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Life Changes

The Biden administration has launched a beta application for its new repayment plan for student loan borrowers.
The Saving on a Valuable Education, or SAVE, plan is an income-driven repayment plan that may cut many borrowers’ previous monthly payments in half, and will leave some people with no monthly bill.

U.S. President Joe Biden, joined by Education Secretary Miguel Cardona, speaks on student loan debt in the Roosevelt Room of the White House August 24, 2022 in Washington, DC.
Alex Wong | Getty Images News | Getty Images

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

How the SAVE student loan plan works

Instead of paying 10% of their discretionary income a month toward their undergraduate student debt under the previous Revised Pay As You Earn Repayment Plan, or REPAYE, plan, borrowers will eventually be required to pay just 5% of their discretionary income under the SAVE plan.
Those who make less than $15 an hour won’t need to make any payments under the new option, the Education Department says.
“The SAVE plan is very generous to borrowers, almost like a grant after the fact,” said higher education expert Mark Kantrowitz.

Some of these benefits of the SAVE plan, including the change from 10% of discretionary income to 5%, won’t fully go into effect until next summer because of the timeline of regulatory changes.

Still, the Education Department says borrowers who sign up for the plan this summer will have their application processed before student loan repayments resume in October.
Borrowers who sign up during the beta application period will not need to enroll again later, Kantrowitz said.

How to apply for SAVE, and what info you need

You can apply for SAVE directly on the Education Department website. Most borrowers finish the application for an income-driven repayment plan within 10 minutes, according to the administration.
You typically need to provide your federal student aid ID, contact and financial information.

More relief in the works as payments resume More

The employee retention credit, worth thousands per employee, was enacted to support small businesses affected by shutdowns during the Covid-19 pandemic.
Scrutiny of the pandemic-era tax credit intensified this week among lawmakers, the IRS and tax professionals.
“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” IRS Commissioner Danny Werfel said this week.

IRS Commissioner Daniel Werfel testifies before a Senate Finance Committee hearing on Feb. 15, 2023.
Kevin Lamarque | Reuters

Scrutiny of a pandemic-era tax credit intensified this week as lawmakers, the IRS and tax professionals sought solutions for the wave of small businesses that wrongly claimed the tax break. 
The employee retention credit, or ERC, was enacted in 2020 to support small businesses affected by shutdowns during the Covid-19 pandemic and is worth thousands of dollars per employee. There’s still time for eligible businesses to amend returns and claim credits, which has sparked a cottage industry of firms, known as “ERC mills,” pushing the credit to businesses that may or may not qualify.

“While it was a great opportunity and much-needed lifeline to small businesses, it is fraught with fraud,” said Roger Harris, president of accounting and tax firm Padgett Advisors, speaking at a House Ways and Means Committee hearing Thursday.
More from Personal Finance:IRS halts most unannounced visits to taxpayersIRS weighs guidance for employee retention tax creditHow to know if your business qualifies for the employee retention tax credit
“Any time this amount of money is being handed out through the tax system, the bad actors show up, and they have shown up in large numbers,” he said.
As of July 26, the IRS said, it had roughly 506,000 unprocessed Form 941-X amended payroll tax returns.
As the IRS works through its backlog of unprocessed amended returns, it’s unclear how many small businesses may have wrongly claimed the credit. But a future audit “could ruin them,” according to Harris.

The IRS has received more than 2.5 million ERC claims since the beginning of the program, but processing has slowed due to the “complexity of the amended returns,” according to the agency.

“The joy of getting the money could very quickly be replaced with the terrifying reality that because you weren’t eligible, you could be put out of business because of the amount of money you now owe back to the federal government,” Harris said.
The true ERC claim backlog may be significantly higher because of professional employer organizations, or PEOs, which provide payroll benefits and other HR services, according to Pat Cleary, president and CEO of the National Association of Professional Employer Organizations, who also testified at the House hearing. That’s because a single PEO claim can represent many small businesses.

