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Employees report that building savings for an emergency and paying monthly bills are just as stressful as — if not more stressful than — saving enough for retirement, according to a new workplace survey.
Passage of the Secure 2.0 legislation last year gives employers more flexibility in their benefit plans.
Companies are looking at financial wellness benefits more holistically, with some offering emergency savings and student loan repayment plans.

Traditional retirement plans aren’t enough

For years, employers’ financial benefits mostly focused on offering robust workplace retirement plans.
Yet, when asked where they would put an extra $600 provided by an employer, workers in the EBRI survey said they would spread it out — putting $192 toward funding retirement, $171 to emergency savings and $89 toward a health savings account, followed by paid time off, college savings and paying down college debt.  

Workplace emergency savings plans are popular

JGI/Jamie Grill | Getty Images

About 42% of employees want to be automatically enrolled in an emergency savings account through their employer, according to research from the Bipartisan Policy Center. However, just 10% of employers offered these benefits in 2022, according to human resources consulting firm Buck.
Yet those numbers may increase as employers recognize the upsides for the worker and the workplace.
“When you do need that money for an emergency, you’re not taking a withdrawal from your 401(k) plan, you’re not missing a student loan payment, you’re not getting evicted, you’re not having your water shut off, so that you can actually come to work without having to worry about all of that,” said Chantel Sheaks, vice president of retirement policy at the U.S. Chamber of Commerce. 

New law gives employers more benefits flexibility

The passage of Secure 2.0 legislation last year also gives employers more flexibility to offer emergency savings accounts.
Starting next year, as much as 3% of an employee’s paycheck can be automatically placed in an emergency savings account, up to a total of $2,500. Employees can then withdraw the money up to four times a year with no fees.

The law, which goes into effect in 2024, also includes provisions for matching 401(k) contributions based on employees’ student loan payments.
“Employers used to be all about just talking about the wage, and I would say they spend about equal time now talking about those other things that are keeping their employees from being productive,” said Amy Friedrich, president of benefits and protection with Principal Financial Group, which works with more than 145,000 small and midsized businesses across retirement and employee benefits. 
Many employers are also now meeting worker requests for financial planning resources, from credit card and other debt counseling to financial coaching, to help them establish a budget and financial plan. 
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Through dual enrollment, students can complete one to two years of college coursework by the time they finish high school.
That can take years off the cost of a bachelor’s degree, potentially cutting the tab in half, not to mention the student loan debt.
Nearly two-thirds of community college dual enrollment students nationally were from low- or middle-income families, according to a 2017 study from the Community College Research Center at Columbia University.

Dual enrollment is growing in popularity

More students are catching on, according to a recent report by the National Student Clearinghouse Research Center, which showed a 12.8% jump in dual enrollment since 2022.

At Post University’s High School Academy in Waterbury, Connecticut, the number of students enrolled has spiked since the program launched a little more than five years ago. Students take a mix of high school- and college-level courses, shortening the time it takes to complete a high school diploma and one to two years of college coursework.
“For every class you can take in high school, that’s one less class you are financing down the road,” said Chad McGuire, director of Post’s High School Academy.

Not all students in dual enrollment programs graduate high school with an associate’s degree, but most finish with at least one year of college credit, which gives them the option to enter college as a transfer student.
At least 35 states have policies that guarantee that students with an associate’s degree can transfer to a four-year state school as a junior.
“Dual enrollment is not new,” McGuire said. “But there’s more effort to make it accessible.”

They’re basically getting two years of college for free.

Martha Parham
senior vice president of public relations at the American Association of Community Colleges

Unlike Advanced Placement, another program in which high school students take courses and exams that could earn them college credit, dual enrollment is a state-run program that often works in partnership with a local community college.
These programs are not restricted to high school students on a specific, and often accelerated, academic track, as many AP classes are.
In fact, many of the programs were initially geared toward underrepresented students who were unlikely to consider college.

Where dual enrollment falls short

Nearly two-thirds of community college dual enrollment students nationally were from low- or middle-income families, according to a 2017 study from the Community College Research Center at Columbia University.
Of those students, 88% continued on to college after high school, and most earned a degree within six years.

