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About 20% of student loan borrowers have risk factors that suggest they could struggle when repayments resume, study finds.
“I’m looking forward hopefully in the next couple of years to being able to get them totally paid off and put this stuff of my life behind me,” said a student-loan borrower, Colton Stedman.

People line up outside of the Supreme Court in Washington, D.C., on June 30, 2023.
Kent Nishimura | Los Angeles Times | Getty Images

Many student loan borrowers face risk factors that suggest they could struggle covering their bills, especially after the Supreme Court struck down President Biden’s federal student loan forgiveness proposal and repayment will resume in October.
To that point, about 20% of borrowers exhibit one or all of five risk factors, according to a June 7 report from federal watchdog agency the Consumer Financial Protection Bureau.

Those five risk factors include:

Delinquencies on student loans prior to the onset of the Covid-19 pandemic;
Pre-pandemic payment assistance on student loans;
Multiple student loan servicers;
Delinquencies on other credit products since the start of the pandemic; and
New non-medical collections during the pandemic.

Colton Stedman, 34, a student-loan borrower from South Saint Paul, Minnesota, demonstrated one such risk factor himself before the pandemic: He went into a financial hardship forbearance for up to two years because he couldn’t afford his payments, which accrued in interest.
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“I felt like I was going backwards,” he said.

‘I would say I was disappointed’

The Supreme Court decision against student loan relief did not come as a shock to Stedman, who — as a Pell Grant recipient — would have had his balance statement completely wiped clean had Biden’s plan survived.”I wasn’t necessarily surprised,” said Stedman, who graduated from college in 2013 with just under $40,000 in student loan debt. “I would say I was disappointed.”

As of today, he owes $19,570 and has been preparing to restart payments after the three-year pause.
The Supreme Court decision will trigger the largest number of borrowers on record ever to enter repayment simultaneously, for any product type, according to a CFPB spokesperson.

Jack Wallace, director of governmental and lender relations at student loan refinance company Yrefy, said “this means is that borrowers will have to make plans to make payments in October, impact their monthly cash flows.”
“They need to make proper decisions to make those payments,” he added.
For his part, Stedman said he’s found his student loan debt to be a “challenge” since graduation.
“It’s been a very large financial burden, as a young person kind of getting started, and I’m looking forward hopefully in the next couple of years to being able to get them totally paid off and put this stuff of my life behind me,” he added.

Student loan debt in the U.S. now totals $1.8 trillion, according to the Board of Governors of the Federal Reserve System, and the cost of higher education will continue to rise. Tuition and fees have more than doubled in 20 years, reaching $10,940 at four-year, in-state public colleges and up to $39,400 in private institutions during the 2022-2023 academic year, according to the College Board.Borrowers who graduated during the suspension and have never made a repayment can go to the federal student aid website to find out who their servicer is and avoid missing information.
“Go onto the FSA website and make sure you have an account set up, so that you can get timely information about what your monthly payment is going to be and what alternatives are available to lower that statement,” said Wallace at Yrefy.

3 things to consider as loan payments resume

Look at income repayment plans. “There are opportunities that exist right now for borrowers to go into income-driven repayment programs,” said Wallace. Income repayment plans are the main way to keep borrowers outside of delinquencies and defaults and can bring a monthly payment as low as to zero dollars a month. Immediately contact your servicer and make sure they have your proper information, said Wallace.
Now is the time for a fresh start. People who were previously delinquent or defaulted on their student debt have the opportunity for a do-over, said Wallace. “That’s a positive thing,” he said. “That’ll give them an opportunity to get back in good graces regarding their credit.” Wallace suggests those who defaulted consider some of the public service forgiveness programs to provide some relief on the monthly payment.
Public service loan forgiveness program is not limited to government employees. This program eliminates your remaining balance after 10 years of qualifying payments if you’re in a public service or interest job, and it applies beyond government workers — its scope includes teachers, firefighters and other first responders. More

Rafael Henrique | Lightrocket | Getty Images

The basic materials sector closely follows economic trends. As fundamental macro factors play such a crucial role in driving the group, one needs a keen eye to identity top investment opportunities among the many chemical, steel, mining and other stocks that make up the sector. 
TipRanks recognized the 10 best analysts in the basic materials sector who delivered noteworthy returns and whose recommendations outperformed their peers. 

