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The Biden administration released new guidance on how colleges can proceed in the wake of the Supreme Court’s decision ending race-based admissions policies.
Two new resources outline which policies and practices for promoting a diverse student body remain legal.

The Biden administration released new guidance Monday on how colleges can “lawfully achieve a diverse student body” in the wake of the Supreme Court’s ruling striking down affirmative action.
In a “Dear Colleague” letter and a questions and answers page, the U.S. Department of Education outlined what policies and practices for promoting a diverse student body remain legal after the Supreme Court decided that the consideration of race in college admissions violates the Equal Protection Clause of the U.S. Constitution and the Civil Rights Act of 1964.

“The resources issued by the Biden-Harris Administration today will provide college leaders with much-needed clarity on how they can lawfully promote and support diversity, and expand access to educational opportunity for all,” U.S. Secretary of Education Miguel Cardona said in a statement. “This is only the first step.”
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The high court’s ruling was considered a massive blow to decades-old efforts to boost enrollment of minorities at American universities through policies that accounted for applicants’ race.
Experts predicted the Supreme Court’s ruling would encourage colleges to put more weight on students’ household income and their regional background to diversify their student bodies.
Schools may also rely less on standardized test scores or even eliminate SAT and ACT requirements, which have reinforced race gaps, other studies show.

Colleges can still consider personal essays about “how race affected his or her life, be it through discrimination, inspiration or otherwise,” Chief Justice John Roberts wrote in the ruling, even though “universities may not simply establish through application essays or other means the regime we hold unlawful today.”
The Education Department said it will release a report next month with additional details on how colleges can use other measures of adversity, including financial means, where a student grew up and went to high school, as well as personal experiences of hardship, including racial discrimination, in their admissions decisions.
Colleges are likely to add questions along these lines to their admissions applications, according to higher education expert Mark Kantrowitz, and more may also end the policy of giving preferential treatment to legacy students, which is increasingly under fire after the ruling on affirmative action.
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People can easily fall into “false financial comparisons,” a scenario in which we believe we can afford the same lifestyles people we perceive as “just like us” have, said bestselling author Manisha Thakor.
Here’s what can make people can lose sight of reality and overstretch themselves financially to meet unrealistic expectations.

Franckreporter | E+ | Getty Images

People can easily fall into “false financial comparisons,” a scenario in which we believe we can afford the same lifestyles people we perceive as “just like us” have, said author Manisha Thakor in her new book, “MoneyZen: The Secret to Finding Your ‘Enough.'”
A certified financial planner, Thakor noticed this phenomenon during the three decades she spent helping people make better decisions around money in her wealth management practice.

“People would come to me and they would be driving the nicest cars [and dressed] in the newest fashions with incredible jewelry and shoes,” she told CNBC. “And I would discover that they didn’t have enough in assets to meet the minimum [to be a client].
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“They looked like millionaires, but they were far from it.”
Thakor came to the conclusion that false financial comparisons can lead anyone to spend beyond their means. Here are three common factors:
1. Fictional financial lifestyles
Characters portrayed in TV shows and movies tend to have expensive wardrobes, apartments and lifestyles, no matter their fictional job.

“When I looked at the homes they are portrayed living in, the cars they drive and the ways they socialize, and I [did] the math assuming they’re earning average incomes for those positions in those cities, the numbers don’t add up,” said Thakor. 

The cast of “Friends:” (l-r) Jennifer Aniston, as Rachel Green; Matt LeBlanc, as Joey Tribbiani; David Schwimmer, as Dr. Ross Geller; Lisa Kudrow, as Phoebe Buffay-Hannigan; Matthew Perry, as Chandler Bing; and Courteney Cox, as Monica Geller-Bing.
NBCU Photo Bank

For instance, when the renowned sitcom “Friends” was on TV, Thakor was in her early 20s, living in New York as an investment banker. She lived in a fourth-floor walk-up and paid $800 a month for a 400-square-foot studio. If she tried to live in an apartment similar to the one shown on “Friends,” she estimates, she would have probably spent more than half her take-home income.
Thakor’s major concern is people may expect to achieve those characters’ lifestyles if they have similar job positions and have one of two outcomes when that doesn’t happen: They either feel bad about themselves for not having that life or stretch themselves financially to access it. 
2. Easy access to credit
Readily available lines of credit may encourage consumers to live up to standards that are not economically feasible, said Thakor.
Instead of once-common in-store layaway plans, where the shopper could make monthly payments until they paid the item off and could bring it home, shoppers can now walk out the door with the product financed on debt, often ultimately paying 50% to 80% more than the original price on minimum monthly payments and interest rates, said Thakor.

