (See Civitas’ Stock Charts on TipRanks)  

Bristol Myers Squibb

Next up is biopharmaceutical company Bristol Myers Squibb (BMY). In September, the company announced a quarterly dividend of 57 cents per share, payable on Nov. 1. This dividend marks a year-over-year increase of 5.6%. BMY’s dividend yield stands at 4%.
On Oct. 8, BMY announced an agreement to acquire biotechnology company Mirati Therapeutics for a total consideration of up to $5.8 billion. The acquisition is expected to bolster the company’s oncology portfolio and help mitigate the loss of sales due to patent expirations in the years ahead. Importantly, BMY will gain access to Krazati, a key lung cancer medicine, which was approved in December 2022.
Given the ongoing commercial launch of Krazati, Goldman Sachs analyst Chris Shibutani views the proposed deal as a strategic positive for BMY, “potentially providing a bridge as its new product portfolio continues to seek its footing while its expansive developmental-stage pipeline incubates with much of its value not to be realized in the near-term.”
Krazati generated sales of over $13 million in the second quarter of 2023 and Goldman Sachs currently estimates the drug will deliver sales of $347 million, $1.8 billion, and $2.1 billion in 2025, 2030, and 2035, respectively. Overall, the analyst expects the Mirati acquisition to provide both commercial and pipeline support to Bristol Myers Squibb.
Shibutani reiterated a buy rating on BMY with a price target of $81. He holds the 288th position among more than 8,500 analysts on TipRanks. Moreover, 42% of his ratings have been profitable, with each generating an average return of 18.9%. (See BMY Blogger Opinions & Sentiment on TipRanks)

Chesapeake Energy

Another Goldman Sachs analyst, Umang Choudhary, is bullish on oil and gas exploration and production company Chesapeake Energy (CHK). The company returned about $515 million to shareholders year-to-date through the second quarter via base and variable dividends and share repurchases. 
It recently hiked its quarterly base dividend per share by 4.5% to $0.575. Considering only the base dividend, CHK offers a dividend yield of about 2.6%.
Following a meeting with Chesapeake’s management, Choudhary reaffirmed a buy rating on the stock with a price target of $91. The analyst noted that given the uncertainty in the natural gas price outlook, the company is focused on maintaining operational flexibility to adjust its capital expenditure based on gas prices.
The analyst added, “Management reiterated its focus on maintaining a strong balance sheet (including moving to investment grade) and capital returns (including growing fixed dividend + variable dividend based on commodity prices and counter-cyclical share repurchases).”
Choudhary ranks No.478 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 77% of the time, with each delivering a return of 39.4%, on average. (See Chesapeake Insider Trading Activity on TipRanks)

EOG Resources

Let’s look at another energy company: EOG Resources (EOG). Back in August, the company declared a quarterly dividend of $0.825 per share, payable on Oct. 31. Based on this quarterly dividend, the annual dividend rate comes to $3.30 per share, bringing the dividend yield to 2.5%.
Under its cash return framework, EOG is committed to return a minimum of 60% of annual free cash flow to shareholders through regular quarterly dividends, special dividends and share repurchases. EOG generated free cash flow of $2.1 billion in the first six months of 2023. Overall, the company’s robust free cash flow supports its attractive shareholder returns.
Ahead of the company’s third-quarter results, due in early November, Mizuho analyst Nitin Kumar reiterated a buy rating on EOG stock and slightly raised the price target to $158 from $157.
The analyst thinks that investors will likely focus on a potential special dividend and a hike in base dividend, as EOG continues to generate strong free cash flow. They might also pay attention to inventory depth and quality due to the underperformance of Eagle Ford and Permian wells. The analyst expects third-quarter 2023 EBITDA of $3.205 billion compared to the consensus estimate of $3.185 billion.
“We estimate a modest (~0.6%) beat on 3Q23 EBITDA from EOG with volumes in-line and pricing slightly ahead of consensus,” said Kumar.
Kumar ranks No.33 among more than 8,500 analysts on TipRanks. His ratings have been profitable 75% of the time, with each delivering an average return of 20.4%. (See EOG Financial Statements on TipRanks)

