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The Biden administration could start discharging millions of Americans student debt as soon as Sunday.
More than 30 million Americans are expected to benefit from President Joe Biden’s student loan forgiveness plan.

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The Biden administration could start discharging millions of Americans’ student debt as soon as Sunday. This is possible as some of the legal challenges brought against the sweeping policy by critics have failed in courts.
A taxpayers group in Wisconsin earlier this week requested that the U.S. Supreme Court immediately block Biden’s plan to cancel up to $20,000 in federal student debt for borrowers, but the court rejected the request.

Meanwhile, a federal district court in Missouri on Thursday tossed out the lawsuit brought by six Republican-led states, which accused the president of overstepping his power. Judge Henry E. Autrey of the Federal District Court in St. Louis said the states did not have sufficient standing to sue.

The main obstacle for those hoping to foil the president’s action has been finding a plaintiff who can prove they’ve been harmed by the policy, experts say.
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“Such injury is needed to establish what courts call ‘standing,'” said Laurence Tribe, a Harvard law professor. “No individual or business or state is demonstrably injured the way private lenders would have been if, for instance, their loans to students had been canceled.”
Although there are a number of other legal challenges to the president’s plan outstanding, the Biden administration is moving forward with its program to cancel student debt.

“We feel these lawsuits are baseless, and we’re going to continue fighting for the American people,” Secretary of Education Miguel Cardona said Friday on CNN.
The U.S. Department of Education opened its application for student loan forgiveness in a beta test last Friday, and more than 8 million people submitted requests for relief over the weekend. The application officially launched Monday, and it’s been reported that millions more have applied since.
The president announced in August that most federal student loan borrowers will be eligible for some forgiveness: up to $10,000 if they didn’t receive a Pell Grant, which is a type of aid available to low-income undergraduate students, and up to $20,000 if they did.
More than 40 million Americans are in debt for their education, owing a cumulative $1.7 trillion, a balance that far exceeds outstanding credit card or auto debt.

Skyrocketing higher education costs coupled with stagnant wages have caused the amount of student debt people graduate with to soar. Today the average balance is more than $30,000, up from $12,000 in 1980.
Even before the pandemic, when the U.S. economy was enjoying one of its healthiest periods in history, problems plagued the federal student loan system.
Only about half of borrowers were in repayment in 2019, according to an estimate by higher education expert Mark Kantrowitz.

About 25% — or more than 10 million people — were in delinquency or default, and the rest had applied for temporary relief for struggling borrowers, including deferments or forbearances.
These grim figures led to comparisons to the 2008 mortgage crisis.
Corey Shirey, who’s studying to be a pastor in Oklahoma, expected to be paying his student debt for 15 years, before the president announced his plan. He said pastors in his state usually start off making around $40,000 a year.
As soon as the application went live, he applied for forgiveness. Since he received a Pell Grant in college — he was raised by a single mother who couldn’t afford to save for his education — he’ll be getting $20,000 in forgiveness and will be left with just around $5,000 in debt.
“It’s so exciting,” said 27-year-old Shirey. “This lets me breathe.”

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A record 8.7% Social Security cost-of-living adjustment will mean bigger monthly benefit checks in 2023.
Here’s how to gauge the size of your increase.

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Social Security benefits will go up by more than $140 per month on average in 2023, as a record 8.7% cost-of-living adjustment kicks in.
Exactly how much of an increase the approximately 70 million Americans who rely on the program for income will see will vary.

More than 65 million Social Security beneficiaries will see their benefit checks increase in January, while more than 7 million Supplemental Security Income beneficiaries will see bigger payments starting on Dec. 30.
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The average retiree benefit will go up by $146 per month — to $1,827 in 2023 from $1,681 in 2022. Meanwhile, the average disability benefit will increase by $119 per month — to $1,483 in 2023 from $1,364 in 2022.

Supplemental Security Income, or SSI, beneficiaries will see the standard individual monthly payment increase $73 per month, to $914 per month in 2023 from $841 this year.

The Social Security Administration will provide notices in the coming months that include your new monthly benefit for 2023.

To find out exactly how much you stand to receive sooner, you can calculate the change on your own:
Multiply your net Social Security benefit by 8.7%, the 2023 cost-of-living adjustment.
To get the most accurate read, add your Medicare Part B premium to your net Social Security benefit and then multiply that sum by the 2023 COLA, recommends Joe Elsasser, an Omaha, Nebraska-based certified financial planner and founder and president of Covisum, a provider of Social Security claiming software.

That’s in contrast to other years, where it would usually be more appropriate to instead deduct your premium for Medicare Part B, Elsasser said.

Premium payments for Medicare Part B, which covers outpatient care, typically come directly out of Social Security benefit checks.
Those premiums will be about 3% lower in 2023, with the standard monthly premium dropping $5.20 per month, to $164.90 in 2023 from $170.10 in 2022.