However, to date, dual enrollment predominantly includes high-achieving, mainly white students who were likely already on the college track, according to new data from Columbia’s Community College Research Center.
While there is evidence that dual enrollment benefits students, students of color are underrepresented, the researchers said.
To reduce equity gaps, the authors suggest improved outreach to underserved students and families to increase awareness of dual enrollment and its effectiveness in increasing college-going and completion rates.
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Nearly a third of American adult workers say they would need $1 million to retire comfortably.
Brokerage firms such as Fidelity and T. Rowe provide benchmarks to help clarify the path to retirement.
You may be able to contribute to your retirement beyond your employer maximum to meet the IRS limit, CNBC FA Council member Marguerita Cheng said.

Peter Cade | Stone | Getty Images

Plenty of people feel like they are behind on their retirement savings. But what exactly does “behind” mean?
More than half, 56%, of American adults in the workforce say they are behind where they should be when it comes to saving for their retirement, including 37% who reported feeling “significantly behind,” according to a new Bankrate survey. Nearly a third say they would need $1 million or more to retire comfortably.

Here’s how experts say you can figure out if you’re actually behind — and what you can do to catch up.

Online tools can provide points of comparison

Adults may feel behind because they haven’t reached “these goals in their minds as either rules of thumbs or points of comparison” that they’ve set for themselves based on what they read online, said certified financial planner Lazetta Rainey Braxton, co-founder and co-CEO of virtual advisory firm 2050 Wealth Partners.
Braxton, a member of the CNBC Financial Advisor Council, pointed to the “numerous calculators” available online to help investors gauge how much they might need, factoring in both ongoing lifestyle expenses and those that may increase in retirement, such as medical costs. The latter can be significant: According to Fidelity, the average retired couple age 65 this year may need around $315,000 saved to cover health-care expenses in retirement.

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Brokerage firms such as Fidelity and T. Rowe provide benchmarks to help clarify the path to retirement. The benchmarks provide different age milestones and a target for how much to save.
For example, according to Fidelity’s guide, you should aim to have twice your starting salary saved by the age of 35, and 10 times your starting salary by the age of 67. According to T. Rowe, you should have 1 to 1.5 times your current annual salary saved by age 35, and anywhere from 7 to 13.5 times your salary by age 65.

‘Specific information is better than no information’

Based on such measures, it’s no wonder people feel behind. People between 25 and 34 years old have an average 401(k) balance of $30,017, or a median $11,357, according to Vanguard’s How America Saves Report 2023. Even in the 55- to 64-year-old age group, the average and median balances are $207,874 and $71,168, respectively.
Comparing yourself against benchmarks might make adults near or in retirement stressed if they are told that they need an additional six-figure sum to retire, Christine Benz, director of personal finance and retirement planning at Morningstar, told CNBC.
“But I do think specific information is better than no information,” Benz said, of benchmarks.
Generation Xers and baby boomers reported feeling more behind on their retirement than anyone else in the Bankrate survey, with 51% of Gen Xers and 40% of boomers thinking they are “significantly behind.”

Bankrate senior industry analyst Ted Rossman said older adults feel more behind because if they have not yet retired, it is getting closer, and these workers are realizing “that they don’t have as much saved as they would like.”
People are also living longer on average, which means many workers are now needing to finance what could be a 30-year retirement. In that case, Rossman said a 4% withdrawal rate was a “safe bet.” If people believe they need between $1 million and $2 million to retire — as 13% said in the Bankrate survey — then a 4% withdrawal rate would equate to approximately $40,000 per year, he said.
“It doesn’t start to sound like quite as much and then it’s like, ‘Oh, wow, I might need more than $40,000 a year to live on,'” Rossman said. “So now that’s why you’re feeling behind.”

How to catch up on retirement savings

Oftentimes, looking at so many different places for savings guidance may only cause more anxiety, said CFP Marguerita Cheng, CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland.
Cheng — who is also a member of CNBC’s Financial Advisor Council — said that if your employer retirement plan sponsor’s website and multiple other tools indicate you are behind, the next best thing to do is to look at your contribution rates.
When people say they are maxing out on their retirement plan, they often mean they are maxing out in terms of their employer’s match, which usually hovers between 5% and 6%, Cheng noted.