TipRanks used its Experts Center tool to identify analysts with the highest success rates. In the process, it analyzed every recommendation by analysts in the basic materials sector over the past 10 years. Then, TipRanks’ algorithms calculated the statistical significance of each rating, analysts’ overall success rate and the average return.

Top 10 analysts from the basic materials sector 

The image below shows the most successful Wall Street analysts from the basic materials sector. 

Arrows pointing outwards

1. Dan Payne — National Bank 

Dan Payne tops the list. Payne has an overall success rate of 64%. His best rating was on Birchcliff Energy (TSE:BIR), an intermediate oil and natural gas company. His buy call on BIR stock from Oct. 6, 2020 to Oct. 6, 2021, generated a return of 373%.

2. Leo Mariani — Roth MKM

Leo Mariani is second on the list, with a success rate of 62%. Mariani’s top recommendation was Permian Resources (NYSE:PR), an oil and gas company. The analyst generated a whopping profit of 800% through his buy recommendation on PR stock from Oct. 20, 2020 to Oct. 20, 2021. 

3. John Freeman — Raymond James 

Raymond James analyst John Freeman ranks No. 3 on the list. Freeman has a success rate of 56%. His best recommendation was on Vital Energy (NYSE:VTLE), an oil and gas explorer in the Permian Basin. The analyst generated a return of 738% through a buy recommendation on the stock from Oct. 23, 2020 to Oct. 23, 2021. 

4. Poe Fratt — Alliance Global Partners

Poe Fratt bags the fourth spot on the list. The analyst has a 54% overall success rate. Fratt’s best recommendation was on Gevo (NASDAQ:GEVO), a company focusing on renewable chemicals and advanced biofuels company. Based on his buy recommendation, the analyst generated a profit of 800% from Aug. 11, 2020 to Aug. 11, 2021. 

5. Elvira Scotto — RBC Capital

Fifth-place analyst Elvira Scotto has a success rate of 64%. Scotto’s best recommendation was Crestwood Equity Partners (NYSE:CEQP), an owner of midstream assets that gathers, processes, stores and transports natural gas, natural gas liquids and crude oil. Based on this pick, the analyst delivered a profit of 437% from March 16, 2020 to March 16, 2021.

6. Vincent Lovaglio — Mizuho Securities

Taking the sixth position is Vincent Lovaglio. The analyst sports a 66% success rate. Lovaglio’s top recommendation was for Comstock Resources (NYSE:CRK), a natural gas producer. Through his buy call on CRK stock, the analyst generated a return of 270% from April 20, 2021 to April 20, 2022. 

7. Scott Hanold — RBC Capital

RBC Capital analyst Scott Hanold is seventh on this list, with a success rate of 58%. The analyst’s best call was a buy on the shares of Matador Resources (NYSE:MTDR), and oil and gas explorer and producer. The recommendation generated a return of 389% from Oct. 1, 2020 to Oct. 1, 2021.

8. Michael Harvey — RBC Capital 

In the eighth position is Michael Harvey of RBC Capital. Harvey has an overall success rate of 55%. The analyst’s top recommendation was for Seven Generations Energy, a Canada-based oil and gas company. Through this buy call, the analyst generated a return of 412.1% from March 16, 2020 to March 16, 2021. Seven Generations Energy merged with ARC Resources (TSE:ARX) in 2021.

