Investing

Your Money

About half, 52%, of young women ages of 7 to 21 want to be homeowners by the time they’re 30 years old, a recent report found.
Despite current high rates and low inventory, this generation has time on their side, experts say.
Here are three key components to being able to buy your first home.

Girls and young women want to be homeowners by the time they’re 30 — a higher priority even than getting married or earning a lot of money.About half, 52%, of young women ages 7 to 21 want to buy a house by 30, the most of any goal, according to Girlguiding’s Girls’ Attitudes Survey 2023. To compare, 48% want to be married by age 30, and 39% said it’s a goal to earn a lot of money. The organization polled 2,614 girls and young women in the U.K. between the ages of 7 and 21 earlier this year.
The report echoes findings from U.S. teens, 85% of whom think owning a home is part of “the good life,” according to the 2022 Junior Achievement and Fannie Mae Youth Homeownership survey.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

While teens dream of owning a home years from now, it’s a daunting market right now. Houses are more expensive than they were pre-pandemic and mortgage rates are higher. The median U.S. home sale price rose 3% year over year to $420,846 in August, the largest annual increase since October 2022, according to real estate brokerage firm Redfin.
Experts say prices are not likely to come down any time soon as the Federal Reserve may continue its interest rate hikes later in the year and homebuyers face a low supply.
On the other hand, young adults looking ahead to homeownership have time on their side.
“Hopefully by the time they are ready to buy, we will be in a different rate environment, there will be more inventory and a more balanced real estate market,” said Melissa Cohn, regional vice president of William Raveis Mortgage in New York.

A daughter learns to save money with a piggy bank.
Dejan_dundjerski | Istock | Getty Images

Three key components to buy your first home

Middle and high school students can start gaining financial literacy early, said certified financial planner Kamila Elliott, co-founder and CEO of Collective Wealth Partners in Atlanta. It will set them up for success in the housing market when their turn comes around.

To that point, there are three key components to being able to buy your first home, said Cohn.
1. Down payment
The down payment for a home is the biggest hurdle for most homebuyers. Although the standard is 20%, you can get by with much less. Shoppers come up with just 6% or 7% as a down payment on their first home more often, Jessica Lautz, deputy chief economist and vice president of research at the National Association of Realtors, told CNBC.
If a high school student wants to buy a house in roughly 10 to 15 years, they can get started with a part-time job and set aside their money for that goal, Elliott explained.
A savings account is key for short-term goals, but if you have been putting aside money in retirement accounts, you may be able to use funds there for your down payment, too.
For instance, a Roth IRA is a retirement account with rules that benefit first-time homebuyers, said CFP Lazetta Rainey Braxton, co-founder and co-CEO of virtual firm 2050 Wealth Partners. Homebuyers can pull out of a Roth IRA account up to $10,000 for the down payment of their first home without penalty, said Braxton, who is a member of the CNBC Financial Advisor Council.
First-time homebuyers can also take advantage of down payment assistance programs some banks and states offer, Cohn said.
2. Credit score
When you apply for your mortgage, banks will look at your credit score, which is a measure of how well you manage debt. The score generally ranges between 300 and 850. The higher the score, the lower — and better — the interest rate you may qualify for on your loan.
For mortgages, banks like to see you are able to make consistent payments and are responsible with debt, said Cohn.
To maintain a high score, it’s important to manage the credit card responsibly and make on-time payments in full, said Elliott, who is also a member of the CNBC FA Council.
3. Income
Having a good income can also make you a more competitive buyer, added Cohn.
Lenders look at your debt-to-income ratio to figure out how much mortgage debt you can take on. Monthly payments for student loan debt, an auto loan or any other lines of credit can affect that calculation.
If you haven’t been working in a job for two years and your income is based on bonus or commissions, you may need a parent or family member to cosign the mortgage to show more stability in history of income, Cohn added.