Those who have higher incomes, based on tax returns from two years earlier, will pay more than the standard monthly rate.
Those income-related adjustment amounts in 2023 will start at $97,000 for single filers and $194,000 for married couples who file jointly.

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Overall confidence in being on track for retirement is lower than it was a year ago due to inflation and market volatility, but Gen Z has the highest share of share of savers who feel like they’re getting it right.
Among older generations (millennials, Gen X and baby boomers), the average retirement-savings rate is 12% of income, compared with 14% among Gen Zers.

miodrag ignjatovic

The nation’s youngest workers appear to be taking the save-for-retirement message to heart, research suggests.
Defined as workers ages 18 to 25, Generation Z is saving an average of 14% of their income for their golden years, according to new study from BlackRock. Among millennials (ages 26-42), Gen Xers (ages 43-55) and baby boomers (ages 56-75), the average is 12%.

However, the overall share of workers across all ages who think they’re on track with their retirement savings has fallen to 63% from 68% in 2021, the research shows. Retirement plan sponsors’ confidence also is down: 58% say their employees are on the right path, compared with 63% last year.
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“Retirement confidence is down for the first time in a few years,” said Anne Ackerley, head of BlackRock’s retirement group.
“Even in the pandemic, it stayed [the same], but we’ve seen it come down across all generations due to inflation and market volatility,” Ackerley said.

Confidence is highest among Gen Zers

Broken down by generation, though, Gen Zers have the most confidence in their savings (69%), followed by boomers at 65%, and both millennials and Gen Xers at 60%.

The research for BlackRock’s “Read on Retirement” report includes input from 305 plan sponsors, 1,308 workplace savers, 1,300 independent savers and 300 retirees.

Experts generally recommend that workers save at least between 10% and 15% of income in a tax-advantaged retirement account. That would include a 401(k) or similar workplace plan, or an individual retirement account.
There are two things that might factor into Gen Z’s higher rate of savings, Ackerley said. For starters, they were more likely to be raised in households where no one was counting on a traditional pension.
“I think it’s a reflection that we’ve switched to defined contribution plans from defined benefit plans,” Ackerley said.

“Gen Z was raised in households where there was a need to save for retirement … and the message is out there that you’re on your own, that you need to start saving early,” she said.
Another possible reason, Ackerley said, is that they might have watched family members struggle due to the 2007-2009 Great Recession — when job losses, home foreclosures and investment losses were widespread — and want to avoid similar financial challenges down the road.

Young adults are aiming to retire at age 63

Gen Zers also envision retiring at an average age of 63.6, the report shows.
That compares to working boomers, who peg that age at 65.9. Separately, a Gallup survey done last year showed that the average age retirees left the workforce was 62, while nonretirees said they plan to retire at age 64.
It’s worth noting that if you tap Social Security before your full retirement age (which is up to age 67, depending on when you were born), you’ll end up with permanently reduced benefits. If you wait beyond that full retirement mark, your benefits will keep growing up until you reach age 70.

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Inflation is weighing heavily on consumer attitudes this holiday shopping season.
Many shoppers are planning to make fewer purchases and at a discount, several reports show.
Still, households will spend $1,455, on average, on holiday gifts.

Families don’t like to skimp when it comes to the holidays, under any conditions.
But with rising prices and fears of a recession, holiday shoppers are feeling less generous this season.

Many consumers are planning to make fewer purchases — and at a discount, according to a recent holiday retail report by Deloitte.
Still, households will shell out $1,455, on average, on holiday gifts, in line with last year, the report found. 
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Even though some consumers may end up spending as much as or more than they did in 2021, that’s largely due to higher prices, other reports also show.
“Inflation is, by far, the biggest issue for households this year,” said Tim Quinlan, senior economist at Wells Fargo and author of its 2022 holiday sales report.

Household finances have taken a hit with a lower savings rate and declining real wages, which could slow holiday sales, Quinlan said in the report.
“The bottom line is, with inflation remaining a headache, dollars aren’t stretching as far, and most consumers will still be looking for bargains.”

Dollars aren’t stretching as far, and most consumers will still be looking for bargains.

Tim Quinlan
senior economist at Wells Fargo

A separate report by BlackFriday.com found that 70% of shoppers will be taking inflation into consideration when shopping this holiday season and even more will be on the lookout for deals.
Nearly 33% of shoppers also plan to buy fewer gifts this year, while roughly one-quarter said they would opt for cheaper versions or more practical gifts, such as gas cards, according to TransUnion’s holiday shopping survey.
“People are trying to economize and make the most of what they have,” said Cecilia Seiden, vice president of TransUnion’s retail business.