9. Dalton Baretto — Canaccord Genuity

Dalton Baretto ranks ninth on the list. The analyst sports a 52% success rate. His top call was made on Capstone Copper (TSE:CS), a Canada-based copper producer. The buy recommendation generated a return of 800% from May 27, 2020 to May 27, 2021.   

10. T J Schultz — RBC Capital

T J Schultz has the 10th spot on the list, with a success rate of 63%. The analyst’s best call has been a buy on shares of Targa Resources (NYSE:TRGP), a provider of midstream services. The recommendation generated a return of 243% from March 16, 2020 to March 16, 2021. 

Bottom line 

Retail investors can leverage TipRanks’ Experts Center tool to keep track of the recommendations of top analysts and make informed investment decisions. More

Today, new cars under $30,000 make up just 8% of the market’s supply, down from 38% pre-pandemic. 
With fully loaded SUVs and trucks in high demand, carmakers continue to upgrade their lineups and scale back on less-expensive cars.

Car shoppers like luxury

Well before the Covid-19 pandemic, consumer tastes had started to steadily shift away from sedans toward more expensive SUVs and trucks. Then, car buyers piled on options, such as high-tech touch screens, ambient lighting, 360-degree cameras and heated and cooled seats.
“There’s a war of features,” said Ivan Drury, Edmunds’ director of insights.

In response to increased demand, dealers began stocking more cars with all the bells and whistles, he said, and carmakers upgraded their lineups with high-end packages, or trim levels, and scaled back on less-expensive cars.
“It only makes sense to continue to ratchet up the price to offer more features and increase the size of the vehicle with each redesign,” Drury said.

Car prices near a record high

For new cars, the average transaction price was $47,892 in May, near an all-time high, according to Edmunds. Now, 10% of all vehicles sold cost more than $70,000, up from 3% five years ago.
On the flipside, there are fewer options available at lower price points. Just 0.3% of new vehicles sold cost less than $20,000, compared with 8% five years ago, Edmunds found.
That’s leaving more car shoppers priced out of the new car market, Ryan said.

How to get the best used car for the money

Instead of getting a new car, buyers on a budget are purchasing older cars with more mileage, which means their cost of ownership is going to go up, Ryan said.
“Those that have the least ability to pay are getting the car that’s going to cost the most to own.”
An iSeeCars study analyzed more than two million cars to see which used models are priced the lowest and offer the longest remaining lifespan. 
Here are the 10 models that came out on top. More

Bobby Bonilla collects a $1.19 million check from the New York Mets every July 1, also known as Bobby Bonilla Day.
An annuity is a lump sum of money, often taken out of a retirement plan, which is converted into a future stream of income.
However, they aren’t for everyone, says certified financial planner Louis Barajas, who is also a member of the CNBC Financial Advisor Council.

Infielder Bobby Bonilla of the MLB’s New York Mets at a game against the Los Angeles Dodgers at Dodger Stadium, July 25, 1993.
Stephen Dunn | Getty Images Sport | Getty Images

Former Major League Baseball player Bobby Bonilla collects a $1,193,248.20 check from the New York Mets every July 1, and he’ll continue to do so until 2035. The catch? He hasn’t played for the team in 24 years.
Bonilla scored this deal in 2000, when the Mets still owed him $5.9 million. However, the all-star player agreed to defer his payment to let the Mets invest in the team and stadium. In return, the Mets agreed to pay Bonilla back $29.8 million over 35 years — one of the MLB’s most famous deals ever.

In fact, ever since, July 1 has been known as Bobby Bonilla Day.
“For Bobby Bonilla, they’ve taken big lump sums of money [and] instead of giving [him] money up front, they’ll convert that money into a future stream of income payments,” said certified financial planner Louis Barajas, CEO of International Private Wealth Advisors in Irvine, California. Barajas is also a member of CNBC’s Financial Advisor Council.
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While most investors can’t expect a deal anything similar to Bonilla’s, they do have access to a similar financial product called an annuity.