Cisco Systems

Computer networking giant Cisco Systems (CSCO) is the final dividend stock in this week’s list. The company returned $10.6 billion to shareholders through cash dividends and stock repurchases in fiscal 2023 (ended July 29). Fiscal 2023 marked the 12th consecutive year in which the company increased its dividend. Cisco offers a dividend yield of 2.9%.
Tigress Financial analyst Ivan Feinseth recently reiterated a buy rating on Cisco stock and increased the price target to $76 from $73. (See Cisco Hedge Fund Trading Activity on TipRanks). 
The analyst is bullish on the company’s long-term prospects and expects it to continue to benefit from higher spending on information technology due to the need for increased speed, network security and artificial intelligence implementation. He also expects the recently announced acquisition of cybersecurity firm Splunk to be an additional growth catalyst.
“CSCO’s industry-leading position and strong brand equity enable it to benefit from key secular IT trends, including cloud migration, AI development, the high-speed 5G network rollout, WiFi 6, and the increasing connectivity needs of the IoT [internet of things],” said Feinseth.
Overall, the analyst thinks that Cisco’s solid balance sheet and strong cash flows could support its growth initiatives, strategic acquisitions and enhance shareholder returns.
Feinseth holds the 349th position among more than 8,500 analysts on TipRanks. His ratings have been successful 57% of the time, with each rating delivering an average return of 9.6%. More

In 2024, high earners may pay more Social Security taxes.
Plus, working while receiving retirement benefits may have consequences.
Here’s what to know.

Dardespot | E+ | Getty Images

Social Security beneficiaries stand to get a boost to their benefits next year, based on a 3.2% cost-of-living adjustment.
But there are several thresholds workers should keep in mind, based on new numbers for 2024 that were recently announced by the Social Security Administration.

If you’re a worker who hopes to eventually be eligible for retirement benefits, or you’re working and also receiving retirement benefits, here’s what you need to know.

1. Up to $168,600 in earnings will be taxed for Social Security in 2024

The maximum taxable earnings for Social Security will rise to $168,600 in 2024, up from $160,200 in 2023.
Workers pay a 7.65% tax from their paychecks for Medicare and Social Security, also known as FICA, which stands for the Federal Insurance Contributions Act. Self-employed workers pay 15.3% to cover both worker and employer contributions.
That 7.65% includes 1.45% that goes to Medicare, and which applies to all earnings. Higher earners may pay an additional 0.9%.
The remaining 6.2% is for Social Security and only applies to the taxable maximum, or $168,600 for next year.

Approximately 6% of workers who pay Social Security taxes have earnings above the taxable maximum every year, according to the Social Security Administration.
By paying taxes to Social Security, you may eventually receive benefits in retirement.
Generally, you need at least 10 years of work, or 40 credits, to qualify. You may earn up to four credits per year.
The amount of earnings required for a Social Security credit will be $1,730 in 2024, up from $1,640 in 2023.

2. Some Social Security beneficiaries who work will face an earnings test

If you claim Social Security between age 62 and your full retirement age, your benefits will be reduced for starting early.
If you also continue to work, you may be subject to what is known as the retirement earnings test if you earn over a certain threshold.
In 2024, the earnings exempt from the retirement earnings test will go up to $22,320, from $21,240 this year. For every $2 in earnings above that limit, $1 in benefits will be withheld.
The good news is those withheld benefits are applied to your monthly benefits once you reach full retirement age.
“It’s worth checking the threshold for the lower earner in a married [two-earner] household,” said Joe Elsasser, a certified financial planner and president of Covisum, a provider of Social Security claiming software.
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That lower earner may be able to continue working and collect their full Social Security benefit without facing any penalty, he said.
Importantly, there is a different earnings test threshold for the year you turn full retirement age.
In 2024, this will go up to $59,520 for the months before you reach your full retirement age, compared to $56,520 this year. In the year you turn full retirement age, $1 in benefits is withheld for every $3 in earnings above the limit.
The earnings test is an important factor to consider when deciding whether to claim retirement benefits early, according to Elsasser.
The new higher threshold — almost $60,000 — for the year you turn full retirement age also presents an opportunity, he said.
For example, if you turn full retirement age in July, you may earn about $10,000 per month prior to your birthday and not be subject to the earnings test if you start benefits Jan. 1, Elsasser said.

3. Beneficiaries may be taxed on up to 85% of their benefit income

Social Security benefit income may be subject to federal taxes.
The rate at which that income is taxed is based on your combined income. That is calculated by adding half your benefits with your adjusted gross income and nontaxable interest.
You may pay taxes on up to 50% of your benefits if your combined income is between $25,000 and $34,000 for individual tax filers, or between $32,000 and $44,000 for couples who are married and file jointly.
Up to 85% of your benefits may be taxable if your individual combined income is more than $34,000 and you file individually, or if you’re married with more than $44,000.