How to avoid holiday debt

“Remember to not put yourself in debt over holiday shopping,” cautioned Natalia Brown, chief client operations officer at National Debt Relief. “Debt prevents people from reaching their financial goals — like building an emergency fund, buying a home and saving for retirement.”
Holiday spending could come at a higher cost if it means tacking on additional credit card debt just as the Federal Reserve raises interest rates to slow inflation, Quinlan added. 

Annual percentage rates are currently near 18%, on average, but could be closer to 19% by the end of the year, which would be an all-time high, according to Ted Rossman, a senior industry analyst at CreditCards.com.
That will leave consumers worse off heading into 2023, Quinlan said. “In many ways we view this year’s holiday shopping season as the last hurrah.”
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Between 1 million and 5 million student loan borrowers who apply for forgiveness may be asked to provide additional information to verify their eligibility.
Here’s what you need to know if that happens to you.

Stefani Reynolds | Afp | Getty Images

The U.S. Department of Education’s application for student loan forgiveness, which officially went live earlier this week, is surprisingly easy to fill out.
Borrowers just need to provide some basic contact information and their Social Security number. That’s it.

Well, for some.
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Millions of people who request the relief may be asked to provide more information at a later date, the Biden administration has said.
“There isn’t any ID authentication process and no process to verify income, so the potential for fraud or benefit eligibility mistakes in this online form is massive,” said Scott Buchanan, executive director of the Student Loan Servicing Alliance, a trade group for federal student loan servicers.
As a result, Buchanan said, “I understand why the Education Department has to audit many applications.”

Here’s what to know about the extra step some borrowers will need to take.

How many borrowers could this impact?

Who is likely to hear from the Education Department?

If you’re still a dependent student, you’re instructed to apply for forgiveness using your own income information. But if the Education Department identifies that you’re in this status, it will email you with instructions for you and your parent, it said.
Because income eligibility for dependent students is based on their parents’ income, your parents will likely need to attest or prove that they fall under the income caps on the relief: $125,000 for individuals and $250,000 for families.
In addition, as a fraud prevention measure, “I’d expect a random sample of applicants, both dependent and independent, to be selected for verification,” said higher education expert Mark Kantrowitz.

What information might I need to have ready?

If you’re selected for verification, you’ll likely need to prove that you did, in fact, fall below the income caps for the forgiveness.
Importantly, the Education Department will be looking at your so-called adjusted gross income, which may be different than your gross salary.
You calculate AGI by adding up your earnings — including salary, interest and more — and subtracting the items on Part II of Schedule 1 on your tax return. Some of those items may include deductible individual retirement account or health savings account contributions, educator expenses and more.

If your AGI was under the caps in 2020 or 2021, you’re in the clear.
To confirm your eligibility with the Education Department, you’ll need to show either a standard 1040 tax return or a tax return transcript. If you didn’t file taxes in either of those years, you’ll want a verification letter from the IRS that you were a nonfiler.

How do I get those documents?

If you don’t have your past tax returns, you can get a tax return transcript or verification of nonfiling letter using the online IRS Get Transcript Tool or by filing IRS Form 4506-T, Kantrowitz said.
The verification process should take around 30 minutes, the Education Department estimates.

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A taxpayers’ group in Wisconsin asked the U.S. Supreme Court to block President Joe Biden’s student loan forgiveness plan.
The request by the Brown County Taxpayers Association in Wisconsin was directed to Justice Amy Coney Barrett, who is responsible for handling emergency application requests from the 7th Circuit U.S. Court of Appeals.
The request asks that the plan by President Joe Biden to cancel up to $20,000 in student debt for millions of borrowers be suspended pending the outcome of a pending appeal at a lower federal court.

Supreme Court nominee and U.S. Court of Appeals Judge Amy Coney Barrett on Capitol Hill in Washington, October 21, 2020.
Ken Cedeno | Reuters

The Supreme Court on Wednesday was asked to block the Biden administration’s student loan debt relief program, which is set to take effect this weekend.
The request by the Brown County Taxpayers Association in Wisconsin was directed to Justice Amy Coney Barrett, who is responsible for handling emergency application requests from the 7th Circuit U.S. Court of Appeals.

The White House did not immediately respond to a request for comment on the group’s request.
A federal judge in Wisconsin earlier this month dismissed the taxpayers association’s lawsuit challenging the program, ruling that the group did not have legal standing to block the plan.

The group then filed an appeal of that ruling to the 7th Circuit appeals court.
Wednesday’s request to Barrett asks that the plan by President Joe Biden to cancel up to $20,000 in student debt for millions of borrowers be suspended pending the outcome of the pending appeal.
The U.S. Department of Education opened its application for student loan forgiveness in a beta test on Friday.

More than 8 million people submitted requests for relief over that weekend.
The application officially launched on Monday. The Biden administration could start processing borrowers’ requests for student loan forgiveness as soon as this Sunday.