“Layaway plans are almost nonexistent these days,” she said. “They’ve been replaced by credit cards.”
“It’s a longer-term trend versus the post-pandemic credit card figures that are due to very real struggle right now,” Thakor added.
Credit card balances are up almost 20% from a year ago, according to a quarterly credit industry insights report from TransUnion. The average balance per consumer rose to $5,947, the highest in a decade. 
3. Social media
“Social media puts everything on steroids,” said Thakor. “It is an airbrushed, curated version of our lives.”
People who consume social media are often exposed to content that shows images of people they may know, or from influencers, that make them feel, quite often, inadequate. 

Nearly 40% of young adults said they spend more of their money on experiences than necessities such as paying bills, according to a 2022 report by Credit Karma.
However, Thakor is hopeful because she has noticed an increased desire for genuine connections from platform users, and one can’t have a true connection if it’s based on falsehoods.

‘We’re all vulnerable to overspending’

“It really helps to just acknowledge that we’re all vulnerable to overspending to maintain our status, [which] is deeply ingrained into our psyche,” said psychologist Bradley T. Klontz, a certified financial planner and the managing principal of YMW Advisors in Boulder, Colorado.
While it is good to always aspire for better, here are three ways for you to stay true to your financial means as you work your way up to your goals:
1. Acknowledge that we all care deeply
The first step is to realize that everyone cares deeply about their status in social circles, “even if we pretend not to,” said Klontz, who is also a member of the CNBC Financial Advisor Council.
2. Remember that social media can be misleading
“The bottom line is we are inundated with misinformation around how people become wealthy and how wealthy people spend their money,” he said.

Juan Algar | Moment | Getty Images

Most wealthy people describe themselves as frugal and are tremendous savers, whereas people who show lavish lifestyles on social media oftentimes have a lower net worth.
Therefore, be aware of who you are comparing yourself to online. “You see what they just bought, but what you’re not seeing is their actual net worth,” he added.
3. Reconsider your reference group
“We are always going to be vulnerable to this,” said Klontz. Therefore, he suggests to consciously choose your reference group, or who you compare yourself with. Make sure that reference group reflects your true goals.
There is a concept in psychology called relative deprivation, meaning there is no objective number at which “we’ve made it or are wealthy or well off,” said Klontz. “It is entirely based on what group of people we are comparing ourselves to.”
“Our entire sense of social status relates to the people we are trying to belong to,” said Klontz. “What tribe are you trying to belong to?” More

Gen Z — 87% — and millennials — 83% — are far more willing to pay extra for travel protections compared to other generations, according to a report by Bank of America.
“I think a lot of it goes to the lifestyle of the different generations and where they are traveling,” said Mary Hines Droesch, the head of consumer and small business products at Bank of America. 

Rome ranked second on a recent list of best travel destinations for a digital detox.
Piola666 | E+ | Getty Images

Despite inflation, Gen Z and millennials are determined to travel this summer, even if it means spending a bit more.
While almost two-thirds, or 73%, of people are willing to pay extra fees for travel insurance or refundable booking options for their trips, Gen Zers and millennials are far more willing — at 87% and 83%, respectively — to pay extra for travel protections compared with other generations, according to a report by Bank of America. The bank surveyed 2,003 consumers in June.”I think a lot of it goes to the lifestyle of the different generations and where they are traveling,” said Mary Hines Droesch, head of consumer and small business products at Bank of America. 

While Bank of America posed the question differently in a prior, similar report, the latest findings seem to represent an increase. When the bank surveyed 2,020 consumers about their savings and spending attitudes and behaviors in March 2022, 54% of those who planned to travel said they would purchase trip protection, including 73% of Gen Z and 65% of millennial travelers.
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Since younger generations may face tighter restrictions, from available free time to finances, they avoid risk where and when they can to ensure their travel plans go smoothly.