IRS says legitimate ERC claims are declining

The IRS has issued several warnings about “ERC schemes” and added the issue to the top of its “Dirty Dozen” list of tax scams for 2023. This week, the agency said it has “increased audit and criminal investigation work” in this area.
“The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining,” IRS Commissioner Danny Werfel said at the IRS Nationwide Tax Forum in Atlanta this week. “Instead, we continue to see more and more questionable claims coming in following the onslaught of misleading marketing from promoters pushing businesses to apply.”  

The further we get from the pandemic, we believe the percentage of legitimate claims coming in is declining.

Danny Werfel
IRS Commissioner

Currently, small businesses have until April 15, 2024, to amend returns for 2020 and until April 15, 2025, to amend returns for 2021. “That raises future concerns,” and the agency is weighing an earlier end date, Werfel said.

Tax professionals need a ‘real-world solution’

Meanwhile, questions linger for tax professionals fielding questions from small businesses about ERC claims.
“As practitioners, we need guidance,” Larry Gray, a certified public accountant and partner at AGC CPA, said in written testimony for the House hearing. “We need guidance to be able to show our clients clearly why they do or do not qualify.”

He said ERC specialists help companies amend payroll tax returns, but aren’t amending income tax returns to reflect the change, which sends clients back to him.
What’s more, “claiming the credit and correcting the tax return are likely not done by the same people,” since many tax professionals don’t handle payroll tax returns, Gray said.
Harris stressed the need for a “real-world solution” for small businesses that wrongly claimed the credit because “there’s no way in the world we’re going to audit our way out of this problem.”  More

Scott Mlyn | CNBC

While many growth stocks have recovered this year, investors continue to look for attractive dividend picks that can offer steady income and the potential for long-term capital appreciation.
Here are five dividend stocks worth considering, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

IBM

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Tech giant IBM (IBM) recently reported mixed results for the second quarter. While revenue fell short of expectations, the company’s earnings smashed estimates due to improved gross margin.
IBM is transforming its business and focusing on growth areas like hybrid cloud computing and artificial intelligence. It generated free cash flow of over $3.4 billion and paid dividends worth $3 billion in the first six months of 2023. IBM expects to deliver free cash flow of $10.5 billion for the full year.
Earlier this year, IBM increased its quarterly dividend by a modest 0.6% to $1.66, marking the 28th consecutive year of dividend hikes. IBM’s dividend yield is about 4.6%.
Following the results, Stifel analyst David Grossman increased his price target for IBM stock to $144 from $140 and reiterated a buy rating. The analyst slightly raised his 2023 and 2024 estimates based on the organic and inorganic growth in the company’s software business.
“IBM has been a source of funds YTD and remains most appropriate for the dividend sensitive value investor looking for a defensive market hedge,” said Grossman.

Grossman is ranked 389th among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 64% of the time, with each one delivering an average return of 14.4%. (See IBM Blogger Opinions & Sentiment on TipRanks)

Chord Energy

Next up is Chord Energy (CHRD), an oil and gas operator with assets in the Williston Basin. The company rewards shareholders through a quarterly base dividend, a variable dividend and share buybacks.
For the first quarter, Chord declared a total cash dividend of $3.22 per share, including a variable dividend of $1.97 per share.
RBC Capital analyst Scott Hanold sees the possibility of the company exceeding its 75% minimum shareholder payout if excess cash builds and no other accretive acquisition opportunities arise. Hanold expects Chord to declare a variable dividend of $0.15 per share for the second quarter, along with a base dividend of $1.25 per share and share buybacks in the range of $25 million to $30 million.    
Ahead of the upcoming results, Hanold lowered his Q2 2023 earnings per share and cash flow per share estimates due to lower benchmark commodity prices, wider price differentials, and lower production. He also reduced his price target for CHRD to $180 from $185 to reflect his new commodity price forecast. 
Nonetheless, Hanold is bullish on CHRD and reiterated a buy rating on the stock, saying, “The company’s balance sheet is strong and leverage is de-minimis, providing the opportunity to allocate a significant portion of FCF to shareholder returns.”
Hanold, who ranks 43rd out of more than 8,500 on Tipranks, has a success rate of 63% and each of his ratings has returned 21.4%, on average. (See Chord Energy Hedge Fund Trading Activity on TipRanks)     