However, you may be able to contribute more to your 401(k) to meet the annual maximum, she said. Workers can contribute up to $22,500 this year under the IRS’ 2023 limit. Those age 50 and older — who reported the most stress about their retirement — are eligible to contribute an additional $7,500.

While Bankrate found that this age group is also the least likely to know how much they need to retire, Rossman said people who don’t have quite as much time left should not be discouraged from getting started on or adding to their retirement savings.
For younger workers, early moves to start investing and boost contributions can help them stay on track. Gen Zers and millennials reported feeling the most ahead on their retirement savings, Bankrate found.
Rossman stressed that “every dollar” you save in your 20s or 30s counts since “time is on your side.” If young people start early and see gains compound by around 10% per year, their money could “double five times over 35 years,” he said.
“That’s a big difference.” More

An Amazon delivery truck at the Amazon facility in Poway, California, Nov. 16, 2022.
Sandy Huffaker | Reuters

Investors are confronting several headwinds, including macro uncertainty, a spike in energy prices and the unanticipated crisis in the Middle East.
Investors seeking a sense of direction can turn to analysts who identify companies that have lucrative long-term prospects and the ability to navigate near-term pressures. 

To that end, here are five stocks favored by Wall Street’s top analysts, according to TipRanks, a platform that ranks analysts based on their past performance.

Amazon

We begin this week’s list with e-commerce and cloud computing giant Amazon (AMZN). While the stock has outperformed the broader market year to date, it has declined from the highs seen in mid-September.
JPMorgan analyst Doug Anmuth noted the recent sell-off in AMZN stock and highlighted certain investor concerns. These issues include the state of the U.S. consumer and retail market, rising competition, higher fuel costs and the Federal Trade Commission’s lawsuit. Also on investors’ mind is Amazon Web Services’ growth, with multiple third-party data sources indicating a slowdown in September.
Addressing each of these concerns, Anmuth said that Amazon remains his best idea, with the pullback offering a good opportunity to buy the shares. In particular, the analyst is optimistic about AWS due to moderating spending optimizations by clients, new workload deployment and easing year-over-year comparisons into the back half of the third quarter and the fourth quarter. He also expects AWS to gain from generative artificial intelligence.
Speaking about the challenging retail backdrop, Anmuth said, “We believe AMZN’s growth is supported by key company-specific initiatives including same-day/1-day delivery (SD1D), greater Prime member spending, & strong 3P [third-party] selection.”

In terms of competition, the analyst contends that while TikTok, Temu and Shein are expanding their global footprint, they pose a competitive risk to Amazon mostly at the low end, while the company is focused across a broad range of consumers.
Anmuth reiterated a buy rating on AMZN shares with a price target of $180. He ranks No. 84 among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 61% of the time, with each delivering an average return of 16.6%. (See Amazon’s Stock Charts on TipRanks)  

Meta Platforms

Anmuth is also bullish on social media company Meta Platforms (META) and reaffirmed a buy rating on the stock. However, the analyst lowered his price target to $400 from $425, as he revised his model to account for higher expenses and made adjustments to revenue and earnings growth estimates for 2024 and 2025 due to forex headwinds.
The analyst highlighted that Meta is investing in the significant growth prospects in two big tech waves – AI and metaverse, while continuing to remain disciplined. (See META Insider Trading Activity on TipRanks)
“AI is clearly paying off in terms of incremental engagement from AI-generated content and Advantage+, and as discussed at Meta Connect, Llama 2 should drive AI experiences across the Family of Apps and devices, while Quest 3 is the most powerful headset Meta has ever shipped,” said Anmuth. Llama 2 is Meta’s new large language model.
The analyst expects Meta’s advertising business to continue to outperform, with AI investments bearing results and Reels anticipated to turn revenue-accretive soon. Overall, Anmuth is convinced that Meta’s valuation remains compelling, with the stock trading at 15 times his revised 2025 GAAP EPS estimate of $20.29.