Why younger travelers spend more insuring trips

Many baby boomers are retired and enjoy a degree of flexibility when it comes to travel. For instance, they are the most likely cohort to travel on nonpeak days (60%) or to drive instead of fly (54%) to their destination, according to the Bank of America report. That’s less true for Gen Z, said Droesch.
“When [Gen Z] plan a trip, they’re really limited to the time that they’ve taken off from work, and especially now that there’s such a push for people to return to the office,” she said.

By opting to buy travel insurance, younger people’s plans are more protected, added Droesch. Boomers “have other options [in case] things go awry, because they don’t have the constraints of having to be at the office, at the very least, three days a week,” she said.
Roughly 20%, or 1 in 5, of customers on Hopper who generally tend to be Gen Z and millennial users, are adding the travel app’s flight disruption guarantee product as a way to protect their trips, said Hayley Berg, an economist at Hopper.
“It’s hugely popular with travelers, especially those who are worried about all the disruptions that are in the news right now,” said Berg.

Pandemic leaves travel jitters in wake

Many travel plans were canceled during the Covid-19 pandemic and many disappointed buyers got no refunds, even if they had travel insurance because unforeseen events such as the Covid-19 lockdown weren’t covered. The experience left a “lasting impression on younger generations,” said Droesch. 
With other countries now reopen for tourism due to relaxed or completely eliminated Covid restrictions, younger U.S. travelers don’t want to miss out on new experiences. However, given those lockdown memories and their limited disposable income, they’re also insuring trips so that if something unexpected happens, they can travel at a later date, said Droesch.
The travel sector is also still experiencing higher service disruption rates compared with pre-pandemic times, according to Berg at Hopper. 

“Travelers are a lot more worried about being disrupted than they probably were four years ago,” she said. Additionally, given a stubborn — albeit falling — inflation rate, “a lot of families are tightening their belt,” Berg added.
These two generations are no longer simply “young ones,” so to speak, said Berg. Millennials are entering their 40s, and much of Gen Z have graduated college and are starting their careers. 
“They’re building economic power and have entered adulthood,” she added. “I do think the trends that we see in this demographic are the trends I expect to see for the next 10 to 20 years.”
To that point, increased interest in travel protection products is not a fleeting phenomenon. Users who applied travel protection products on Hopper are two to four times more likely to purchase the product for future trips, adding up about 10% or $40 more per booking, said Berg. 
“It comes at a cost, but we’re seeing the willingness, and the repetitive purchases are really there,” she added.While travel insurance sounds like a good idea, travelers should be aware of the different types of travel insurance that exist and be sure of which type they buy. For instance, you can cancel a flight for any reason and get a full refund through Cancel for Any Reason, or CFAR, plans. However, such coverage can add up to 50% or more on top of actual costs.

Traveling for less can mean risking less

Insurance or no insurance, opting to travel when others are staying home can mean risking less hard-earned money. Traveling during a destination’s “shoulder seasons,” or the transition period between times most popular with travelers — such as spring and fall, which bookend the summer high season, in Europe — is favorable because that’s when the best deals are usually available, said Berg. 
“January, September and October are the cheapest months of the year to travel pretty much anywhere in the world and to stay in hotels because it’s back to school, [and] most of Europe has gone back to work after their summer holidays in August,” she said.Considering off-peak days for travel and hotel stays can help “chip away the cost of the trip.” More

Michael Wirth, CEO of Chevron.
Adam Jeffery | CNBC

When times get rocky for the stock market, dividends can offer investors a measure of stability in the form of portfolio income.
Here are five attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.