Energy Transfer LP

Another RBC Capital analyst, Elvira Scotto, is bullish on dividend stock Energy Transfer (ET), a publicly traded limited partnership that operates a vast pipeline network spanning 41 U.S. states.
On July 25, Energy Transfer announced a quarterly cash distribution of $0.31 per common unit for the second quarter, marking a 0.8% increase compared to the first quarter of 2023. That brings the dividend yield to over 9%. The company is targeting a 3% to 5% growth in its annual distribution.
Heading into second-quarter results, Scotto expects the performance of midstream companies to be affected by lower commodity prices. Nonetheless, the analyst reiterated a buy rating on Energy Transfer stock with a price target of $17.
“We believe ET has one of the most attractive integrated asset bases across our midstream coverage universe and view ET as a compelling investment opportunity, trading at a discount to large cap peers on EV/EBITDA and at a FCF [free cash flow] yield of ~14%,” said Scotto.    
The analyst thinks that ET is well positioned to generate significant rise in cash flows, which, coupled with its solid balance sheet, could drive higher cash returns through increased distributions to unitholders.
Scotto holds the 53rd position among more than 8,500 analysts on TipRanks. Additionally, 65% of her ratings have been profitable, with an average return of 19.6%. (See Energy Transfer Stock Chart on TipRanks)   

EOG Resources

Another energy name this week is EOG Resources (EOG), a crude oil and natural gas exploration and production company. Last year, the company returned $5.1 billion through regular and special dividends, representing 67% of its free cash flow.  
For the first quarter of 2023, EOG declared a regular quarterly dividend of $0.825 per share, payable on July 31. Moreover, the company repurchased $310 million worth shares in Q1. EOG offers a forward dividend yield of about 2.6%.
Mizuho analyst Nitin Kumar recently revised his estimates for EOG ahead of its upcoming results, to reflect actual pricing and improving Delaware well productivity based on the data from his firm’s proprietary database. Kumar’s Q2 2023 volume estimates are biased toward the higher end of the outlook range.
The analyst projects that EOG will deliver free cash flow of $753 million in the second quarter, despite his expectation of a 10% fall in aggregate pricing compared to the first quarter.
“Compared to the base dividend burden of ~$484mm and over $5bn of cash on hand at March 31, the company should have excess cash to pursue buybacks opportunistically,” said Kumar, who reiterated a buy rating on EOG with a price target of $146.
Kumar ranks 111th among more than 8,500 analysts on TipRanks. His ratings have been profitable 69% of the time, delivering an average return of 22.5%. (See EOG Insider Trading Activity on TipRanks)  

Morgan Stanley

Finally, we will look at a dividend stock in the financial sector: Morgan Stanley (MS). Recently, the global financial services giant reported market-beating second-quarter results, as the strength in its wealth management division offset lower trading revenue.
Last month, Morgan Stanley announced that it will hike its quarterly dividend per share to $0.85 from $0.775, commencing with the dividend to be declared in the third quarter of 2023. With this hike, Morgan Stanley’s forward dividend yield stands at about 3.6%. The bank’s board also reauthorized a $20 billion multi-year share repurchase program, beginning in the third quarter of 2023.
The bank’s upbeat second-quarter results prompted BMO Capital analyst James Fotheringham to increase his forward estimates by 1% to 2% and raise his price target for MS stock to $103 from $100. The analyst reiterated a buy rating on the stock, noting that the wealth management division remains the “bright spot.”
“Following two lackluster quarters for capital markets, MS noted the emergence of ‘green shoots’ across its businesses, supportive of a near-term improvement in deal activity,” said Fotheringham.
Fotheringham holds the 215th position among more than 8,500 analysts on TipRanks. Additionally, 65% of his ratings have been profitable, with an average return of 12.4%. (See Morgan Stanley Financial Statements on TipRanks) More

Federal student loan payments will be due again in roughly two months.
Interest will start accruing in September and due dates will vary among borrowers, but the government will be lenient regarding late payments.
Here’s what to know.