Annuities provide a guaranteed stream of income

An annuity is a lump sum of money, often taken out of a retirement plan, which is converted into a future stream of income, or annuitized. Insurance companies guarantee payments for a set period that can span the rest of your life or beyond. Payments might begin immediately or be deferred.

The allure for investors is a guaranteed stream of income, much similar to Social Security or pensions. That can alleviate fears of running out of money in retirement.
How do insurance companies determine how much money they’re going to give you? It’s based on a couple of things, said Barajas. These include the rate of return they think they can earn on the money you give them, and your life expectancy, added Barajas.

Demand for annuities has soared this year amid concerns about the economy and lingering hints of a potential recession. Annuities struck a record sale of $310.6 billion in 2022, according to estimates released by Limra, an insurance trade group.
More than half, or 54%, of savers are considering a type of guaranteed lifetime income, according to a survey by Morning Consult for the American Council of Life Insurers.
Annuities are an investment product that have benefited from record-high interest rates — the higher the interest rate, the better the monthly rate you’re going to get, Barajas said. Calculations are starting to change because companies have to figure out how to benefit the consumer and people are, on average, living longer, sometimes to age 95 or 100, he said.
“If you annuitize it, the company has to guarantee you that income,” said Barajas. “Once it’s annuitized, it’s guaranteed for the rest of your life.”

Three ways to gauge an annuity offer

Annuities aren’t for everyone, however. There are many different kinds, and some can be hard to understand or come with expensive terms and fees. There can also be restrictions and important but easily overlooked fine print, including terms that make it difficult or impossible to get your principal back if you change your mind.
Here are three ways to educate yourself before signing an annuity contract, Barajas said:

Look at the insurance company’s reputation. You’re giving a significant amount of money to an annuity provider, so make sure it has a good reputation, including a strong credit rating from an agency, such as AM Best or Standard & Poor’s, and favorable reviews from customers.
Vet the agent or advisor. “Don’t pull the trigger with the first person you meet,” said Barajas. Check that the person selling you the annuity has a good reputation and a clean professional history. Ideally, pick someone who isn’t a captive agent and can work with multiple companies. “I always tell clients to ask, ‘Are you working as fiduciary for me, and can I get that in writing?'”
Consider how an annuity fits in your larger financial plan. There are no good or bad products; it’s the context, said Barajas. “What are the pros and the cons?” he said. “Every investment has a plus and a minus.” Make sure you fully understand the commitment you are about to make and talk with a financial advisor about whether other products might be a better fit for your needs. More

Viaframe | Getty Images

Company: Clear Channel Outdoor (CCO)

Business: Clear Channel Outdoor is an out-of-home advertising company that offers a variety of advertising services, including through billboards, street furniture displays, transit displays and airport displays. It also sells street furniture equipment, provides cleaning and maintenance services and operates public bike programs. Clear Channel is broken into the following segments, which account for the following percentage of revenue: America (45%); Airports (10%, in the U.S. and Caribbean); Europe-North (23%); Europe-South (19%); and Other (3%, includes Latin America).
Stock Market Value: $661M ($1.37 per share)

Activist: Legion Partners

Percentage Ownership: 5.08%
Average Cost: $1.98
Activist Commentary: Legion is an activist investor whose managing directors are Chris Kiper, previously of Shamrock Activist Value Fund, and Ted White, previously of European activist fund Knight Vinke. Legion prefers to do its activist work behind the scenes, resorting to a proxy fight if amicable discussions do not go well. The firm has significant experience with consumer retail companies.

What’s happening?

Legion sent a letter to Clear Channel’s board, expressing concern with the scope and pace of the company’s current strategic review process. The firm also argued that the board needed to consider a broader strategic review process, including potential divestitures of other non-core assets and select U.S. assets, or a sale of the entire company.