Chevron

Energy giant Chevron’s (CVX) earnings declined in the second quarter of 2023, as energy prices have cooled down compared to last year when the Russia-Ukraine conflict sent oil and gas prices soaring.
Nonetheless, Goldman Sachs analyst Neil Mehta recently upgraded Chevron to buy from hold, citing leading capital returns and inflection in free cash flow next year. He raised his price target for CVX stock to $187 from $166.
Mehta stated that Chevron lagged its key rivals over the past two to three years due to issues related to upstream execution and lower refining exposure compared to Exxon. However, the analyst said that some of the upstream execution risks have been addressed, with major projects in Tengiz at 98% completion and Permian volumes growing better than anticipated in Q2 2023.
Regarding capital returns, Mehta noted that Chevron has grown its dividends for more than 25 years. The stock has a yield of 3.3%. Moreover, earlier this year, the company increased its annual share repurchase guidance range to $10 billion to $20 billion from $5 billion to $15 billion.
“We highlight that from 2024-2026, we expect a sharp improvement in ROCE [return on capital employed], production per share growth and FCF per share, all enabling a top decile return of capital profile in the S&P 100,” said the analyst.

Mehta ranks 262nd among more than 8,500 analysts tracked by TipRanks. His ratings have been profitable 66% of the time, with each rating delivering an average return of 12.3%. (See Chevron Stock Chart on TipRanks)  

ConocoPhillips

Mehta is also bullish on another dividend-paying energy stock – ConocoPhillips (COP). While the company’s second-quarter earnings and cash flow fell slightly short of the analyst’s expectations, he sees the possibility of a more constructive setup in the second half of 2023 as pricing realizations normalize and volumes increase.
Mehta added that though ConocoPhillips is in a higher spending mode to support longer-term and high-return projects, he continues to expect attractive capital returns in 2024 and beyond. The analyst projects a capital return yield of 7% in 2024, with room for further upside.
The analyst’s 2024 capital return projection is based on $5 billion of share buybacks and the expectation of a higher dividend payout of $4.3 billion compared to the prior estimate of $3.7 billion. ConocoPhillips has a capital return target of $11 billion for 2023, and it has returned about $5.8 billion to shareholders in the first half of the year through share repurchases and fixed and variable dividends.
Mehta reiterated a buy rating on COP and raised the price target to $128 from $120, saying, “We see COP as the most advantaged on return on capital employed, with a 2024-2026 avg ROCE of 21% vs the US Major peer avg of 16%.” (See ConocoPhillips’ Financial Statements on TipRanks) 

Pioneer Natural Resources

Next on this week’s list is Pioneer Natural (PXD), an independent oil and gas exploration and production company. Recently, PXD modified its capital return framework to pay at least 75% of free cash flow to shareholders through base and variable dividends and opportunistic share repurchases. The remaining 25% will be used to strengthen the balance sheet.
Mizuho analyst Nitin Kumar noted that in the second quarter — marking the inaugural quarter for the updated capital return framework — post-base dividend free cash flow was evenly divided between buybacks (about $125 million) and variable dividends ($138 million). He also mentioned that Pioneer recently announced its third-quarter dividend payment and pointed out that its forward dividend yield is over 3.0%, based on $1.25 per share of base dividend and $0.59 per share of variable dividend.  
Kumar, who has a buy rating on PXD with a price target of $265, highlighted that PXD’s second-quarter volumes and above-guidance production validated his prediction of an improvement in well productivity, as indicated by his firm’s proprietary database.    
“Critically, this well productivity is allowing management to increase oil/total production guidance by ~1%/3% while reducing capex by ~3%, setting the stage for strong capital efficiencies into 2024 without factoring in the impact of cost deflation anticipated by the industry,” said Kumar.
Kumar holds the 26th position among more than 8,500 analysts on TipRanks. Moreover, 79% of his ratings have been profitable, with each generating a return of 23.2%. (See PXD Insider Trading Activity on TipRanks)

Seagate Technology

Seagate (STX), one of the prominent makers of computer hard drives, is under pressure because of the uneven pace of recovery in China and cautious enterprise spending due to macro headwinds.
Nevertheless, Baird analyst Tristan Gerra, who ranks 398th among more than 8,500 analysts tracked on TipRanks, remains bullish on this dividend-paying tech stock. Seagate generated free cash flow of $626 million in fiscal 2023 and paid $582 million in dividends while directing $408 million toward repurchasing shares. STX offers a dividend yield of 4.2%.
The analyst noted that the June quarter’s shipments fell significantly due to the ongoing inventory correction among most of the company’s customers, with this trend expected to last a couple of additional quarters. However, the analyst contended that hard disk drive (HDD) secular demand trends remain intact.  
Gerra thinks that the worst is behind the company. He expects STX’s gross margin to improve due to the company’s aggressive cost reduction and ramp-up of higher-density architecture.
The analyst reiterated a buy rating on STX stock with a price target of $70. He said, “Net, business remains structurally sound, and we see no reason for Seagate not to return and eventually exceed a historical $5-$5.50 EPS run rate.”
Gerra has a success rate of 56% and each of his ratings has returned 10.3% on average. (See Seagate Hedge Fund Trading Activity on TipRanks)          

