Investing

There’s still time to boost 401(k) contributions and max out your plan for 2024, but not everyone should, according to financial advisors.
For 2024, employees can defer up to $23,000 into 401(k) plans, up from $22,500 in 2023, with an extra $7,500 for workers age 50 and older.
After getting your employer match, you should weigh high-interest debt, emergency savings and short-term goals before maxing out your 401(k).

Hispanolistic | E+ | Getty Images

There’s still time to boost 401(k) contributions and max out your plan account for 2024, but not everyone should, according to financial advisors.
For 2024, employees can defer up to $23,000 into 401(k) plans, up from $22,500 in 2023, with an extra $7,500 for workers age 50 and older. Some 401(k)s allow added savings beyond those limits.

Generally, “it’s a no-brainer” to save at least enough to get your employer’s full matching contribution, which deposits extra money based on your deferrals, said certified financial planner Donald LaGrange, a wealth advisor with Murphy & Sylvest Wealth Management in Dallas.
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After receiving your employer’s full 401(k) match, you should consider “several variables” before adding more to the plan, LaGrange said.   
Some 14% of investors maxed out their 401(k) employee deferrals in 2023, according to a 2024 report from Vanguard. 
Meanwhile, the average 401(k) savings rate in 2023 — including employee deferrals and company contributions — was an estimated 11.7%, which matched a record high from 2022, the same Vanguard report found. 

If you can afford to go further and max out your 401(k) for 2024, here are three things to consider first, experts say.

1. Prioritize high-interest debt

After getting your employer’s full 401(k) match, paying down high-interest debt such as credit cards and auto loans should be a priority, said Austin, Texas-based CFP Scott Van Den Berg, president of Century Management Financial Advisors.
“With today’s higher interest rates, prioritizing debt repayment is crucial if they must choose between the two,” he said.
The average credit card interest rate was hovering near 25% in early August, according to LendingTree. But that could fall once the Federal Reserve starts cutting rates, which could come as soon as September.
“The key is to pay off the debt first, which will free up cash flow,” for higher 401(k) contributions in the future, Van Den Berg said.

2. Plan for short-term goals

Before maxing out your 401(k), you should also consider whether you’ll need the funds for other short-term goals, such as paying for a wedding or buying a home, experts say.
“A 401(k) is not the most efficient account to save for pre-retirement goals,” LaGrange from Murphy & Sylvest Wealth Management said. “Savings should reflect a family’s goal priorities and timelines.”
If you tap your 401(k) before age 59½, you’ll generally trigger a 10% early withdrawal penalty, along with regular income taxes.

3. Weigh your emergency fund

Most experts recommend keeping a minimum of three to six months of expenses in cash or other liquid assets for emergency savings, depending on your circumstances. Some experts say that should be higher for entrepreneurs or small business owners.
Nearly 60% of Americans aren’t comfortable with their amount of emergency savings, up from 48% in 2021, according to an annual Bankrate survey that polled more than 1,000 U.S. adults in May.
If your emergency savings aren’t sufficient, you may consider boosting cash reserves before maxing out your 401(k), experts say.

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If you’re retired with multiple sources of income, you’re expected to withhold taxes or make quarterly payments to avoid IRS penalties.
But some retirees can correct missed tax payments via withholdings from required minimum distributions, or RMDs.
Tax withholdings from your RMD are considered on-time payments, even when used to cover taxes from previous quarters, experts say.

Aire Images | Moment | Getty Images

Retirees may have income from Social Security, a pension, a retirement plan or other sources — and they typically must either withhold taxes or make quarterly payments to avoid IRS penalties.
For 2024, the quarterly estimated tax deadlines are April 15, June 17, Sept. 16 and Jan. 15, 2025. But a lesser-known year-end strategy can cover your taxes while still satisfying IRS rules, experts say.

Certain retirees can correct missed tax payments via withholdings from mandatory yearly withdrawals, known as required minimum distributions, or RMDs. These withdrawals typically apply to pretax retirement savings. 
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“It’s very helpful,” especially when retirees sell investments or real estate that trigger taxable gains, said JoAnn May, a certified financial planner at Forest Asset Management in Riverside, Illinois.
While Social Security benefits are the most common type of retirement income, 56% of retirees also had a pension in 2023, according to a recent Federal Reserve report.
Meanwhile, nearly half of retirees had income from interest, dividends or rental income and roughly one-third had earnings from a job, the Fed report found.