Behind the scenes

CCO is one of the largest and highest quality out-of-home (“OOH”) advertising companies. The OOH business has long-term growth prospects and a strong business moat, especially among billboard assets. Clear Channel effectively has two business lines – Americas and Europe, each with very different business models and valuations. The European business works on fixed limited-term contracts with municipalities, which are rebid at maturity. Because of this, the European business trades at around a multiple of 8 times earnings before interest, taxes, depreciation and amortization. Most of the U.S. business is billboards, which the company owns, and accordingly trades closer to 13 times to 15 times EBITDA. Moreover, these billboards are in the process of being converted to digital, which will allow each billboard to generate approximately four times more revenue and six to 10 times more EBITDA. However, this conversion requires the approval of each municipality and will not be a quick process.

Despite its market leading position, Clear Channel’s shares have seriously underperformed since its separation from iHeartMedia in May 2019. CCO is currently trading 79% below the pre-deal share price and 65% below its peers since the separation. CCO’s underperformance has been linked to several factors, but is largely driven by the company’s high leverage, which amplifies volatility, and the sub-optimized conglomerate structure, which increases complexity. This has led to a misunderstanding by the market of the intrinsic value of the underlying assets, which should be significantly higher than what is implied by the current stock price. Legion Partners conducted a sum-of-the-parts analysis based on 2024 adjusted EBITDA estimates which implies an upside of 230% (implied valuation of $3.57 compared to $1.08 as of May 12). The firm thinks this could be unlocked as the company transitions to a U.S. pure play and reduces its leverage. Legion highlighted that while multiples for publicly traded OOH peers have compressed recently given potential macroeconomic slowdown concerns, it has seen that private market multiples for OOH assets are robust. Legion thinks that given quick synergies, industry consolidation is an accretive pursuit for any OOH player.
Legion has been actively engaged with the company for the past two years and most recently, had a meeting with management on May 12, where Legion expressed its concerns with the pace and scope of the company’s strategic review process. Specifically, Clear Channel has been prioritizing the sale of assets within Europe-South, even though the significantly larger part of the business is Europe-North. Moreover, since this strategic review of Europe began in December 2021, Clear Channel has announced the sales of businesses in Italy, Spain and Switzerland. This is concerning since as a fixed-contract business, the value goes down the closer the contracts get to maturity. Accordingly, Legion is pushing for an accelerated pursuit of a sale of the Europe business.
Legion sees two potential paths to value creation here. First, the company could sell off its European and Latin American businesses and become a U.S. pure play. While there is little value to Europe-South and Latin America, Legion believes that the Europe-North business could fetch $500 million to $600 million in a sale, which could be used to de-lever the company. Additionally, while selling Europe-South and Latin America would not yield significant proceeds, it would get rid of a distraction and allow management to focus on its crown jewel U.S. asset. As a sale of the European business would not be enough to optimally de-lever the balance sheet, Clear Channel could also consider selling select U.S. assets. Legion would like to see management pursue this plan while also exploring a potential sale of the entire company. Such a sale would be more complex and possibly less lucrative than the other plan, but it would have the benefit of certainty.
CCO first announced its strategic review of the European business in December 2021 and very little has come to fruition. It is unclear why this is and what the logjam is, but if it continues, Legion will want to be inside the boardroom to get a better look. Legion has shown in the past that it has no hesitancy in soliciting proxies if it feels that is necessary. We have no doubt that if the firm is met with reluctance by the board to commence one of the two outlined paths, Legion will seek board seats. But the firm has plenty of time to make that decision as the nomination window does not open until Jan. 4, 2024.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

President Joe Biden says his administration will attempt to deliver a different loan forgiveness program under the Higher Education Act, a 1965 law.
“Today’s decision has closed one path,” Biden said during a briefing Friday. “Now we’re going to pursue another.”