Intel

We now move to semiconductor stock Intel (INTC), which recently announced its decision to operate its Programmable Systems Business (PSG) as a standalone business, with the intention of positioning it for an initial public offering in the next two to three years.
Needham analyst Quinn Bolton thinks that a standalone PSG business has several benefits, including autonomy and flexibility that would boost its growth rate. Operating PSG as a separate business would also enable the unit to more aggressively expand into the mid-range and low-end field programmable gate arrays segments with its Agilex 5 and Agilex 3 offerings.
Additionally, Bolton said that this move would help Intel drive a renewed focus on the aerospace and defense sectors, as well as industrial and automotive sectors, which carry high margins and have long product lifecycles. It would also help Intel enhance shareholder value and monetize non-core assets.  
“We believe the separation of PSG will further allow management to focus on its core IDM 2.0 strategy,” the analyst said, while reiterating a buy rating on the stock with a price target of $40.   
Bolton holds the No.1 position among more than 8,500 analysts on TipRanks. His ratings have been successful 69% of the time, with each rating delivering an average return of 38.3%. (See Intel Hedge Fund Trading Activity on TipRanks). 

Micron Technology

Another semiconductor stock in this week’s list is Micron Technology (MU). The company recently reported better-than-feared fiscal fourth-quarter results, even as revenue declined 40% year over year. The company’s revenue outlook for the first quarter of fiscal 2024 exceeded expectations but its quarterly loss estimate was wider than anticipated.  
Following the print, Deutsche Bank analyst Sidney Ho, who holds the 66th position among more than 8,500 analysts on TipRanks, reiterated a buy rating on MU stock with a price target of $85. 
The analyst highlighted that the company’s fiscal fourth quarter revenue exceeded his expectations, fueled by the unanticipated strength in NAND shipments through strategic buys, which helped offset a slightly weaker average selling price.
Micron’s management suggested that the company’s overall gross margin won’t turn positive until the second half of fiscal 2024, even as pricing trends seem to be on an upward trajectory. However, the analyst finds management’s gross margin outlook to be conservative.
The analyst expects upward revisions to gross margin estimates. Ho said, “Given that the industry is in the very early stages of a cyclical upturn driven by supply discipline across the industry, we remain confident that positive pricing trends will be a strong tailwind over the next several quarters.”
Ho’s ratings have been profitable 63% of the time, with each delivering a return of 21.5%, on average. (See Micron Blogger Opinions & Sentiment on TipRanks)  

Costco Wholesale

Membership warehouse chain Costco (COST) recently reported strong fiscal fourth-quarter earnings, despite macro pressures affecting the purchase of big-ticket items.
Baird analyst Peter Benedict explained that the earnings beat was driven by below-the-line items, with higher interest income more than offsetting an increased tax rate.
“Steady traffic gains and an engaged membership base underscore COST’s strong positioning amid a slowing consumer spending environment,” said Benedict.
The analyst highlighted other positives from the report, including higher digital traffic driven by the company’s omnichannel initiatives and encouraging early holiday shopping commentary.
Further, the analyst thinks that the prospects for a membership fee hike and/or a special dividend continue to build. He added that the company’s solid balance sheet provides enough capital deployment flexibility, including the possibility of another special dividend.   
Benedict thinks that COST stock deserves a premium valuation (about 35 times the next 12 months’ EPS) due to its defensive growth profile. The analyst reiterated a buy rating on the stock and a price target of $600.
Benedict ranks No. 123 among more than 8,500 analysts tracked on TipRanks. Moreover, 65% of his ratings have been profitable, with each generating an average return of 12.2%. (See COST’s Technical Analysis on TipRanks) More

In the wake of the battle over student loan forgiveness, a growing number of colleges are eliminating education debt from the outset. 
Roughly two dozen schools now have “no-loan” policies, which means they will meet 100% of an undergraduate’s need for financial aid with grants rather than student loans.

Without broad-based student loan forgiveness, some colleges have a new strategy to keep students from drowning in debt.  
Roughly two dozen schools have introduced “no-loan” policies, which means they are eliminating student loans altogether from their financial aid packages.

“College is expensive — we have to make sure we keep it accessible,” said Nicole Hurd, president of Lafayette College in Easton, Pennsylvania.