As income increases, retirees typically need to withhold more taxes or boost withholdings, experts say.

Leverage your required minimum distribution

Typically, taxes must be paid by the quarterly deadlines. But some advisors will cover a client’s levies for all sources of income via a withholding from annual RMDs, which generally happen closer to year-end.
The same strategy can be used for retirees who realize at some point that they didn’t withhold the right amount of tax from other income or didn’t pay enough through estimated payments.
“You’re getting credit for making tax payments throughout the year, even though you might have only done it in December,” said CFP Matthew Saneholtz, chief investment officer and senior wealth advisor at Tobias Financial Advisors in Plantation, Florida.

You’re getting credit for making tax payments throughout the year, even though you might have only done it in December.

Matthew Saneholtz
Chief investment officer and senior wealth advisor at Tobias Financial Advisors

Generally, an estimated tax projection can be easier by the fourth quarter. But it’s important to track income and tax liability throughout the year, which can affect other planning strategies, he said.
May from Forest Asset Management, who also recommends the strategy, typically completes RMDs in November to allow time for fixing any issues.
Since 2023, most retirees must start RMDs by age 73, based on changes enacted by Secure 2.0, and that age increases to 75 starting in 2033.
The annual deadline for RMDs is Dec. 31. If you miss the withdrawal or don’t take enough in a given year, there’s a 25% penalty on the amount you should have withdrawn. The deadline for your first RMD is extended to April 1 after the year you turn 73.

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The total cost of attendance at a few colleges and universities is nearing six figures per year.
Although many families will pay a lot less, sky-high sticker prices may be a psychological barrier for students from low- and moderate-income families.
Financial aid, including scholarships, grants and loans, must make up for the affordability gap.

Yale University.
Yana Paskova / Stringer (Getty Images)

The cost of attendance at some colleges is now nearing six figures a year, after factoring in tuition, fees, room and board, books, transportation and other expenses.
Among the schools appearing on The Princeton Review’s “The Best 389 Colleges” list, eight institutions — including New York University, Tufts, Brown, Yale and Washington University in St. Louis — have a sticker price of more than $90,000 for the 2024-25 academic year, according to data provided to CNBC.

Considering that tuition adjustments average roughly 4% a year, those institutions — and others — could cross the $100,000 threshold as soon as 2026, according to a 2023 estimate by Bryan Alexander, a senior scholar at Georgetown University.
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That type of sticker shock “can discourage students from seeing that [college] as a place they can attend, despite grant aid,” said Sameer Gadkaree, president of the Institute for College Access and Success, a nonprofit organization that promotes college affordability.
“It’s simply unaffordable,” he said, particularly for low- and moderate-income families.
Deep cuts in state funding for higher education have contributed to significant tuition increases and pushed more of the costs of college onto students, according to an analysis by the Center on Budget and Policy Priorities, a nonpartisan research group based in Washington, D.C. “It’s absolutely a worrisome trend,” Gadkaree said.

But still, these schools account for “a small slice of the higher education pie,” he added. “The vast majority of colleges are open-access community colleges or state universities where the prices are not that high.”

What families really pay for college

Even though college is getting more expensive, students and their parents rarely pay the full tab out of pocket.
The amount families actually spent on education costs in the 2023-24 academic year was $28,409, on average, according to Sallie Mae’s annual How America Pays for College report. Sallie Mae surveyed 1,000 parents of undergraduate students and 1,000 undergraduate students ages 18 to 24 this spring.
While parental income and savings cover nearly half of college costs, free money from scholarships and grants accounts for more than a quarter of the costs and student loans make up most of the rest, the education lender found.

The U.S. Department of Education awards about $120 billion every year to help students pay for higher education. Beyond federal aid, students could also be eligible for financial assistance from their state or college, or via private scholarships.
But students must first fill out the Free Application for Federal Student Aid, or FAFSA, which serves as the gateway to all federal money, including loans, work-study and grants.
This year, problems with the new FAFSA have discouraged many students and their families from completing an application.
As of Aug. 9, FAFSA submissions were down almost 10% nationally in 2024 compared to 2023, according to the National College Attainment Network, or NCAN.
“We know that fewer students applied for financial aid, which translates into few students attending college,” said Robert Franek, editor-in-chief of The Princeton Review.