Johnnygreig | E+ | Getty Images

Interest will start accruing in September

Although federal student loan payments won’t be due until October, interest will continue collecting on your debt again on Sept. 1, the Education Department says.
The accrual of interest has been suspended on most federal student loans since March 2020.

Due dates will vary

There will be some variation in due dates among borrowers, depending on their account details, including their payment schedule before the Covid pandemic.
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 get even more time if they’re still in their grace period, Kantrowitz said. Grace periods usually span six months from graduation.

Borrowers will be given leeway with late payments

What’s more, the Education Department has said it will institute a 12-month “on ramp” to repayment, which will run from this Oct. 1 through Sept. 30, 2024.
During that period, borrowers will be shielded from the worst consequences of missed payments.
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.
“The 12-month on-ramp is similar to a forbearance in many ways,” Kantrowitz said.

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.
Still, consumer advocates say this leeway is essential.
“Borrowers are not ready to resume payments,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, in a recent interview with CNBC. “Even if the risk from the virus has diminished, the financial fallout has not.” More

The average monthly car payment reached $733, a new record, in the second quarter of the year, according to auto site Edmunds.
While 78% of middle-income households earning between $47,000 and $142,000 rely on a vehicle to get to work, 74% are willing to make tradeoffs to maintain access to cars, another survey found.

Westend61 | Westend61 | Getty Images

Access to personal cars remains important to Americans despite the growing monthly cost of ownership. 
The average monthly auto payment reached $733, a new record, in the second quarter of the year, according to a report by auto site Edmunds.

Seventy-eight percent of middle-income households earning between $47,000 to $142,000 rely on a vehicle to get to work, Santander Bank found in a new survey, and 74% are willing to make financial tradeoffs to maintain access to cars. For instance, 61% would give up dining out, while 48% would pass on vacations and 48%, entertainment. 
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Almost half, or 48%, of the 2,213 survey respondents say they prioritize cost over practicality, comfort and performance when shopping for a new car, up from 37% who said so in pre-pandemic years. Factors like maintenance and fuel costs are also being taken into account.
Despite high vehicle costs — pushed upward by record-high interest rates and inventory issues — Americans are finding ways to navigate the cost of buying. 

Interest rates, inventory issues add to costs

The overall cost of purchasing a car is increasing in part due to interest rates, said Tom McParland, contributing writer for automotive website Jalopnik and operator of vehicle-buying service Automatch Consulting.

The average rate on a new car loan is at 7.2%, according to Edmunds. That’s the highest it’s been since the fourth quarter of 2007, right at the cusp of the Great Recession.
Back then, however, the auto industry didn’t have the same inventory problems. 

“There were discounts in 2007 and 2008 because cars [were] just sitting on the lot and now we don’t have cars on the lot,” said Joseph Yoon, a consumer insight analyst for Edmunds. “That’s really contributing to overall really high costs for consumers.”
While some car manufacturers are improving their supply deliveries, inventory wrinkles are still far from being ironed out, experts say.
“When you start drilling down the vehicles that are in demand, that’s where [you] start to see a different texture,” said McParland.

How some drivers are trimming monthly payments

As interest rates and inventory spur price hikes, some car shoppers are either lengthening their loans or — if they have the money and means to do so — making a more generous down payment.
The average duration of car loans is stretching ever longer — before the pandemic, the average length was 5 years, Yoon said. Consumers are now more apt to sign 72 to 84 month loans, equating to 6 or 7 years in repayment. 
“If you have to have a car and your budget is limited, what people are doing is just pushing out the loan terms,” which reduces the monthly payment, he said.Yet, a longer loan is not always ideal. A longer repayment term means you’re paying more for the car overall. Additionally, cars depreciate in value, so there’s a chance you will owe more than the car is worth. It’s important to keep this in mind, especially if you get into an accident that totals the vehicle, or can’t keep up with payments.