Notably, these thresholds do not change from year to year. However, as benefit income increases each year with cost-of-living adjustments, more of that becomes subject to taxes over time.
More beneficiaries may be liable for federal income taxes on their benefit income next April due to the 8.7% cost-of-living adjustment for 2023, according to research from The Senior Citizens League. The nonpartisan senior group is advocating for the tax thresholds to be updated and annually adjusted so seniors do not have to pay as much taxes on their benefit income.
“Certainly, taxation has become a growing concern,” said Mary Johnson, Social Security and Medicare policy analyst at The Senior Citizens League. More

Sanjeri | E+ | Getty Images

Company: Fortrea Holdings (FTRE)

Business: Fortrea Holdings is a global contract research organization, or CRO, that provides clinical development and patient access solutions to the life sciences industry. CROs work with drug companies through all stages of the drug development process, from drug discovery and preclinical development to Phase I through IV post-approval work. The company was originally part of Covance from 1997 to 2015, where it had central lab preclinical and Phase I through IV clinical development capabilities. Covance was acquired by Labcorp in 2015, and Labcorp (LH) spun out Fortrea in July 2023.
Stock Market Value: $2.6B ($29.77 per share)

Activist: Starboard Value

Percentage Ownership:  8.75%
Average Cost: $28.42
Activist Commentary: Starboard has made 113 prior 13D filings and has an average return of 26.61% versus 11.88% for the S&P 500 over the same period. Of these 113 filings, 13 have been on companies in the health-care sector, where Starboard has an average return of 38.64% versus 13.23% for the S&P 500 over the same period.

What’s happening?

On Oct. 17, Starboard reported an 8.75% position in Fortrea Holdings.

Behind the scenes

Fortrea was spun out from Labcorp on July 3, as a Phase I through IV clinical development business. The company is one of the top seven contract research organizations that control 80% of the market. Over the years, drug companies have spent an increasing amount of money on research and development. With a material portion of that outsourced, the CRO industry has grown accordingly. So, there are strong secular tailwinds driving growth for the CRO industry, but to be a successful contract research organization, it helps to have global scale. Fortrea has operations in more than 90 countries with a focus on more than 20 therapeutic areas, which has allowed them to conduct over 5,000 trials over the last five years. However, despite having global reach and scale, the company’s adjusted 2023 earnings before interest, taxes, depreciation and amortization margins are only 9% (with projected 2024 margins of 13%), significantly below the peer median of 18%. This is not unusual for a company that has recently been spun out of a larger company as it could be saddled with a bloated cost structure in the spinout and could have been somewhat neglected operationally as a smaller part of a large company.  

So, now it is in a position to be run more efficiently with management solely focused on the CRO business. The crucial factor in achieving this is having the right CEO for the job, and Fortrea has that. In January, Tom Pike joined Labcorp as president and CEO of its Drug Development Clinical Development business unit and retained his CEO seat at Fortrea, upon completion of the spin-off. Pike has a track record for improving CRO profitability. When he was CEO at Fortrea peer IQVIA (formerly known as Quntiles), he increased margins by 425 basis points between 2012 and 2016, and led the stock to substantially outperform the market by 48% over that time. He has already committed to increasing margins at Fortrea to 13% from 9%, but this still falls short of peer performance. Starboard thinks that the company can reach pure margin levels of 18%. The firm has a great deal of experience helping portfolio companies run more efficiently and improve margins either as an active shareholder or member of the board.
With Pike as CEO and margin guidance going in the right direction, we expect Starboard will be an engaged shareholder here and look for a board seat only if things do not progress as planned. In that case, there is no reason why this would not be amicable. Both Starboard and Pike share the same views regarding margin improvement and seem to be rowing in the same direction. With peer margins and peer multiples, Starboard sees this as a $47 to $72 stock.
Finally, there may also be compelling strategic opportunities to create shareholder value. Private equity firms and strategics have been frequent acquirers of CRO assets and recent transactions have been at higher multiples, with a median of 14x EBITDA. Moreover, this is a consolidating industry right now. Elliott Management recently partnered with Patient Square Capital and Veritas Capital to acquire Fortrea peer Syneos Health Inc (SYNH) for $7.1 billion. That acquisition is expected to close in the second half of 2023. Elliott also just got management of Catalent, an outsourced manufacturer in the pharma industry, to pursue a strategic review. Once margins are improved and the company is running efficiently, there may be significant private equity and strategic interest here as well.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. Fortrea Holdings is owned in the fund. More

The yield on the benchmark 10-year Treasury note, a key barometer for mortgage rates, auto loans and student debt, hit 5% for the first time since 2007 on Thursday. 
Borrowing costs could head even higher as a result. 
One group that stands to benefit from higher rates: savers.