With cost being the No. 1 college concern among families, “it is hard for students and parents to see a lofty sticker price and think that school is going to be able to help me,” Franek said.
However, when it comes to offering aid, private schools typically have more money to spend, he added.
Despite high sticker costs, “there are many schools out there that are meeting students’ and families’ demonstrated need, and that is the glorious story here,” Franek said.
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Democratic vice-presidential nominee Tim Walz’s family relied on Social Security benefits after his father died.
Children may qualify for Social Security benefits if one of or both of their parents pass away.
Yet many children may not be receiving the benefits for which they are eligible.

Minnesota Governor and 2024 Democratic vice presidential candidate Tim Walz at the first day of the Democratic National Convention in Chicago on Aug. 19, 2024.
Charly Triballeau | AFP | Getty Images

Minnesota Gov. Tim Walz accepted the Democratic vice presidential nomination at the Democratic National Convention on Wednesday night.
In his speech, Walz credited a particular source of support for helping to get his family to where they are today — Social Security survivor benefits.

His father died of lung cancer when Walz was 19, leaving a “mountain of medical debt,” Walz said. Social Security benefits allowed his family, including his mother and younger brother, to “live with dignity,” he recently posted on social media.
“Thank God for Social Security survivor benefits,” Walz said during his Wednesday night speech.

‘Lots of kids … do not claim their survivor benefits’

About 3.7 million children receive Social Security benefits, according to recent Social Security Administration data.
Children can receive benefits if they are unmarried and younger than 18; between 18 and 19 and are full-time students in grades 12 or below; and age 18 or older with a disability that started before age 22.
If a working parent dies, 98 out of 100 children in the U.S. could get Social Security benefits, the agency estimates. The monthly checks are based on the earnings of a deceased parent.

The average monthly surviving child benefit is $1,103 as of July, with more than 2 million children receiving those checks, according to the Social Security Administration.
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Yet families are not always aware they qualify for this financial support.
“Lots of kids all across the country do not claim their survivor benefits,” Social Security Commissioner Martin O’Malley said at a National Academy of Social Insurance event in Washington, D.C., in June.
Data suggests as many as half of orphaned children in the U.S. are not receiving the Social Security benefits for which they are eligible, according to Joyal Mulheron, founder and executive director at Evermore, a nonpartisan nonprofit focused on improving the lives of bereaved people.
“That’s … children potentially who could be lifted out of poverty as a result of accessing this benefit,” Mulheron said.
The Social Security Administration is working to figure out who those families are and to develop more targeted approaches to reach them, O’Malley said at the NASI event in June.
To date, those efforts have included sending information letters to households with potential applicants, launching a new web page on survivor benefits and working with states and communities to help raise awareness of these benefits, according to the agency. In Utah, for example, a check box has been added to death reporting forms to indicate when the deceased has a minor child.

How children can qualify for Social Security benefits

Christopher Hopefitch | The Image Bank | Getty Images

More than half of children who receive Social Security checks have had a parent who worked and paid taxes into the program die, according to the Social Security Administration. Those children may receive up to 75% of the deceased parent’s basic benefit.
To qualify for survivors’ benefits, children do not have to live with a parent or receive financial support from them, according to the Social Security Administration. Additionally, the child’s parents do not have to have been married.
In some situations, surviving parents who care for children under 16 may also be eligible for benefits.

There are other ways in which children may qualify for benefits.
For example, they may also be able to receive benefits if they have a living parent who is retired or disabled and who is eligible for Social Security. Those children may receive up to half of their parent’s full benefits.
The amount of benefits children receive may be adjusted based on a maximum family benefit, a limit on how much a family may receive per month based on a worker’s earnings record. The formula for that varies based on whether the payments are related to disabled or retirement and survivor benefits.

‘You don’t want to see anybody lose out on any benefits’

When someone dies, a funeral director may send a family to Social Security, particularly since there may be a $255 lump sum death benefit available, said Jim Blair, vice president of Premier Social Security Consulting and a former Social Security administrator.
At that time, widows and widowers may be informed of the benefits available to them, as well as their children, he said. Still, it’s possible some situations may fall through the cracks.
Children may not access the benefits for which they are eligible if they switch to a different guardian, for example, who many not be able to answer all of Social Security’s questions, Mulheron said. Families may also fail to access benefits due to immigration issues, missed deadlines or administrative errors with applications, she said.
It could help for the Social Security Administration to make applications for children’s benefits more accessible online, Mulheron said.