‘The math on leases isn’t good’

For some drivers, leases were once considered a smart way to score a new vehicle for less because you would pay for the depreciation of the vehicle only for that period. However, for a lease to be ideal, you need three elements in your favor: The residual value of the vehicle after the lease expires needs to be high, you need solid discounts and interest rates have to be low, said Yoon.
Three to four years ago, a customer could walk into a lot and lease a luxury sedan for $300 a month, but these days dealers are rarely offering discounts and interest rates are astronomical, he added. 

You are going to have a larger chunk of people with loan payments in the four figures.

Tom McParland
operator of Automatch Consulting

However, a large portion of customers who would have leased luxury cars are now buying them and agreeing to pay about $1,000 a month instead, “because the math on the leases isn’t good,” said McParland.”If you have a large chunk of the consumer pool who would normally lease a luxury car that retails for $60,000 or more now deciding to finance that car instead, you are going to have a larger chunk of people with loan payments in the four figures,” added McParland.The share of car buyers who financed a vehicle with a monthly payment of $1,000 or more climbed to a new record high of 17.1% in the second quarter, found Edmunds.”Consumers who are paying large amounts of finance charges could be in jeopardy of falling into a negative equity trap,” wrote Ivan Drury, Edmunds’ director of insights, in a statement.

Some would-be buyers are simply waiting it out

Even though demand for vehicles persists, some customers are waiting for the prices to cool down.
While 24% of survey respondents delayed purchasing a vehicle over the past year, 41% say they will put off a vehicle purchase in the upcoming year, as well, if prices remain elevated, found Santander. 
Between the pricing and inventory issues, people who have the luxury or the patience to wait it out are “definitely” doing so, said Yoon.
There is also an uptick in the age of trade-in vehicles, a sign that people are holding onto their cars for longer and waiting for availability and better deals, he added. However, this represents a return to pre-pandemic norms, stabilizing from the drop in average trade-in ages observed the last two years.

Back in 2019, the average age of a trade-in vehicle was 6.24 years; last year, it dipped to 4.9 years. Now, the average is coming back up, currently at 5.3 years, said Yoon. 
“We’re still about a year off from the [pre-Covid] trading age, kind of bouncing back to full normal,” he said. “People are still playing the waiting game.”
The market could begin to cool later this year, but it all comes down to supply and demand, said McParland.
However, if dealers begin to see 2023 vehicles sitting around the lot while 2024 models are coming off the truck in a couple of months, they may have more motivation to clear out that old inventory, he added. More

As interest rates reach a more than two-decade high, Treasury bill yields remain well above 5%, as of July 27.
However, there are a few things to know before purchasing, financial experts say.

Morsa Images | E+ | Getty Images

As interest rates reach a more than two-decade high, Treasury bill yields remain well above 5%, as of July 27, providing a competitive option for cash.
With terms ranging from one month to one year, Treasury bills, known as T-bills, are still paying more than long-term Treasurys amid Fed policy uncertainty.

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T-bill yields have soared after a series of interest rate hikes from the Federal Reserve, competing with choices like Series I bonds, high-yield savings, certificates of deposit and money market funds.
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But there is not a direct rate comparison with other products because T-bills are typically sold at a discount, with the full value received at maturity, explained Jeremy Keil, a certified financial planner with Keil Financial Partners in Milwaukee.
For example, let’s say you purchase $1,000 worth of 1-year T-bills at a 4% discount, with a $960 purchase price. To calculate your coupon rate (4.16%), you take your $1,000 maturity and subtract the $960 purchase price before dividing the difference by $960.   

U.S. Treasurys

Fortunately, you’ll see the “true yield” or “bank equivalent yield” when buying T-bills through TreasuryDirect, a website managed by the U.S. Department of the Treasury, or your brokerage account, Keil said.