Joybird ranked the best states for flipping houses based on the maximum return on investment and several other factors.
Westend61 | Westend61 | Getty Images

‘Understand what it is to be a homeowner’

If homeownership is a goal for early adulthood, it’s important to anticipate your responsibilities as a new homeowner, experts say. Outside of the mortgage, property taxes and insurance costs, utility and maintenance costs also tend to be higher in a house than an apartment.
“Understand what it is to be a homeowner and how things work,” Elliott said.
Keep in mind that your first home might not check all your boxes. It should be in an area you like and meets your needs.
“Your first home will not be your ‘forever home,'” Elliott said. “It may not [have dream amenities like] an open-air kitchen, the fireplace or a pool in the backyard.” More

The Biden administration has made it clear that student loan borrowers’ payments will restart in October.
However, some people may have a little more time. Here’s why.

Westend61 | Getty Images

By now, most federal student loan borrowers have accepted that, after a three-year break, their payments will restart in October. Some people, however, may actually have more time.
CNBC spoke to several borrowers who say they have statements from their servicer showing their first payment’s due date is in November or December.

That’s not surprising, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
“Some borrowers may not be due until 2024,” Buchanan said.
More from Personal Finance:The Federal Reserve leaves rates unchanged. Here’s how it impacts your moneyA ‘financial vortex’ may reduce retirement savings, Goldman Sachs findsTikTok interviewers ask ‘How much do you make?’ What you can learn from the answers

Your last payment may affect your next due date

Borrowers have different due dates, based on various factors about their loans. When a borrower made their last payment before or during the pause can impact when their next due date is, Buchanan said.
Many people made their usual student loan payment in March 2020, before former President Donald Trump first announced the pause on federal student loan bills and interest accrual, he said.

Depending on when their loan servicer received those funds, it may have been considered an extra payment that has now pushed back their due date. Meanwhile, borrowers who made repeated payments during the pause will likely have even more time, Buchanan said.
You can contact your loan servicer or log in to StudentAid.gov to learn your exact due date, said higher education expert Mark Kantrowitz.
Recent graduates, meanwhile, may also get more time if they’re still in their grace period, Kantrowitz said. Grace periods usually span six months from graduation.

How to get ready for your student loan payment

Ahead of your due date, you want to make sure you are familiar with your loan servicer (millions of borrowers’ accounts had been transferred to a new company during the pandemic) and the payment amount you’ll owe. The typical federal student loan bill is $350 a month.
If you were enrolled in the standard 10-year repayment plan before Covid and still are, your monthly payment should not have changed. However, borrowers repaying their loans in an income-driven plan could see a different monthly obligation if their income has increased or decreased since three years ago.
If you are struggling financially, you should acquaint yourself with your options, including deferments and forbearances.

Until October 2024, borrowers will be shielded from the worst consequences of missed payments, the Biden administration recently announced.
For example, loans will not go into default and delinquencies will not be reported to credit reporting agencies, Kantrowitz said.
Late fees won’t be charged, either.
But as is the case with a forbearance, interest will continue accruing on your debt while you don’t make payments. As a result, Kantrowitz recommends borrowers start repaying their bills if they can.
“Doing otherwise will eventually hurt them,” he said. More

Credit card interest rates, also known as APY, are at all-time highs.
The Federal Reserve has raised borrowing costs to their highest level in over two decades to tame pandemic-era inflation.
Making just the minimum monthly payment on a credit card is financially “brutal” for consumers, one expert said.

Credit cards are practically charging “loan shark interest rates” after hitting historic highs this year, said Barry Glassman, a certified financial planner and member of CNBC’s Advisor Council.
A credit card’s interest rate is the price consumers pay to borrow money. It’s most commonly expressed as a yearly rate — the annual percentage rate, or APR.  

The average interest rate for all credit card accounts hit 20.68% in May, the highest on record, according to most recent Federal Reserve data.