“You don’t want to see anybody lose out on any benefits, because that’s what the benefit is there for,” Blair said.
“If you think you might even have an inkling that there might be something payable, call and ask,” he said.
The Social Security Administration can be reached at 1-800-772-1213. When applying for children’s benefits, the agency may require you to provide a child’s birth certificate, proof of birth or adoption, the parent’s and child’s Social Security numbers, and when relevant, a parent’s death certificate or medical evidence of a child’s disability. More

Traders work on the floor of the New York Stock Exchange during morning trading on August 20, 2024 in New York City.
Michael M. Santiago | Getty Images

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Here’s what CNBC TV’s producers were watching as stocks rose on Wednesday and what’s on the radar for the next session.

Retail in the U.S.A.

While Target and TJX reported positive news that boosted the stocks’ prices Wednesday — with TJX getting a 6% bump and Target an 11% jump — we’re turning our attention to the mall real estate investment trusts.
Retail earnings this season — including Target, TJX and Macy’s, which fell nearly 13% in Wednesday’s session — all indicated a Great American Consumer who is becoming more cautious.
Kimco and Simon Property Group both rose more than 1% Wednesday.
Both stocks are up about 5% in August, and both hit new highs this week.
Brixmor, which operates open-air shopping centers, hit a new high Wednesday. The stock is up 9% in a month.
Tanger, the outlet mall operator, is 4% from the 52-week high hit back in March. The stock is up 2.6% week to date and up 24% in the past year.

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Tanger in 2024

O Canada

Ahead of a possible rail strike in Canada, shares of Canadian National Railway are 15% from the March high. The stock is down about 10% in three months.
CNBC’s Lori Ann LaRocco will be watching it closely.
Canadian Pacific Kansas City is 13% from the March high. The stock is flat in 2024.
Norfolk Southern is 8% from the March high. Shares are up 7.5% in three months.
Union Pacific is 5% from the February high. Shares are almost exactly flat in 2024.
CSX is 16% from the February high.

Brent crude

The commodity is now negative for the year after falling 1.5% on Wednesday.
West Texas Intermediate crude is up 0.4% in 2024.
Thanks to CNBC data chief Gina Francolla for watching oil.
The S&P 500 energy sector is up 5.7% this year. Only the real estate sector ranks below it.
Exxon Mobil is up about 14% in 2024.
Chevron is down 2.6% in 2024.

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Exxon Mobil in 2024

Infrastructure in the U.S.A

CNBC TV’s Pippa Stevens will report on the prospect of a new round of infrastructure spending.
The S&P 500 materials sector is up 7% year to date. The S&P 500 is up roughly 18% in 2024.
Vulcan Materials is 11% from the July 31 high. The stock is up 9% in 2024.
Martin Marietta is 14% from the April high. It’s up 8% so far in 2024.
Emerson Electric is 13% from the July 16 high. The stock is up 7% in 2024.
Mosaic is 31% from the September 2023 high. Shares are down 22% in 2024.
Freeport-McMoRan is 20% from the May high. It’s up 3% in 2024. 

Political ad dollars

CNBC TV’s Julia Boorstin will report on where the political ad dollars are going this cycle.
The election season is usually strong for local TV operators as House and Senate candidates load up on advertisements.
Gray Television is down 46% so far this year. The stock closed at $4.84 Wednesday.
Tegna is down 11% this year. The stock closed at $13.63. 
E.W. Scripps is down 73% so far in 2024. It is a $2 a share stock.

Peloton reports before the bell Thursday

The stock is up 2.75% in the past three months. Overall, it’s not a good scene: The stock is down 52% in a year.

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Peloton Interactive shares in the past year

Baidu reports before the bell

The Chinese e-commerce stock is 40% from the 52-week high.
The stock is down 15% in the past three months.
Competitor Alibaba is down 3% in three months, and it’s 13% from the 52-week high.

Williams-Sonoma reports before the bell

The stock is down 8.5% since last reporting three months ago.
It is 17.5% from the 52-week high.

Cava reports after the bell

The new restaurant chain is up 31.5% in the past three months.
The stock hit a new high on Wednesday, closing at $102.87.
Cava went public in June 2023: It was priced at $22 a share and closed at $43.78 on its first day of trading.