McDonald’s

Last on this week’s list, there’s fast-food chain McDonald’s (MCD), which impressed investors with strong second-quarter results. The company is a dividend aristocrat and has raised its dividend payment for 46 consecutive years. MCD has a dividend yield of 2.1%. 
Following the impressive Q2 2023 print, RBC Capital analyst Christopher Carril reiterated a buy rating on MCD and increased the price target to $340 from $325.
The analyst highlighted that the company delivered another solid quarter against elevated estimates, driven by still-elevated average check and positive guest counts, which were supported by its robust marketing efforts. 
“McDonald’s stable and improved business model, global scale and near best-in class dividend yield all help to balance relatively lower unit growth, in our view justifying a multiple above that of all franchised peers,” said Carril.
Carril ranks No. 661 out of more than 8,500 analysts tracked on TipRanks. Also, 64% percent of his ratings have been profitable, with an average return of 12.3%. (See McDonald’s Blogger Opinions & Sentiment on TipRanks)   More

TikTok’s latest trend aims to reframe the narrative around luxury indulgences.
“Girl math” breaks down the price of an item by the cost per wear.
However, with any big-ticket purchase, consumers should first consider the trade-offs, experts say, especially if it comes at the expense of your financial well-being.

By nearly every measure, Americans are financially strained. Yet, we’re coming up with new ways to justify expensive purchases.
The latest way, coined “girl math,” breaks down the price of an item by the cost per wear. If you use an expensive handbag every day for a year, for example, then it might only set you back a few bucks each time you wear it.

Alternatively, buying something on sale not only means you’ll spend less, but the difference can be considered “found money,” which can be put toward something else.
While the term originated from an unflattering view of women and their finances, TikTok’s latest trend aims to reframe the narrative around luxury indulgences.
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In addition to how these purchases are rationalized, there’s also a psychology to which payment method is used.
Buying big-ticket purchases in cash, for instance, makes them easier to forget because there’s no paper trail, according to a recent paper by Christopher Bechler and Szu-chi Huang at Stanford’s Graduate School of Business.

This works well for “an indulgent purchase that doesn’t feel super justifiable,” Bechler said.
Otherwise, consumers increasingly turn to buy now, pay later to spread out the cost of their “retail therapy” with small installments.

All this coincides with TikTok’s other recent trend, “treat” culture, which promotes spending money as a form of self-care, providing a temporary boost during stressful economic times.
By whatever means, “we are all vulnerable to destroying ourselves financially,” said Brad Klontz, a Boulder, Colorado-based psychologist and certified financial planner.
However, there are some benefits to this approach.

When ‘girl math’ works

Hollie Adams | Bloomberg | Getty Images

Most experts recommend thinking about major purchases more carefully, and that’s where “girl math” can come in handy.
“Sometimes, ‘girl math’ is perfect math,” Klontz said. Factoring in how often you will use or wear an item helps “calm down the emotional part of the brain and turn on the rational part of your brain.”

When the math doesn’t add up

“The math often won’t end up in favor of splurging on luxury goods. Jewelry and watches may hold their value but most of the rest are depreciating assets,” said Christine Benz, Morningstar’s director of personal finance and retirement planning.
That underscores the importance of weighing those types of purchases carefully, she added, and considering the trade-offs, especially if it comes at the expense of your economic standing.

‘Girl math’ is just the latest iteration of us trying to rationalize financial behaviors that we know we shouldn’t be doing.

Brad Klontz
psychologist and managing principal of YMW Advisors

“‘Girl math’ is just the latest iteration of us trying to rationalize financial behaviors that we know we shouldn’t be doing,” said Klontz, who is also managing principal of YMW Advisors and a member of CNBC’s Financial Advisor Council.
“Why the need to justify it?” he added. “The answer to that is because you can’t afford it.”