More from Your Money:

Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

Ted Rossman, industry analyst for CreditCards.com, doesn’t think rates have gotten nearly bad enough to be in “loan shark” territory. Some payday loans charge 400%, 500% or even more than 600%, for example, he said.
“But credit cards do charge the highest interest rates of any mainstream consumer debt [by far],” he wrote in an e-mail. “We’re talking 3x, 4x, 5x, maybe even higher compared with your typical mortgage, car loan or student loan. This is why it’s so important to prioritize credit card debt payoff.”

High rates ‘can have a real devastating snowball effect’

Consumer borrowing costs have increased sharply since early 2022 as the Federal Reserve began raising its benchmark interest rate to tame inflation.
Cardholders who pay their balances in full and on time don’t amass interest. But banks do charge interest when consumers carry a balance from month to month. Such accounts had a 22.16% average interest rate in May, also a record high, according to Fed data.

Since these are averages, many consumers are paying higher rates that can extend at least into the mid-20s, said Glassman, founder and president of Glassman Wealth Services, based in Vienna, Virginia, and North Bethesda, Maryland.
Rates of more than 20% “can have a real devastating snowball effect and consumers may never catch up,” Glassman said.
In fact, 37 out of 100 cards tracked by CreditCards.com currently cap their APRs at 29.99% or more — a record share.

Total credit card debt has surpassed $1 trillion

Westend61 | Westend61 | Getty Images

Americans leaned more on credit cards to pay their bills as pandemic-era inflation raised prices on food, housing and other consumer items at the fastest pace in four decades.
Total credit card debt topped $1 trillion in the second quarter of 2023 for the first time ever.
There are 70 million more credit card accounts open now than in 2019, Federal Reserve Bank of New York economists wrote in August. Further, 69% of Americans had a credit card account in the second quarter, up from 65% at the end of 2019 and 59% at the end of 2013, they said.
“Credit cards are the most prevalent form of household debt and continue to become even more widespread,” the economists wrote.
The good news, for now, is that delinquency rates among cardholders seem to have stabilized around pre-pandemic levels, even in lower-income areas, according to the Fed economists.
“American consumers have so far withstood the economic difficulties of the pandemic and post-pandemic periods with resilience,” the economists said. “However, rising balances may present challenges for some borrowers.”
About half of cardholders carry debt from month to month, and therefore amass interest, Rossman said. Making just the minimum monthly card payment is financially “brutal,” he said.
Consider that the average credit card balance is $5,947, according to TransUnion. Making the minimum payment at current interest rates means a borrower will be in debt for 211 months and owe $8,811 in interest, Rossman said. (His analysis used a 20.71% interest rate cited by Bankrate as of Sept. 13.)

The Fed hasn’t broken much with high rates — yet

Getty Images

The Fed’s sharp increase in its benchmark interest rate has pushed up borrowing costs across many types of debt like mortgages and consumer loans Glassman said.
“Whenever the Fed has raised interest rates as they have, something usually tips or fails,” he said.
Yet, aside from a few bank failures earlier this year — like those of Silicon Valley Bank and Signature Bank — the U.S. economy hasn’t seen “anything really break,” Glassman said.

“We have seen some bank failures and maybe that was it,” he added. “I’m not so convinced that that’s the only downside or devastating impact of much higher interest rates that we’ve seen.”
Aside from the financial challenge higher credit card balances pose for consumers, a resumption of federal student loan payments in October — after a pause of more than three years — will also stress households, Glassman said.
It will amount to “an immediate pay cut” for borrowers, he said. Borrowers owe a collective $1.7 trillion in student debt.
In the past, borrowers may have been able to take helpful steps like refinance their loans at a lower interest rate, but that safety valve isn’t available any longer, at least while interest rates remain at their highest level in 22 years, Glassman said.
“This dynamic over the next year-plus is going to be fascinating and I’m not exactly sure how it plays out,” he said. More

The Biden administration announced Wednesday that it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix.
The University of Phoenix’s national ad campaigns misled students by making them believe their job prospects would be improved by the school’s partnerships with thousands of corporations, including Fortune 500 companies, the Education Department said.