At Lafayette, families with household incomes of up to $200,000 have their financial need met through grants and work study, without any loans.
“We have a moral obligation to make sure our low- and moderate-income families know that college is the best investment you’ll make in yourself,” Hurd said.
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Colby College in Waterville, Maine, has had a no-loan policy in place since 2008.

For Terra Gallo, who is a senior majoring in environmental policy, “Colby’s no-loan policy and the fact that demonstrated need is met and accounted for was something that was important to both me and my family.”
“I know a lot of people who are in significant debt,” Gallo, 21, added. “That was something I didn’t want.”
Colby senior Jackie Hardwick of Jacksonville, Florida, also said the cost of attendance was the main thing she was considering when looking at colleges.

“That was the No. 1 concern on my mind,” she said, highlighting Colby’s support for financial aid and Quest Bridge scholarship recipients like herself.
Hardwick, 21, who is a global studies and East Asian studies double-major, said she would not be enrolled at Colby without her scholarships or if she had a larger expected family contribution, which she said is still “pretty hefty.”
“For us, the no-loan message is incredibly powerful especially when so many families are grappling with the very real concerns about the cost of higher education,” said Randi Maloney, Colby’s dean of admissions and financial aid.

‘A win-win for schools and students’

“These schools have addressed the biggest concern for students and parents, which is assuming too much debt,” said Robert Franek, The Princeton Review’s editor in chief and author of “The Best 389 Colleges.”
“They are saying to students and parents, ‘I see you and I hear you.'”
Further, such programs will likely result in more students applying, which can also boost a college’s yield — or the percent of students who choose to enroll after being admitted — which is an important statistic for schools, Franek added.

These schools have addressed the biggest concern for students and parents, which is assuming too much debt.

Robert Franek
editor in chief of The Princeton Review

“It is a win-win for schools and students.”
“Typically you will see a fairly sizeable increase in the number of admissions applications,” said Forrest Stuart, Lafayette’s vice president for enrollment management.
“It puts your school on the map,” he said. And “the more you can have your name out there, the more robust class we can put together.”

‘No loan doesn’t mean free’

Of course, students may still be on the hook for the expected family contribution, as well as other costs, including books and fees. There could also be a work-study requirement, depending on the school.
Even if a school has a no-loan policy, that does not prevent a student or family from borrowing money to help cover their contribution.
“No loan doesn’t mean free,” Franek noted.
Hardwick, for example, works six part-time jobs on campus to support herself and her family’s expected contribution.
“I have to help my family out whenever I can,” she said.
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Domestic round-trip airfare for Thanksgiving is currently around $270 on average. For Christmas, domestic round-trip flights are hovering at $400 on average, per Hopper.
While prices have plateaued in the past two weeks, they’re expected to spike soon.
“Travelers are going to miss out on the opportunity to save when they wait too long,” said Hayley Berg, lead economist at Hopper.

D3sign | Moment | Getty Images

Fares could get much pricier within days

After April, holiday airfares tend to drop and then are volatile until the four-week “ideal booking window” spanning mid-September to mid-October where prices stay constant. “We’re at the end of [that period] now,” said Berg.

Domestic round-trip airfare for Thanksgiving is still around $268 on average, which is what they were about three weeks ago. For Christmas, domestic round-trip flights are still hovering at $400 on average, per Hopper data.
However, after about Oct. 14, prices are likely to consistently get more expensive and travelers will have a more challenging time finding the best deals.
“After this weekend, we’ll see a lot of volatility continue but on average, prices are going to go up,” said Berg.
While there may be some deals available through the end of October, don’t wait it out if you have set travel dates in mind between commitments such as school or work.
Each day you wait, you could see prices increase. Hopper expects prices to spike about $30 a day for Thanksgiving fares at the last three weeks before the holiday.
“Each day you wait at the last minute for Thanksgiving, you’re adding a significant amount of cost,” said Berg.
In the last few days before Christmas, travelers could see price jumps of about $40 a day, Hopper anticipates.