U.S. President Joe Biden speaks about the Supreme Court’s decision overruling student debt forgiveness in the Roosevelt Room of the White House in Washington, D.C., June 30, 2023.
Jim Watson | AFP | Getty Images

President Joe Biden suggested on Friday that he was looking for another avenue to deliver student debt relief after the Supreme Court rejected his forgiveness plan.
“Today’s decision has closed one path,” Biden said during a briefing Friday. “Now we’re going to pursue another.”

Biden says his administration will attempt to deliver a different loan forgiveness program under the Higher Education Act. The 1965 law allows the secretary of education to “compromise, waive or release any right, title, claim, lien or demand, however acquired, including any equity or any right of redemption.”
The president didn’t provide many details about how this new approach might work, but said it was “legally sound.”
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In a 6-3 decision, the court’s conservative majority struck down Biden’s plan to cancel up to $20,000 in student debt for tens of millions of Americans. The high court said the president didn’t have the authority to instruct his Education secretary to cancel such a large amount of consumer debt without authorization from Congress.
Consumer advocates said the debt cancelation shouldn’t die with the Supreme Court ruling.

“Biden must use another legal authority to deliver on this crucial obligation, and he must do so without delay,” said Astra Taylor, co-founder of the Debt Collective, a union of debtors.

Other relief measures after forgiveness is nixed

The president also said that his administration’s new payment plan, which slashes monthly bills in half for many student loan borrowers, would be available before payments resume.
Federal student loan payments have been on pause since March 2020.
After student loan bills restart, there will also be a 12-month period during which borrowers won’t face the harshest consequences of missing payments, including negative credit reports and collection activity.
This is breaking news. Please check back for updates. More

The Supreme Court on Friday struck down President Joe Biden’s student debt relief plan.
The ruling matched expert predictions, given the justices’ conservative majority. Education officials, however, warned of a historic rise in delinquencies and defaults.
“Today’s decision is an absolute betrayal to 40 million student loan borrowers counting on an impartial court to decide their financial future based upon the established rule of law,” said Persis Yu, deputy executive director at the Student Borrower Protection Center.

Supporters of student debt forgiveness demonstrate outside the US Supreme Court on June 30, 2023, in Washington, DC. 
Olivier Douliery | AFP | Getty Images

The Supreme Court on Friday struck down President Joe Biden’s federal student loan forgiveness plan, denying tens of millions of Americans the chance to get up to $20,000 of their debt erased.
The ruling, which matched expert predictions given the justices’ conservative majority, is a massive blow to borrowers who were promised loan forgiveness by the Biden administration last summer.

The 6-3 majority ruled that at least one of the GOP-led six states that challenged the loan relief program had the proper legal footing, known as standing, to do so.
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The high court said the president didn’t have the authority to instruct his Education secretary to cancel such a large amount of consumer debt without authorization from Congress.
“‘Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” wrote Chief Justice John Roberts in the majority opinion for Biden v. Nebraska. “We can’t believe the answer would be yes.”
Roberts also said the president’s plan would cause harm to Missouri, as it would have reduced profits at the Missouri Higher Education Loan Authority, or MOHELA.

“Under the Secretary’s plan, roughly half of all federal borrowers would have their loans completely discharged,” Roberts wrote. “MOHELA could no longer service those closed accounts, costing it, by Missouri’s estimate, $44 million a year in fees…The plan’s harm to MOHELA is also a harm to Missouri.”
Legal experts and advocates recently poked holes in the states’ argument that Biden’s plan would reduce MOHELA’s bottom line. They pointed out that the lender’s revenue was actually expected to rise because of some student loan servicers recently leaving the space and it picking up extra accounts. 
“I was surprised the court found Missouri had standing,” said higher education expert Mark Kantrowitz. “The debts of MOHELA are not the debts of the state. And MOEHLA is able to sue on its own, so why didn’t it bring its own lawsuit?”
In a statement Friday, Biden called the Supreme Court’s decision wrong and accused Republicans of hypocrisy.
“They had no problem with billions in pandemic-related loans to businesses — including hundreds of thousands and in some cases millions of dollars for their own businesses. And those loans were forgiven,” Biden said. “But when it came to providing relief to millions of hard-working Americans, they did everything in their power to stop it.”
In a briefing Friday afternoon, Biden said his administration was looking for another avenue to deliver student debt relief.