How to buy T-bills via TreasuryDirect

If you already have a TreasuryDirect account — say, because you’ve purchased Series I bonds — it’s relatively easy to buy T-bills, according to Keil, who detailed the process on his website.
After logging into your account, you can pick T-bills based on term and auction date, which determines the discount rate for each issue.
“You don’t really know truly what the rate is going to be until the auction hits,” Keil said. The process involves institutions bidding against one another, with no action required from everyday investors. 

How to buy T-bills through TreasuryDirect
1. Log in to your TreasuryDirect account.
2. Click “BuyDirect” in top navigation bar.
3. Choose “Bills” under “Marketable Securities.”
4. Pick your term, auction date, purchase amount and reinvestment (optional).

After the auction, “you get the exact same rate as the Goldman Sachs of the world,” with TreasuryDirect issuing T-bills a few days later, he said.
There is one downside, however. If you want to sell T-bills before maturity, you must hold the asset in TreasuryDirect for at least 45 days before transferring it to your brokerage account. There are more details about that process here.

The benefit of brokerage accounts

One way to avoid liquidity issues is by purchasing T-bills through your brokerage account, rather than using TreasuryDirect.
Keil said the “biggest benefit” of using a brokerage account is instant access to T-bills and immediately knowing your yield to maturity. The trade-off is you’ll probably give up around 0.1% yield or lower, he said.

George Gagliardi, a CFP and founder of Coromandel Wealth Management in Lexington, Massachusetts, also suggests buying T-bills outside of TreasuryDirect to avoid liquidity issues.
For example, there are low-fee exchange-traded funds — available through brokerage accounts — that allow investors to buy and sell T-bills before the term ends, he said.
“The fees pose a small drag on the interest,” Gagliardi said, but the ease of purchase and ability to sell before maturity “may override the small penalty in interest rates” for many investors. More

Borrowers disappointed by the failure of student loan forgiveness at the Supreme Court should check if they qualify for existing relief measures, experts say.
“There are many other opportunities for loan forgiveness that often go unknown because there is no global database of all student loan forgiveness options,” said higher education expert Mark Kantrowitz.

Designer491 | Istock | Getty Images

1. Income-driven repayment plans

After 20 to 25 years of payments, borrowers enrolled in so called income-driven repayment plans get any remainder of their debt canceled by the federal government. The Biden administration recently wiped out debt for more than 800,000 people in such plans, delivering them $39 billion in relief.
“Income-driven repayment plans are also student loan forgiveness plans,” Kantrowitz said.

While they’re making payments, borrowers’ monthly bills are capped at a share of their discretionary income, and some payments wind up being as little as $0.

(The Biden administration is currently planning to make available a new income-driven repayment plan under which many borrowers will get to pay just 5% of their discretionary monthly income to their student debt. That option will be called SAVE, or the Saving on a Valuable Education plan.)
The debt forgiveness at the end of the repayment term under these plans used to trigger a tax bill, but a recent law ended that policy until at least 2025, and experts anticipate it to become permanent.

2. Public Service Loan Forgiveness

Signed into law by then-President George W. Bush in 2007, the Public Service Loan Forgiveness program allows certain nonprofit and government employees to have their federal student loans canceled after 10 years, or 120 payments.
Although the program has had its fair share of problems, the Biden administration recently made a number of improvements to it.

Andrii Dodonov | Istock | Getty Images

There are typically three primary requirements to qualify for the program, although the recent changes provide some more wiggle room in certain cases:

Your employer must be a government organization at any level, a 501(c)(3) not-for-profit organization or some other type of not-for-profit organization that provides public service.
Your loans must be federal Direct loans.
To reach forgiveness, you need to have made 120 qualifying, on-time payments in an income-driven repayment plan or the standard repayment plan.

The best way to find out if your job qualifies as public service is to fill out an employer certification form.
In 2013, the Consumer Financial Protection Bureau estimated that 1 in 4 American workers could be eligible for the program.