Air travel passenger picked up at the airport during the holiday season.
Getty Images

Secure your flight and confirm your seating

Most flights are not entirely sold out — yet. Travelers who don’t book holiday airfares soon may find that many nonstop trips, flights on the most ideal times of the day and most popular dates are gone.
Fares will likely become increasingly competitive as travelers wait, “judging by the number of people traveling this year,” said Elizabeth Ayoola, a personal finance writer at NerdWallet. 
“Those determined to avoid the summer crowds and heat may be planning to travel during the holidays, driving prices up,” said Ayoola.
Take one of the first flights of the day if possible. You’re two times more likely to be affected by flight delays or cancellations after 8:00 a.m., Berg said.
While nonstop flights are often more expensive, they can help travelers bypass the risk of missing connections due to a flight disruption.

Weather and air traffic disruptions last year caused a lot of turmoil for holiday travelers. Given the demand for holiday flights, it’s worth planning with the potential for such delays or cancellations in mind.
Holiday travel numbers are expected to resemble or surpass results from 2019, wrote Phil Dengler, co-founder and head of editorial and marketing of travel site The Vacationer.
Travelers might also look into travel insurance, and brushing up on your rights if your travel plans are interrupted.
While picking your seat can come at an additional cost with most airlines, “ensure you have a seat on your desired flight,” Berg said. It may serve as a peace of mind for travelers. More

Consumers saw some prices deflate in September 2023, according to the consumer price index, issued Thursday by the U.S. Bureau of Labor Statistics.
Deflation is the opposite of inflation. It measures how quickly prices are falling.
Largely, deflation has happened among consumer goods, not services, economists said.

Inverse Couple Images | Moment | Getty Images

Consumers have been hearing a lot about inflation in the U.S. economy since early 2021, and rightfully so. At their pandemic-era peak, consumer prices were rising faster than at any point in 40 years.
But the dynamic seems to have shifted.

Inflation has been declining gradually, which means prices are still rising but at a slower pace, also known as disinflation. Some prices have actually deflated over the past year, according to the consumer price index.
Deflation is the opposite of inflation: It means consumers are seeing prices decline in certain categories.

Why some prices are deflating

Largely, this deflationary dynamic is occurring on the “goods” side of the U.S. economy, or the tangible objects that Americans buy, economists said. Goods encompass roughly a quarter of the consumer price index.
There are several reasons for this.  
For one, a stronger U.S. dollar makes imported goods cheaper. Some of those savings — on items such as apparel and furniture — get passed on to consumers, said Mark Zandi, chief economist of Moody’s Analytics.

The dynamic is also somewhat a reversion to the pre-pandemic norm, Zandi said.
Goods deflation was typical before the Covid-19 pandemic, he said. But the health crisis snarled global supply chains, causing shortages that fueled big spikes in prices. Energy costs surged when Russia invaded Ukraine, pushing up transportation and other distribution costs.
Now, supply chain disruptions are largely in the rearview mirror, he said. Energy costs have declined.
Over the long term, consumers also generally see savings as manufacturers shift goods production to lower-cost areas, Zandi said.

How measurement quirks affect prices

Some of the declines are due partly to measurement quirks.
For example, the U.S. Bureau of Labor Statistics, which compiles the CPI report, controls for quality improvements over time. Electronics such as televisions, cell phones and computers continually get better. Consumers get more for roughly the same amount of money, which shows up as a price decline in the CPI data. 
Health insurance, which falls in the “services” side of the U.S. economy, is similar.
The BLS doesn’t assess health insurance inflation based on consumer premiums. It does so indirectly by measuring insurers’ profits. This is because insurance quality varies greatly from person to person. One person’s premiums may buy high-value insurance benefits, while another’s buys meager coverage.
Those differences in quality make it difficult to gauge changes in health insurance price with accuracy.
These sorts of quality adjustments mean consumers don’t necessarily see prices drop at the store — only on paper.   More

As payments resume after more than a three-year break, borrowers describe receiving incorrect bills and incredibly long wait times trying to contact their servicers.
“It’s a challenging environment,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.