‘An absolute betrayal’ for borrowers, say advocates

Consumer advocates slammed the ruling, and accused the court of bias.
“Today’s decision is an absolute betrayal to 40 million student loan borrowers counting on an impartial court to decide their financial future based upon the established rule of law,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, an advocacy group.

Astra Taylor, co-founder of the Debt Collective, a union of debtors, called the decision “a travesty for debtors and for democracy.”
“Student loan cancelation is perfectly legal, and these baseless and bad-faith lawsuits should have been dismissed long ago,” Taylor said.
The U.S. Department of Education recently warned that the Covid pandemic left millions of borrowers in a worse off financial situation and that its relief was necessary to avoid a historic rise in delinquencies and defaults.

Critics say plan was ‘expensive’ and ‘immoral’

The high court’s decision is a major win for the plaintiffs who worked to block the forgiveness and were worried about the executive branch interfering in the lending sector. At an estimated cost of $400 billion, Biden’s policy would have been among the most expensive executive actions in U.S. history.
“The President’s unilateral student debt cancellation plan was expensive, inflationary, poorly targeted, and would have done nothing to improve the affordability of higher education,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said in a statement. “With today’s Supreme Court decision, it’s time to put these costly cancellation schemes behind us.”
Republicans also celebrated the ruling.
Sen. Tim Scott, R-S.C., a Republican presidential contender, called the loan forgiveness plan an “illegal and immoral” bid to “transfer student debt to taxpayers.”
“If you take out a loan, you pay it back,” Scott said in a statement.
Conservative lawmakers recently passed legislation in the House and Senate to overturn the president’s plan, criticizing the policy for forcing taxpayers to improve the personal finances of those who benefited from higher education. Around half of people in the U.S. don’t hold a college degree, which research shows leads to greater earnings.
Biden vetoed that legislation.

How student loan forgiveness got to the Supreme Court

Supreme Court justices listen to arguments.
Artist: Bill Hennessey

Last August, under pressure from other Democrats, consumer advocates and borrowers to fix a lending system they described as broken and predatory, Biden announced he’d cancel up to $10,000 in federal student debt for most borrowers, and as much as $20,000 for those who’d received a Pell Grant in college, a form of aid for low-income families.
Even before the Covid-19-related public health crisis, when the U.S. economy was enjoying one of its healthiest periods in history, there were still problems plaguing the federal student loan system.
Only about half of borrowers were in repayment in 2019, according to an estimate by Kantrowitz. Around 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief measures for struggling borrowers, including deferments or forbearances.
These grim figures led to comparisons to the 2008 mortgage crisis.
When the Biden administration rolled out its loan forgiveness plan, it also released a 25-page memo by the U.S. Department of Justice asserting that its relief was permitted by the Heroes Act of 2003 — passed in the aftermath of the 9/11 terrorist attacks, which grants the president broad power to revise student loan programs during national emergencies. The country was operating under an emergency declaration due to Covid-19 at the time.
But the administration’s forgiveness application process had been open for less than a month when a slew of legal challenges forced them to shut it. Biden’s plan faced at least six lawsuits from Republican-backed states and conservative groups, most of which accused him of executive overreach.

Two of those legal challenges made it to the Supreme Court: one brought by six GOP-led states — Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina — and another backed by the Job Creators Network Foundation, a conservative advocacy organization.
While the justices’ decision largely matched the predictions of many legal experts, some saw it going another way, especially after the Supreme Court heard oral arguments at the end of February.
Fordham law professor Jed Shugerman said at the time that he was struck by the “brilliant performance” of Solicitor General Elizabeth Prelogar, the lawyer who argued on behalf of the Biden administration and its relief plan.