In the wake of the Covid-19 pandemic, a spike in interest in luxury goods has also driven prices sky-high.
The “quiet luxury” trend is partly to blame, which glorifies the most high-end lifestyles even though most Americans are more likely to live paycheck to paycheck.
Just take the HBO series “Succession,” where the central characters travel by helicopter in $600 Loro Piana cashmere baseball hats and scoff at a Burberry tote bag that retails for $2,890.
Benz advises others to think broadly about luxury. Rather than an expensive bag, being financially healthy is a more valuable possession, she said.
“For me, financial well-being and security have evolved to be more important than luxury goods.”
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After piling into Series I bonds amid record-high yields, many investors are now eyeing other competitive options for cash.
However, there’s a three-month interest penalty for redeeming I bonds within five years, which may cut into higher yields.

Enes Evren

Investors piled into Series I bonds amid record yields, and some are now eyeing an exit for higher-interest alternatives. But redeeming I bonds can be tricky, experts say.
After reaching 9.62% annual interest in May 2022, I bond yields have declined with falling inflation, reaching 4.3% interest for new purchases between May and October. 

The latest consumer price index data supports the downward trend, with annual inflation rising 3.2% in July. However, the U.S. Department of the Treasury still needs two months of CPI readings before the next I bond rate change.

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I bond yields have two parts: a fixed rate that stays the same after purchase, and a variable rate, which changes every six months based on inflation. The Treasury Department announces new rates every May and November.
“It’s falling back in line with I bond inflation rates we had before the pandemic,” said Ken Tumin, founder and editor of DepositAccounts.com.

The ‘best time’ to get out of I bonds

However, the best time to sell may vary, depending on when you purchased the I bonds, along with your investing goals, said Keil, who has addressed the question on his company blog.
While longer-term investors may like the current 0.9% fixed rate portion of I bond yields, short-term investors may prefer higher-paying alternatives.

The interest penalty can cut into higher yields

One of the big downsides of purchasing I bonds is you can’t access the money for at least one year. But there’s another sneaky pitfall: a three-month interest penalty for selling the asset within five years.
“If you’re thinking about redeeming this year, you want to make sure you’re getting the full six months of 6.48% interest,” Tumin said.

When selling I bonds within five years, it’s easy to get confused by how much interest you’re giving up. That’s because the yield resets every six months starting on your purchase date, not when the Treasury Department announces rate adjustments.   
For example, if you bought I bonds last July, when the annual rate was 9.62%, your interest didn’t drop to 6.48% until this January, and your rate didn’t decline to 3.38% until last month. You can find the rate by purchase date here and rate change by purchase month here.
“If you bought in April 2022, don’t be upset about the new rate because it won’t affect you until October,” Keil said.

There’s no ‘partial month’ of interest for I bonds

You also need to consider the timing of when you sell, because you don’t earn interest until you’ve held I bonds for the full month, according to Keil.
“There’s no partial month [of interest] in the world of I bonds,” he said, meaning it’s better to cash out at the beginning of the month rather than the last few days, if possible.  More

Astra Taylor has been fighting to get student debt forgiven for a decade.
She’s not giving up now: “The genie of debt cancellation is not going back in the bottle.”

Astra Taylor
Source: Isabella De Maddalena

In 2014, Astra Taylor co-founded the Debt Collective, the first union for debtors. Since then, one of her main goals has been to get student debt canceled.
The last year or so has been bittersweet: First, in what felt like a major victory, President Joe Biden announced that he’d cancel up to $20,000 in federal education debt for tens of millions of Americans. Then that plan was quickly halted by a barrage of legal challenges from the right.

The Supreme Court finally struck down Biden’s relief program in June, ruling that the president didn’t have the authority to forgive so much consumer debt without prior authorization from Congress.
But Taylor isn’t discouraged. “The genie of debt cancellation is not going back in the bottle,” she said.
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I interviewed Taylor, who is also a documentary filmmaker and author, this week about her reaction to the Supreme Court’s decision, and what is next for the battle to get student debt forgiven. Her latest book, “The Age of Insecurity: Coming Together as Things Fall Apart,” will be published in September.
This interview has been edited and condensed for clarity.