A sign marks the location of the University of Phoenix Chicago Campus in Schaumburg, Illinois.
Getty Images

The Biden administration announced Wednesday it would cancel nearly $37 million in student debt for more than 1,200 students who attended the University of Phoenix.
The relief will go to many borrowers who applied for borrower defense discharges between Sept. 21, 2012, and Dec. 31, 2014, according to the U.S. Department of Education. The borrower defense program allows borrowers who can prove they’ve been misled or defrauded by their schools to get their federal student loans voided.

The University of Phoenix’s national ad campaigns misled students by making them believe their job prospects would be improved by the school’s partnerships with thousands of corporations, including Fortune 500 companies, the Education Department said.
“The University of Phoenix brazenly deceived prospective students with false ads to get them to enroll,” said Richard Cordray, the federal student aid chief operating officer.
“Students who trusted the school and wanted to better their lives through education ended up with mounds of debt and useless degrees,” he said.
The University of Phoenix did not immediately respond to a request for comment.
More from Personal Finance:The Federal Reserve leaves rates unchanged. Here’s how it impacts your moneyA ‘financial vortex’ may reduce retirement savings, Goldman Sachs findsTikTok interviewers ask ‘How much do you make?’ What you can learn from the answers

The Federal Trade Commission also provided evidence from its multiyear investigation into the University of Phoenix that resulted in a $191 million settlement in 2019. The FTC had obtained internal emails, as well as advertisement materials and recorded phone calls with prospective Phoenix students.
“Phoenix management was aware that the corporate relationships the school claimed to have did not exist,” the Education Department said. “One senior vice president at Phoenix described one of the advertisements in question as ‘smoke & mirrors.'”
Impacted borrowers will be notified in early October of the relief, and should see any remaining loan balances canceled. Payments made on these loans will be refunded.

The borrowing rates at the University of Phoenix are among the highest in the country. Its students took out nearly $484 million in loans in the 2022-2023 academic year, according to higher education expert Mark Kantrowitz.
So far, the Biden administration has canceled more than $117 billion in student debt for 3.4 million borrowers, through fixes to certain repayment plans and the Public Service Loan Forgiveness program.
President Joe Biden’s plan to forgive up to $20,000 in student debt for tens of millions of Americans was blocked by the Supreme Court in June. Biden said he was pursuing another path to cancel people’s education debt, though experts say the next rendition is likely to have a narrower reach. More

The Federal Reserve left interest rates unchanged at the end of its two-day policy meeting.
The central bank has raised its benchmark borrowing rate 11 times since March 2022, the fastest pace of tightening since the early 1980s.
For consumers, it won’t get any less expensive to carry credit card debt, buy a house, purchase a car or tap into home equity.

The Federal Reserve left its target federal funds rate unchanged Wednesday, but did not signal an end to its aggressive rate hike campaign.
For households, that offers little relief from sky-high borrowing costs.

Altogether, Fed officials have raised rates 11 times in a year and a half, pushing the key interest rate to a target range of 5.25% to 5.5%, the highest level in more than 22 years. 
“I’m worried for the consumer,” said Tomas Philipson, University of Chicago economist and a former chair of the White House Council of Economic Advisers. “People are hit on both fronts — lower real wages and higher rates.”
More from Personal Finance:3 money moves millionaires are more likely to makeMoney market funds vs high-yield savings accountsHomeowners say 5% is the magic number to move
Since wage growth for many Americans hasn’t been able to keep pace with higher prices, those households are getting squeezed and are going into debt just when borrowing rates are spiking, Philipson said.
Real average hourly earnings fell 0.5% in August, while borrowers are paying more on credit cards, student loans and other types of debt.

“Borrowing is very expensive, period,” Philipson said.