Creatas | Creatas | Getty Images

Before the pandemic, the federal student loan system caused borrowers frustration and confusion. As the Biden administration resumes payments this month for some 40 million Americans after more than a three-year reprieve, the situation has been especially difficult.
Borrowers describe receiving incorrect bills and spending hours on the phone trying to reach their servicers. One woman told CNBC the estimated wait time to speak to someone at her servicer was 542 minutes.

“It’s a challenging environment,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers. “Sometimes there are incredibly divergent call hold times from what we’d like to see.”
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The many recent government announcements related to student loans seem to be adding to borrower confusion, Buchanan said. Though many of those developments are positive for borrowers, including a recent cancellation of $9 billion in student debt, they also raise a lot of questions about who is eligible and how soon that relief might arrive.
Other issues may be due to a change in servicers and incorrect calculations of borrowers bills under a new income-driven payment plan.

Official warned of potential for ‘ongoing confusion’

The Supreme Court in June struck down President Joe Biden’s broad plan to cancel up to $20,000 in student debt for tens of millions of Americans, rolled out in August 2022.

Before the high court’s ruling, a top official at the U.S. Department predicted some of the problems now unfolding.
“These student loan borrowers had the reasonable expectation and belief that they would not have to make additional payments on their federal student loans,” said Education Department Undersecretary James Kvaal said in a court filing last year.

“Unless the Department is allowed to provide one-time student loan debt relief,” Kvaal went on, “we expect this group of borrowers to have higher loan default rates due to the ongoing confusion about what they owe.”
Former President Donald Trump first announced the stay on federal student loan bills and the accrual of interest in March 2020, when the coronavirus pandemic hit the U.S. and crippled the economy. The pause was extended eight times.
Nearly everyone eligible for the relief took advantage of it, with less than 1% of qualifying borrowers continuing to make payments. Outstanding education debt in the U.S. exceeds $1.5 trillion, burdening Americans more than credit card or auto debt.

New SAVE payment plan leads to billing errors

To ease the transition for borrowers, the Biden administration worked quickly to implement a new payment plan option, which it describes as the “most affordable repayment plan ever.”
Yet many borrowers who’ve signed up for the Saving on a Valuable Education, or SAVE, plan, complain they’ve gotten incorrect bills.
Higher education expert Mark Kantrowitz said that while he’s heard from several borrowers who’ve run into this issue, he estimates that “hundreds of thousands of borrowers may have been affected.”
According to Kantrowitz, student loan servicers seem, in some cases, to be using the 2022 poverty line to calculate borrowers’ payments instead of the current 2023 figure. (The SAVE plan is supposed to use the poverty data to shield a share of borrowers’ income from their payment calculation.)

Because of the misinformation being disseminated, borrowers are likely to make overpayments, or underpayments and get off-track.

Ella Azoulay
Policy analyst, Student Borrower Protection Center

Miscommunication between servicers may also have contributed to the errors.
Several of the largest companies that service federal student loans announced during the Covid-19 pandemic that they’ll no longer be doing so, including Navient and FedLoan. As a result, about 16 million borrowers have had a different company to deal with this month.
“Whenever there is a change of loan servicer, there can be problems transferring borrower data,” Kantrowitz said.
Meanwhile, Buchanan said that some of the data provided by the U.S. Department of Education has been wrong. Borrowers can sign up for the SAVE plan with their servicer or with the department.
“We’re having challenges with data integrity issues coming from the department,” Buchanan said. “It’s meant a lot of questions.”
A spokesperson for the U.S. Department of Education said they’ve worked swiftly to resolve these problems.
It directed servicers to notify affected borrowers and put them into an administrative forbearance until they were able to calculate the correct payment amount, the spokesperson said. It may also refund some borrowers.
“Our top priority continues to be supporting borrowers as they successfully navigate return to repayment,” they said.

Still, consumer advocates caution that the new problems will only reduce borrowers trust in the lending system.
“Because of the misinformation being disseminated, borrowers are likely to make overpayments, or underpayments and get off-track,” said Ella Azoulay, a policy analyst at the Student Borrower Protection Center.
“Moreover, being forced to make incorrect monthly payments places additional strain on borrowers’ monthly finances and puts some in the position of being unable to afford necessities, like medication.” More