3. Forgiveness options for teachers, nurses and others

In addition to those two main programs, there are several other forgiveness opportunities that many borrowers miss out on because they don’t know about them, experts say.
Full-time teachers who work for five consecutive years in a low-income school may be eligible for up to $17,500 in loan forgiveness under the Teacher Loan Forgiveness Program.
The Nurse Corps Loan Repayment Program allows certain nurses to get up to 85% of their student debt canceled.

There are many other opportunities for loan forgiveness that often go unknown.

Mark Kantrowitz
higher education expert

Federal agencies also offer student loan repayment assistance programs, Kantrowitz said. Agencies can make payments to a federal employee of up to $10,000 a year, for a total of $60,000, according to the U.S. Office of Personnel Management.
Meanwhile, there are numerous state-level student loan forgiveness programs.

The Get On Your Feet Loan Forgiveness Program, rolled out in 2015, is meant to “invest in recent college graduates with student loan debt who opted to invest their futures in New York,” said Angela Liotta, public information officer and director of communications at the New York State Higher Education Services Corp.
Under the program, certain residents of the state may be eligible for student loan forgiveness on up to 24 months of payments.
“Student loan forgiveness is based on the borrower’s occupation, in most cases,” Kantrowitz said. “So they should look for forgiveness based on their job, especially for their state.” More

Helping your child build credit is one of the most important things you can do to set them up for financial success.
Here are some of the ways to get started.

It can be hard for young people to build credit, but some parents seem to think they have it figured out.
They often start by adding their teenager as an authorized user on their credit card. That can help children practice healthy credit habits when they’re young.

However, what’s considered a wise strategy is fraught with pitfalls, according to Erik Beguin, CEO of Austin Capital Bank and former member of the Consumer Financial Protection Community Bank Advisory Council.
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Children “piggy-backing” on a parent’s credit history forgoes the opportunity for children to build their own credit profile, Beguin said. Because authorized users are not responsible for paying the credit card bill, those payments won’t show up on their credit report and contribute to their own payment history in the eyes of the credit bureaus.
Beguin recommends adding your child as a “co-signer” instead. That way, they take on the risk — and reward — that comes with being responsible for the bill.
Co-signing on credit cards can help your children build healthy credit while they’re young to ensure they won’t need to lean on you in the future, Derek Miser, a financial advisor and president of Miser Wealth Partners in Knoxville, Tennessee, also said.

However, in this case, you may be responsible for their debt if your child cannot pay it back.

Either way, “it’s important to use this as a stepping stone to establish credit in your own name,” said Ted Rossman, a senior industry analyst at CreditCards.com.
Rossman advises young adults to establish their own credit within six months or a year after piggy-backing on their parent’s card, while they are still living at home but starting to be more independent. “It’s good to start early.”
A secured credit card is also designed to do just that. Often, secured cards require a cash deposit that then serves as the credit line, which can be a good fit for those without a proven payment history. 

Why having good credit is so important

Young adults often don’t have a credit score, unless they already have a credit account.
Credit scores represent your credit risk and impact whether you can get a loan, as well as the interest you’ll pay. Generally, the higher your credit score, the better off you are.
FICO scores, the most popular scoring model, range from 300 to 850. A “good” score generally is above 670, a “very good” score is over 740 and anything above 800 is considered “exceptional.”
Once you reach that 800 threshold, you’re highly likely to be approved for a loan and can qualify for the lowest interest rate, according to Matt Schulz, LendingTree’s chief credit analyst. 

Start with a conversation at home

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Before families decide which credit card is best, “what’s really important is the conversation about how to manage your credit and responsible use of debt,” Beguin said. That largely boils down to paying your bills on time and keeping your credit-card balance low.
While there is an important role for schools to play, a financial education should begin at home.
Those conversations could start well before the teenage years, most experts say. Too frequently, talking about finances is considered taboo, and that’s another mistake.
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