What the federal funds rate means for you

The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.
Here’s a breakdown of how the central bank’s increases so far have affected consumers:

Credit cards

Since most credit cards have a variable rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rose, the prime rate did as well, and credit card rates followed suit.
Credit card annual percentage rates are now more than 20%, on average — an all-time high. Further, with most people feeling strained by higher prices, more cardholders carry debt from month to month.
For those who carry a balance, there’s not much relief in sight, according to Matt Schulz, chief credit analyst at LendingTree.
“Even though the Fed chose not to raise rates in September, the truth is that no one should expect credit card interest rates to stop rising anytime soon,” he said.
In the meantime, knocking down that debt “should absolutely be the goal,” he said.

Home loans

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rates for a 30-year, fixed-rate mortgage “remain anchored north of 7%,” said Sam Khater, Freddie Mac’s chief economist.
“The reacceleration of inflation and strength in the economy is keeping mortgage rates elevated,” he said.

Other home loans are more closely tied to the Fed’s actions. Adjustable-rate mortgages and home equity lines of credit, or HELOCs, are pegged to the prime rate. Most ARMs adjust once a year after an initial fixed-rate period. But a HELOC rate adjusts right away. Already, the average rate for a HELOC is up to 9.12%, the highest in 22 years, according to Bankrate.
“That HELOC is no longer low-cost debt and it warrants a much higher focus on repayment than it has for a long time,” said Greg McBride, chief financial analyst at Bankrate.com.

Auto loans

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average rate on a five-year new car loan is now 7.46%, the highest in 15 years, according to Bankrate.
Experts say consumers with higher credit scores may be able to secure better loan terms or shop around for better deals. Car buyers could save an average of $5,198 by choosing the offer with the lowest APR over the one with the highest, according to a recent report from LendingTree. 

Student loans

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by the Fed’s moves. But undergraduate students who take out new direct federal student loans are now paying 5.50% — up from 4.99% in the 2022-23 academic year and 3.73% in 2021-22.
For those with existing debt, interest is now accruing again as of Sept. 1. In October, millions of borrowers will make their first student loan payment after a three-year pause.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Savings accounts

While the central bank has no direct influence on deposit rates, the yields tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock bottom during most of the Covid pandemic, are currently up to 0.43%, on average, according to the Federal Deposit Insurance Corp.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are now paying over 5%, according to Bankrate, which is the most savers have been able to earn in more than 15 years.
Because the top online savings accounts are currently beating inflation, “money in a savings account is no longer a drag on your portfolio,” McBride said. And yet, only 22% of savers are earning 3% or more on their accounts, according to another Bankrate report.
“Boosting emergency savings is rewarded with returns exceeding 5%, if you’re putting the money in the right place,” McBride said.
Subscribe to CNBC on YouTube. More

Life Changes

Unexpected life events may put a dent in your retirement savings, according to new research from Goldman Sachs.
Top financial advisors say consistently living below your means may help adjust for those shortfalls.

Thomas Barwick

Life goals and other financial priorities can get in the way of saving for retirement.
Over the long term, those competing priorities — dubbed the “financial vortex” — may reduce U.S. workers’ retirement savings by up to 37%, according to new research from Goldman Sachs Asset Management.

That’s even as more U.S. workers — 65% — say they are confident in their ability to meet their retirement savings goals, up from 57% last year, the firm’s July survey of 5,261 U.S. individuals found.
Yet even for the most diligent savers, life events can get in the way of retirement preparedness.
Having to retire earlier than expected at age 62 may reduce total retirement savings by 25%, Goldman Sachs’ research found.
Meanwhile, student loans may result in a 19% reduction in total retirement savings; caregiving may cause an 18% shortfall; early career cash outs pointed to a 16% decline; salary increases that didn’t coincide with proportional retirement savings increases resulted in a 13% reduction; and financial hardships resulted in a 5% decrease.

More from Life Changes:

Here’s a look at other stories offering a financial angle on important lifetime milestones.

For savers who experience multiple such events or factors, it’s “easy to see” how they may suffer a 37% decline in their retirement savings, Chris Cedar, senior retirement strategist at Goldman Sachs said during a presentation on the research.

“The reality for retirement savers is that they’re going to have to figure out how to balance some of these real-life impacts more than they’ve had to do so in the past,” Cedar said.