Annie Nova: Did the Supreme Court’s decision surprise you?
Astra Taylor: No. It is obvious that the court’s majority is ultraconservative and highly partisan. The Biden administration should have canceled the debt automatically and immediately before lawsuits were filed.
AN: What do you expect the consequences of the ruling to be?
AT: I hope the ruling contributes further to the delegitimization of the court. Justice Elena Kagan charged that the decision violated the Constitution. In the long term, the cause of student debt abolition will prevail. Borrowers won’t let six reactionary judges have the last word.

AN: What’s next for advocates and borrowers who’ve been pushing for student loan forgiveness for years?
AT: We’ve organized through far tougher scenarios than this. No one doubts that student debt cancellation is possible and lawful, and the majority of Americans are on our side when it comes to student loan relief. We’ve made tremendous progress and will keep fighting. The student debt strike is growing, and I invite people to join it. Direct actions are being planned, and we have various legal strategies that will be unveiled soon.
AN: What would you want to see the president do next? Some experts expect his second plan for student loan forgiveness will be much more modest.
AT: Anything less than what Biden promised will be felt as a letdown, even a betrayal. Biden needs to do his best to deliver, and the safest path is to go big. Cancel it all, immediately, and dare the court to reimpose life-destroying debts on 45 million people.

AN: What do you make of the Biden administration’s plan to resume student loan payments in less than two months?
AT: It is unthinkable that Biden would restart payments and have the Department of Education collect on loans he and his administration promised to cancel, especially given the fact he has other legal tools to follow through on his commitments. If he does make the mistake of restarting payments, he will head into 2024 as America’s debt collector in chief. And the political consequences will be severe. Student debt cancellation tipped the balance in Democrats’ favor in the midterms. Failing to deliver will demoralize and demobilize young people, whose votes they cannot afford to lose. More

Life Changes

With other household debt on the rise, the restart of student loan payments in less than two months may cause financial hardship for many Americans.
Fortunately, they have options.

Jacob Wackerhausen | Istock | Getty Images

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

1. Deferments

Struggling borrowers should first see if they qualify for a deferment, experts say. That’s because their loans may not accrue interest under that option, whereas they almost always do in a forbearance.
If you’re unemployed when student loan payments resume, you can request an unemployment deferment with your servicer. If you’re dealing with another financial challenge, meanwhile, you may be eligible for an economic hardship deferment.
Those who qualify for a hardship deferment include people receiving certain types of federal or state aid and anyone volunteering in the Peace Corps, said higher education expert Mark Kantrowitz.
With both a hardship and an unemployment deferment, interest generally doesn’t accrue on undergraduate subsidized loans. Other loans will rack up interest, however.
The maximum amount of time you can use an unemployment or hardship deferment is usually three years, per type.
Other, lesser-known deferments include the graduate fellowship deferment, the military service and post-active duty deferment and the cancer treatment deferment.

2. Forbearances

Student loan borrowers who don’t qualify for a deferment may request a forbearance.
Under that option, borrowers can keep their loans on hold for as long as three years. However, because interest accrues during the forbearance period, borrowers can be hit with a larger bill when it ends.
Kantrowitz provided an example: A $30,000 student loan with a 5% interest rate would increase by $1,500 a year under a forbearance.

If a borrower uses a forbearance, he recommends they at least try to keep up with their interest payments during the pause to prevent their debt from increasing.
“A deferment or forbearance should be a last resort, but they are better than defaulting on the loans,” Kantrowitz said.
Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit, recommends borrowers only use a forbearance or deferment for a short-term hardship, including a sudden big medical expense or period of joblessness.
Borrowers are best off finding a payment plan they can afford, Mayotte said. 

3. Income-driven repayment plans

Income-driven repayment plans can be a great option for borrowers who are worried they won’t be able to afford their bills, experts say.
Those plans cap your monthly payments at a percentage of your discretionary income and forgive any of your remaining debt after 20 or 25 years.
Currently, the Biden administration is working to roll out a new repayment option under which borrowers would pay just 5% of their discretionary income toward their undergraduate student loans, with some people having a $0 monthly bill. More