“She may have snatched victory from the jaws of defeat,” Shugerman tweeted.
When the justices expressed skepticism that the Heroes Act of 2003 allowed such a large cancellation of student debt, Prelogar remained adamant that the president was acting squarely within the law’s scope to avoid borrower distress during national emergencies.
“There hasn’t been a national emergency like this in the time that the Heroes Act has been on the books that’s affected this many borrowers,” Prelogar said. “And so, I think it’s not surprising to see in response to this once-in-a-century pandemic.”
— CNBC’s Kevin Breuninger contributed to this story.
This is breaking news. Please check back for updates. More

The U.S. Supreme Court struck down President Joe Biden’s student loan forgiveness plan Friday.
Between the high cost of college and student loan burden, students are increasingly questioning the value of a four-year degree.
High schoolers are also putting more emphasis on career training and post-college employment, a recent report by ECMC Group found.

The U.S. Supreme Court struck down President Joe Biden’s student loan forgiveness plan Friday, yet college affordability will remain an issue for years to come, experts say, causing more students to opt out altogether.
Given the Supreme Court’s ruling against affirmative action admission policies as well, “it’s very appropriate for us to be concerned,” said Kelly Slay, assistant professor of higher education and public policy at Vanderbilt University. “Instead of broadening opportunities, we’re adding barriers.”

Michele Shepard, senior director of college affordability at The Institute for College Access & Success, added that “this debt-financed system is unsustainable.”
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“We continue to be concerned that the high cost of college — including not only tuition costs but housing, food, transportation and other living costs — is giving students second thoughts about enrolling,” she said.

College is only getting more expensive

Tuition and fees have more than doubled in 20 years, reaching $10,940 at four-year, in-state public colleges, on average, in the 2022-23 academic year. At four-year private colleges, it now costs $39,400, according to the College Board, which tracks trends in college pricing and student aid.
“The [Supreme Court] decision still does little to erase the massive burden brought on by the exponential rise in college tuition,” said Sarah Foster, analyst at Bankrate.com.

Many students borrow to cover the tab, which has already propelled collective student loan debt in the U.S. past $1.7 trillion.

Typically, seven in 10 college seniors graduate in the red, owing an average of nearly $30,000 per borrower, according to the most recent data from The Institute for College Access & Success.
This year’s incoming freshman class will rely on loans even more in pursuit of a degree at a public college or university, a recent report shows.
A 2023 high-school graduate could take on as much as $37,300, on average, in student debt to earn a bachelor’s degree, according to a NerdWallet analysis of data from the National Center for Education Statistics.
The share of parents taking out federal parent PLUS loans to help cover the costs of their children’s college education has also grown, NerdWallet found.

A wave of students may opt out of college

Between the high cost of college and student loan burden, students are increasingly questioning the value of a four-year degree.
“I started looking for a path that would be the cheapest and cause the least amount of debt,” said Parker O’Neill, 18, who will start a two-year dental assisting program this fall at Century College, a community and technical college in White Bear Lake, Minnesota. Watching his mom struggle with her own debt repayment was the determining factor, he said.

High schoolers are also putting more emphasis on career training and post-college employment, a recent report by ECMC Group found.
About two-thirds, or 65%, of high schoolers think education after high school is necessary, the report said, but among students from low-income, first-generation or minority backgrounds, only 47% are considering a four-year college. 

How to avoid taking on too much student debt

With debt relief off the table, “people now should realize they need to be prudent,” said Kalman Chany, a financial aid consultant and author of The Princeton Review’s “Paying for College.” 
High-school students must plan ahead, he said, by maximizing gift aid, such as scholarships and grants, which does not need to be paid back; choosing schools that are affordable; and not borrowing more than they expect to earn in their first year after college.
Above all else, would-be students should “be very careful with how much they borrow,” Chany said.
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