Living better now vs. living better later

With salary increases, the model forecasted for ongoing 3% adjustments as well as seven growth events over the course of a career. That includes 10% for early career increases and 6% for late career ones.
The potential for a shortfall even with those increases points to the challenge all workers face of accumulating wealth for retirement while also funding their lifestyles today.
“There’s a balance between living better now and living better later,” said John Merrill, president and founder of Tanglewood Total Wealth Management in Houston, which is No. 58 on the CNBC FA 100 list this year.
While events like a divorce, which Merrill calls a “financial wrecker,” may crop up unexpectedly even planned life milestones like the birth of a child can increase financial pressure.
“The main thing is discipline,” Merrill said. “People who are disciplined with their money, disciplined with their life, really are going to go so much further.”
The best approach is to pay yourself first — including at least 10% of your salary toward retirement and 5% toward an emergency fund — and then spend the rest, he said.
Other experts caution that increasing overall spending as salary and wealth goes up, known as lifestyle creep, should be avoided.

Having a higher-cost lifestyle creates two problems, according to Stephen Cohn, a certified financial planner and co-president of Sage Financial Group in West Conshohocken, Pennsylvania, which is No. 22 on the CNBC FA 100 list.
First, it makes it more difficult to save for long-term goals including retirement. Then at retirement, savers may find their nest egg falls short of their needs while they’re challenged with making up the income they need to sustain their lifestyle.

Retirement age uncertainty

Some people may be willing to forgo having more saved toward retirement in favor of other nearer-term goals.
“There are people who say, ‘Me putting my children through college is more important to me than retiring at age 65,'” Cohn said.
Yet Goldman Sachs’ research points to many savers not having control of when they will retire.
The firm found that 21% of respondents said they believe they will have to delay retirement by four or more years due to the competing financial pressures they face, which may include credit card debt, saving for college and providing support to family members.
Yet among retirees, 50% retired earlier than expected, Goldman Sachs found.
Some individuals reach age 60 and are worn out and want to retire but unfortunately haven’t saved enough to make it work, noted Patrick McGinn, president of Retirement Resources Investment Corp. in Peabody, Massachusetts, which is No. 29 on the CNBC FA 100 list.
They may be faced with reduced Social Security benefits for claiming early. Plus, they also have to figure out how to cover their health care between age 62 and the Medicare eligibility age of 65, McGinn noted.
“Combined, it really makes that math very challenging,” he said.
The best way to prepare, he said, is to focus on the things you can control and try to find balance in your current lifestyle.
“Try to live below your means pretty consistently and that should result generally in a pretty good success rate,” McGinn said. More

The IRS on Monday said it will “substantially” reduce the number of so-called correspondence audits for filers claiming the earned income tax credit, a tax break for low- to moderate-income filers.
It’s part of the agency’s broader effort to fix inequity in enforcement, with a focus on auditing higher earners, partnerships and large corporations.  
The IRS aims to curb earned income tax credit audits by helping taxpayers file more accurate returns upfront.

IRS Commissioner Daniel Werfel testifies before the House Small Business Committee on July 17, 2013.
James Lawler Duggan | Reuters

They’re using resources to reverse the precipitous decline in enforcement at the top.

Chuck Marr
Vice president for federal tax policy at the Center on Budget and Policy Priorities

Only 2% of Americans earning more than $5 million a year faced an audit in 2019, down from 16% in 2010, according to a report from the Government Accountability Office.
The IRS in May said that Black Americans are significantly more likely to face an audit, confirming earlier findings from economists from Stanford University, the University of Michigan, the U.S. Department of the Treasury and the University of Chicago.

Findings show the earned income tax credit has contributed to this disparity and the IRS has been weighing policy changes to address the issue.
The IRS aims to curb correspondence audits for the earned income tax credit by helping taxpayers file more accurate returns upfront, which will “increase payment accuracy while reducing administrative burdens for the IRS and the tax filer,” according to the letter.
However, experts are still waiting for details about how these policy changes will be implemented.