The yield on the benchmark 10-year Treasury crossed 5% for the first time in 16 years on Thursday, causing a ripple effect that could raise rates on mortgages, student debt, auto loans and more.
After Federal Reserve Chair Jerome Powell said “inflation is still too high,” expectations that the U.S. central bank could continue to tighten monetary policy sent the 10-year yield over the key psychological level for the first time since July 2007.

“That has real impacts on the economy, ultimately affecting every individual in the U.S.,” said Mark Hamrick, Bankrate.com’s senior economic analyst.

The yield on the 10-year note is a barometer for mortgage rates and other types of loans.
“When the 10-year yield goes up, it will have a knock-on effect for almost everything,” according to Columbia Business School economics professor Brett House.
Even though many of these consumer loans are fixed, anyone taking out a new loan will likely pay more in interest, he said.

Why Treasury yields have jumped

A bond’s yield is the total annual return investors get from bond payments. There are many factors driving the recent spike in Treasury yields, economists said.

For one, yields tend to rise and fall according to the Federal Reserve’s interest rate policy and investors’ inflation expectations.
In this case, the central bank has hiked its benchmark rate aggressively since early 2022 to tame historically high inflation, pushing up bond yields. Inflation has fallen significantly since then. However, Fed officials and recent strong U.S. economic data suggest interest rates will likely have to stay higher for a longer time than many expected to finish the job. Higher oil prices have also fed into inflation fears.

But interest rates are just part of the story.
Most of the recent jump in Treasury yields is due to a so-called “term premium,” said Andrew Hunter, deputy chief U.S. economist at Capital Economics.
Basically, investors are demanding a higher return to lend their money to the U.S. government — in this case, for 10 years. One reason: Investors seem skittish about rising U.S. government debt, Hunter said. Generally, investors demand a higher return if they perceive a greater risk of the government’s inability to pay back debt in the future.

Mortgage rates will stay high

Most Americans’ largest liability is their home mortgage. Currently, the average 30-year fixed rate is up to 8%, according to Freddie Mac.
“For those who are planning to buy a home, this is really bad news,” said Eugenio Aleman, chief economist at Raymond James.
“Mortgage rates will probably continue to go up and that will push affordability farther away.”

Student loans could get pricier

There is also a correlation between Treasury yields and student loans.
A college education is the second-largest expense an individual is likely to face in a lifetime, right after purchasing a home. To cover that cost, more than half of families borrow.

Undergraduate students who take out new direct federal student loans for the 2023-24 academic year are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
The government sets the annual rates on those loans once a year, based on the 10-year Treasury.
If the 10-year yield stays above 5%, federal student loan interest rates could increase again when they reset in the spring, costing student borrowers even more in interest.

Car loans are getting more expensive

There is also a loose correlation between Treasury yields and auto loans. The average rate on a five-year new car loan is currently 7.62%, the highest in 16 years, according to Bankrate. Now, more consumers face monthly payments that they likely cannot afford.
“There are only so many people who can carve out an $800 to $1,000 car payment,” Bankrate’s Hamrick said.
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While other types of borrowing, including credit cards, small business loans and home equity lines of credit, are predominantly pegged to the federal funds rate and rise or fall in step with Fed rate moves, those rates could head higher, too, according Aleman.
“Everything from business loans to consumer loans is going to be affected,” he said.