Legal challenges against student loan forgiveness

The legal challenges that have been brought against the president’s plan continue to mount.
Six Republican-led states — Arkansas, Iowa, Kansas, Missouri, Nebraska and South Carolina — are trying to block Biden’s plan, arguing that the president doesn’t have the power to issue nationwide debt relief without Congress. They’re also claiming that the policy would harm private companies that service some federal student loans by reducing their business.
The main obstacle for those hoping to foil the president’s action is finding a plaintiff who can prove they’ve been harmed by the policy. “Such injury is needed to establish what courts call ‘standing,'” said Laurence Tribe, a Harvard law professor.
Tribe said he isn’t convinced that any of the current lawsuits filed have successfully done that.
This is a developing story. Check back for updates.

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Starting in 2023, individuals can transfer up to $12.92 million to heirs, during life or at death, without triggering a federal estate-tax bill, up from $12.06 million this year. 
There’s also a higher annual limit on tax-free gifts in 2023, rising to $17,000 from $16,000.

Bernd Vogel | Getty Images

Ultra-wealthy Americans can soon protect more assets from federal estate taxes, the IRS announced this week. 
Starting in 2023, individuals can transfer up to $12.92 million to heirs, during life or at death, without triggering a federal estate-tax bill, up from $12.06 million in 2022. 

Since married couples may share exclusions by electing portability, their combined limits are double, allowing transfers of up to nearly $26 million for 2023, compared to just over $24 million this year. 
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These increases are part of the agency’s annual inflation adjustments, affecting federal income tax brackets, standard deductions and dozens of other provisions.
Whether the estate-tax exclusion is $12.06 million or $12.92 million, it won’t likely make a “material difference,” said Adam Brewer, a tax attorney with AB Tax Law in San Diego and Honolulu. “But certainly, every bit helps, so why not take advantage of it?”

With the stock market down in 2022, many are sitting on lower-value portfolios and the higher exclusion next year may provide opportunities for “more aggressive” estate-planning techniques, such as shielding wealth via trusts, he said. 

“It just seems like almost a no-brainer,” Brewer said.

Estate-tax exclusion may fall after 2025

The estate-tax exclusion has roughly doubled since Republicans’ signature tax overhaul in 2017. Without further action from Congress, the provision will sunset after 2025, leaving a limited window to leverage the higher limits.
Still, many affected taxpayers have worked with advisors to prepare for the “potential risk,” according to Brewer. “We’re talking about ultra-wealthy individuals here,” he said, and these families won’t have a significant chunk of their wealth hurt by “the whims of Congress.”
Regardless of what legislation happens, 2023 is shaping up to be a “very big year for estate planning,” Brewer added.

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As the cost of living keeps rising, more Americans are struggling financially.
Now, two-thirds of adults say they are worse off than they were just one year ago, according to a recent report.
Nearly 1 in 3 workers, including those earning more than $100,000, run out of money before payday.

Rising costs have chipped away at most Americans’ standard of living.
As inflation pressures continue, two-thirds of working adults said they are worse off financially than they were a year ago, according to a recent report by Salary Finance.

To make ends meet, many are dipping into their cash reserves or going into debt.
Nearly three-quarters, or 72%, of consumers have less in savings than last year, a jump from 55% who said the same in February, the report found. And 29% said they have wiped out their savings entirely. The report is based on a survey of 500 adults in August.
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The consumer price index, which measures the average change in prices for consumer goods and services, rose more than expected again in September, still hovering near the highest levels since the early 1980s.
The rising cost of living is bad news for workers, whose average hourly earnings declined 0.1% for the month on an inflation-adjusted basis and are off 3% from a year ago, leaving more Americans living paycheck to paycheck.

Now, 32% of adults said they regularly run out of money between pay periods, according to Salary Finance.

Across the board, American workers are struggling financially.

Asesh Sarkar
CEO of Salary Finance

Even high earners are struggling more than last year, Salary Finance said. Of those making more than six figures, roughly half are having a harder time staying afloat and have less in savings than they did in 2021.
A separate report by LendingTree also found that 40% of adults said they are less able to afford their bills compared with one year ago. 
“Across the board, American workers are struggling financially, regardless of gender, race, ethnicity, sexual orientation, or earnings; in fact, half of American workers making over $100,000 are worse off this year,” said Asesh Sarkar, CEO of Salary Finance.

‘The federal funds rate must go higher from here’

For its part, the Federal Reserve has indicated more interest rate increases are coming until inflation shows clear signs of a pullback.
The central bank “continues to see a bright green light with respect to future interest rate increases,” said Mark Hamrick, senior economic analyst at Bankrate.com. 
“Based on the latest snapshots of inflation, they believe the target range for the federal funds rate must go higher from here,” he said. “There’s no pivot yet in sight, only a push to higher ground.”
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