Scrutiny of the earned income tax credit

Generally, refundable tax credits, such as the earned income tax credit, face more scrutiny because filers can still receive a refund without taxes owed.
More than 26 million low- and middle-income taxpayers received the earned income tax credit during tax year 2019, according to the National Taxpayer Advocate’s 2022 annual report to Congress. However, during fiscal year 2020, over $16 billion of the credit was improperly claimed, according to the report.
The reason for errors is the tax break’s complexity, which requires claimants to work and have a qualifying child, according to Janet Holtzblatt, a senior fellow at the Urban-Brookings Tax Policy Center.
“Defining care is a challenge,” she said.
For example, a child can have multiple caretakers throughout the year and it can be difficult to match the credit with the right caretaker. More

Most borrowers haven’t made a payment on their education debt since Donald Trump was president and the coronavirus was just starting to spark concern.
But the pandemic-era relief policy will conclude in October.

Woman going over her finances
Damircudic | E+ | Getty Images

1. There’s wiggle room for those struggling

Consumer advocates say many borrowers are likely to struggle readjusting to student loan payments.

“Even if the risk from the virus has diminished, the financial fallout has not,” Persis Yu, deputy executive director at the Student Borrower Protection Center, previously told CNBC.
The Consumer Financial Protection Bureau has also warned that roughly 1 in 5 student loan borrowers have risk factors that could lead them to face difficulties meeting their bills.
To combat these concerns, the Biden administration is implementing a 12-month “on ramp” to repayment, during which borrowers will be shielded from the worst consequences of falling behind.
Specifically, for a year, borrowers’ late payments shouldn’t be reported to the credit bureaus and they will not face the normal collection activity, including wage and retirement benefit garnishments, said higher education expert Mark Kantrowitz.

2. Your student loan servicer may have changed

Several of the lenders that manage federal student loans for the government — including Navient, the Pennsylvania Higher Education Assistance Agency (also known as FedLoan) and Granite State — stopped doing so during the pandemic-era pause.
As many as 4 in 10 student loan borrowers will be transferred to a different company by the fall, according to the CFPB.
More from Personal Finance:Rather than a recession, we could be in a ‘richcession’61% of Americans live paycheck to paycheckMany young couples don’t split costs equally
Those who were serviced by Granite State will now be with EdFinancial Services, said Kantrowitz, who has been tracking the changes. Accounts with Great Lakes Higher Education should be managed by Nelnet going forward, and Navient’s borrowers will be moved to Maximus Federal Services/Aidvantage.
Borrowers can check to see if they have a new servicer at StudentAid.gov.
Meanwhile, borrowers shouldn’t have to do much during the servicer swap, said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
Some will need to create an updated online account with their new company. “But the communications they received would have told them if they needed to take that step,” he said.

Even if the risk from the virus has diminished, the financial fallout has not.

deputy executive director at the Student Borrower Protection Center

If you were enrolled in automatic payments with your servicer, which usually leads to a small discount on your interest rate, you may need to reenroll, Kantrowitz said.
You’ll also want to make sure your new servicer has your latest contact information, he said, as these details might have changed during the Covid pandemic.

3. Your payment amount could be different

If you are enrolled in the same repayment plan as you were in before the pause went into effect, your monthly bill may not change, Kantrowitz said. The average payment is about $350 a month.
However, if you are signed up for an income-driven repayment plan, your monthly bill could be different if your income is lower or higher than it was in March 2020. IDR plans cap your payment at a share of your discretionary earnings.
Also: if you signed up for the Biden administration’s new SAVE plan, your monthly payment should be lower, at least in time. That plan cuts people’s obligation to just 5% of discretionary income, the smallest amount to date. (Some of the program’s benefits will be in effect by the time payments restart, but others will only kick in next summer, due to the timeline of regulatory changes.)
To determine how much your monthly bill would be under different plans, use one of the calculators at Studentaid.gov or Freestudentloanadvice.org More