Savers can benefit

One group that does stand to benefit from higher yields is savers.
“For many years, we’ve been bemoaning the plight of savers,” Hamrick said. But because yields tend to be correlated to changes in the target federal funds rate, deposit rates are finally higher. 
High-yield savings accounts, certificates of deposits and money market accounts are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in more than 15 years.
“This is the rare time in recent history when cash looks pretty good,” Hamrick said.
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The average 30-year fixed mortgage rate hit 8% for the first time since 2000.
Homebuyers must earn $114,627 to afford a median-priced house in the U.S., according to a recent report by Redfin, a real estate firm.
“Housing affordability is incredibly difficult for potential homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

Lifestylevisuals | E+ | Getty Images

The average 30-year fixed mortgage rate just hit 8% for the first time since 2000, putting housing financing costs at historically high levels.
Given high prices and high interest rates, homebuyers must earn $114,627 to afford a median-priced house in the U.S., according to a recent report by Redfin, a real estate firm, which analyzed median monthly mortgage payments in August 2023 and August 2022.

The firm considers a monthly mortgage payment to be affordable if the homebuyer spends no more than 30% of their income on housing. At the time of the analysis, the average 30-year fixed mortgage was 7.07%.
The median U.S. household income was $75,000 in 2022, Redfin found. While hourly wages in the U.S. grew 5% over the past year, according to the real estate firm, that has not outpaced rising housing costs.
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Those current market trends have left homeownership out of reach for many people, experts say.
“Housing affordability is incredibly difficult for potential homebuyers,” said Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors.

How home affordability has changed

In August 2020, the typical monthly mortgage payment was $1,581, based on an average interest rate of 2.94%, Redfin found. At the time, the typical house cost roughly $329,000, and homebuyers would have needed an annual income of $75,000 to afford it. 
However, those record-low levels were the result of “highly unusual events, like a pandemic and a nearly catastrophic financial crisis,” said Mark Hamrick, senior economic analyst at Bankrate.com.
Nowadays, the typical U.S. homebuyer’s monthly mortgage payment is $2,866, according to Redfin — an all-time high.

Phiromya Intawongpan | Istock | Getty Images

While the economy and the housing markets move through cycles, it’s unlikely for mortgage rates to decline substantially in the near term, especially as the Federal Reserve is expected to keep the benchmark rate high for longer, added Hamrick.
Additionally, the constrained supply of homes for sale is a “direct result of the lock-in effect,” said Hamrick. The low supply pressures prices upward as current homeowners are less compelled to move or put their houses on the market as they don’t want to trade their low-rate mortgage for one that is significantly higher.
“Higher rates are also increasing the cost and availability of builder development and construction loans, which harms supply and contributes to lower housing affordability,” Alicia Huey, NAHB’s chairman and a homebuilder and developer from Birmingham, Alabama, previously told CNBC.

‘This pain shall pass’

“People should know that this pain shall pass,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York. “In the next year or two years, interest rates will be lower, and people will have the ability to refinance.”
That said, competition for homes on the market is likely to be worse in a few years as interest rates cool, she said. There are many buyers who remain on the sidelines because of current high rates.
“When interest rates come down, everyone’s going to come back to the marketplace,” said Cohn.

How to decide: Buy now or wait?

The decision of purchasing a home is intensely personal and prospective homebuyers should tread with caution, experts say.
“When deciding to purchase a home, it comes down to personal finances, stability and the length of time they plan on owning,” said Lautz.
In addition to mortgage costs, prospective homebuyers should keep their other financial goals in mind, as well as maintenance costs, said Hamrick. The biggest regret among recent homebuyers was not being prepared for maintenance and other costs, according to a Bankrate survey.
However, “homeownership is the primary means of wealth creation in this country,” said Hamrick.
The typical homeowner has $396,200 in wealth compared to the average renter at $10,400, added Lautz.

First-time homebuyers may consider tapping retirement funds or taking advantage of first-time homebuyer programs that may offer down payment assistance. Buyers can also consider temporary buydowns, which are paid by either the real estate broker or seller, to help lower the monthly payment, said Cohn.
However, it will be important for prospective buyers to work with professionals in the long run, experts say. Buyers should examine all options, consult with realtors about overlook areas and talk with mortgage brokers to consider all the possible loan options, said Lautz.
“This is potentially the most expensive transaction somebody will be associated with in their lifetimes,” said Hamrick. “It should be done as well as possible to the benefit of the buyer.”Don’t miss these CNBC PRO stories: More

When it comes to the highest-paying bachelor’s degrees, engineering and other STEM-related fields of study continue to dominate.
As a result, more students are pursuing careers in science, technology, engineering and mathematics.
However, in some cases, you may not even need a degree to get a foot in the door.

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Highest-paying majors are mostly STEM

Payscale’s recent college salary report found that petroleum engineering is currently the highest-paying major overall. Graduates in the field earn nearly six figures just starting out and more than $200,000 with 10 or more years of experience.
After petroleum engineering, operations research and industrial engineering majors are the next highest paid, followed by interaction design, applied economics and management and building science. 

Technology jobs also claimed most spots in the top 10 list of highest-paying jobs currently available, according to a separate report by job search site Ladders.
“Even though tech hiring has slowed, there’s still demand for software engineers and project managers. I suspect the rise of AI is a big factor here,” Ladders founder Marc Cenedella said.
Down the road, students who pursue a degree specifically in computer science, electrical engineering, mechanical engineering or economics — still mostly STEM disciplines — earn the most overall, according to another recent analysis of bachelor’s degrees and median earnings by the U.S. Census Bureau.

Higher pay has led to a surge in STEM graduates

“Up until 10 years ago, the focus was almost entirely on the umbrella name of the institution. Now people are looking closer at pre-professional programs from a financial point of view,” Greenberg said.
“The acceleration of college tuition prices is making people look much more closely at the value,” he said.

People are looking closer at pre-professional programs from a financial point of view.

Eric Greenberg
president of Greenberg Educational Group

In the past decade, college got a lot more expensive. Tuition and fees at four-year private colleges jumped roughly 36%, according to the College Board, which tracks trends in college pricing and student aid.
During that same time, there has been a surge in the number of STEM graduates from U.S. colleges and universities at all degree levels, according to a Pew Research Center analysis of federal employment and education data.
Going forward, that’s likely to continue, the research shows. The growth in STEM jobs is expected to outpace that of non-STEM jobs in the coming years, Pew also found. 

‘You don’t always need a degree’

However, in some STEM-related fields, “you don’t always need a degree,” according to John Mullinix, chief growth officer at Ladders.
A growing number of companies, including many in tech, are dropping degree requirements for middle-skill and even higher-skill roles.

Between boot camps, specialized programs and online certifications, there are more options available at a lower cost, according to Mullinix. 
“There’s a huge opportunity there,” he said.
Still, occupations as a whole are steadily requiring more education, according to a separate report by Georgetown University’s Center on Education and the Workforce.
The fastest-growing industries, such as computer and data processing, still require workers with disproportionately high education levels compared with industries that have not grown as quickly.
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The IRS on Thursday announced a “special withdrawal process” for small businesses that may have wrongly claimed the so-called employee retention tax credit.
Many small businesses were misled by ERC promoters, prompting the agency to temporarily stop processing new claims in September.
“We want to give these taxpayers a way out,” IRS Commissioner Danny Werfel said in a statement.

IRS Commissioner Daniel Werfel testifies during the Senate Finance Committee hearing on The President’s Fiscal Year 2024 IRS Budget and the IRS’s 2023 Filing Season, in the Dirksen Building on April 19, 2023.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

The IRS on Thursday announced a “special withdrawal process” for small businesses that may have wrongly claimed the so-called employee retention tax credit, or ERC.
Enacted to support small businesses during the Covid-19 pandemic, the ERC, worth thousands per eligible employee, has been a magnet for fraudulent or “questionable claims,” according to the IRS. Many small businesses were misled by ERC promoters, prompting the agency to temporarily stop processing new claims in September.

The new withdrawal option allows certain small businesses to withdraw an ERC claim if they haven’t already received a refund, to avoid future repayment, interest and penalties, according to the IRS.
“The aggressive marketing of these schemes has harmed well-meaning businesses and organizations, and some are having second thoughts about their claims,” IRS Commissioner Danny Werfel said in a statement. “We want to give these taxpayers a way out.”
More from Personal Finance:Net worth surged 37% in pandemic era for the typical family, Fed findsHere’s who qualifies for the IRS’ free ‘Direct File’ pilot program in 2024How Medicare open enrollment may help you cut health-care costs for next year
“We continue to urge taxpayers to consult with a trusted tax professional rather than a marketing company about this complex tax credit,” Werfel said.
Small businesses can use the ERC claim withdrawal process if they meet the following criteria:

They claimed the ERC on an adjusted employment return (Forms 941-X, 943-X, 944-X, CT-1X).
They only filed the adjusted return to claim the ERC and made no other changes.
They intend to withdraw the entire ERC claim.
They have either not received payment for their claim, or received the payment but haven’t cashed or deposited the refund check.

Small businesses can learn more about the ERC withdrawal process by visiting IRS.gov/withdrawmyERC.

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