Workday reports after the bell

The HR cloud software company is down 10% in three months. The stock is 25% from the February high.

CNBC’s coverage of the market-moving Jackson Hole Federal Reserve conference starts Thursday

Senior economics reporter Steve Liesman will be there. More

After saving money into pretax retirement accounts, you will eventually face mandatory withdrawals, known as required minimum distributions, or RMDs.
While many worry about the tax hit, RMDs could offer a chance to improve your portfolio, experts say. 
You could use RMDs to rebalance your asset allocation or adjust your tax location for future growth.

Richard Drury | Digitalvision | Getty Images

After funneling money into pretax retirement accounts, you will eventually face mandatory withdrawals in retirement known as required minimum distributions, or RMDs.
Since RMDs can trigger higher taxes, the withdrawals can be a nuisance for some retirees who do not need the money. But the yearly activity could offer a chance to improve your portfolio, experts say. 

“Ultimately, you look at your portfolio and say, what do I want to trim?” said certified financial planner Matthew Saneholtz, chief investment officer and senior wealth advisor at Tobias Financial Advisors in Plantation, Florida.
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Since 2023, most retirees need to begin RMDs by age 73, based on changes enacted by Secure 2.0. That age jumps to 75 starting in 2033.
While the annual RMD deadline is Dec. 31, you will have until April 1 after the year you turn 73 to make your first RMD. If you skip yearly RMDs or do not take enough in a given year, there is a 25% penalty on the amount you should have withdrawn.

Rebalance your investments

Your asset allocation, or investment mix, drifts throughout the year as markets move. But you can use RMDs to shift assets back to your intended percentages, based on risk tolerance, goals and timeline.

“Every client in my practice has a target asset allocation, so I sell a holding from whichever asset class or classes they happen to be overweight in at the time,” which is typically U.S. stocks, said CFP Paul Winter, president of Five Seasons Financial Planning in Salt Lake City, Utah.

Every client in my practice has a target asset allocation, so I sell a holding from whichever asset class or classes they happen to be overweight at the time.

Paul Winter
President of Five Seasons Financial Planning

As you weigh assets to sell, you should avoid selling investments when they are down to avoid the so-called sequence of returns risk, which can shrink your portfolio over time, experts say.
Withdrawing assets during stock market downturns could mean selling more investments for the same-sized RMD. That could leave fewer investments to capture future growth when the market rebounds.

Shift your ‘tax location’

You can also use RMDs to adjust your “tax location,” or the types of investments in certain accounts to minimize future levies, Saneholtz said.  
Withdrawals from pretax retirement accounts incur regular income taxes, depending on your federal bracket, and brokerage accounts are subject to capital gains taxes. Meanwhile, Roth accounts generally grow tax-free.
If you do not need the RMD, you could use funds to reinvest in a brokerage account. While the move would not reduce current-year taxes, future asset growth could have more favorable capital gains tax treatment.

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Although student loan debt is already an all-time high, college students are borrowing more for the coming year, according to a recent report.
Debt cancellation expectations may be factor.

Although the fate of federal student loan forgiveness is up in the air, college students may be borrowing more for the coming year in part because of the expectation that their debt may get forgiven, recent research suggests.
With few families able to shoulder the sky-high tuition tab, students and their parents are increasingly leaning on student loans, according to Sallie Mae’s annual How America Pays for College report. Roughly half of families, or 49%, reported borrowing for college for the 2023-24 academic year, up from 41% the year prior. Sallie Mae surveyed 1,000 parents of undergraduate students and 1,000 undergraduate students ages 18 to 24 this spring.

Education debt, which now exceeds $1.7 trillion, is at an all-time high. Over the past 15 years, the total balance has more than doubled, even outpacing the rising cost of college.

Nearly half — 48% — of student loan borrowers anticipate debt forgiveness after they finish college, Sallie Mae also found. Of those who expect forgiveness, 37% plan to work in public service, while 7% say their future employer will pay for their loans. The biggest share, 47%, think the government will forgive student loans.
“Borrowing is up; at the same time, half of students expect their loans to be forgiven,” said Rick Castellano, a spokesperson for Sallie Mae. “You have to wonder, is there a correlation there?”
If the expectation is that loans are going to be forgiven, that could encourage more borrowing, he said.
According to a separate report by NerdWallet, 31% of student loan borrowers have slowed their repayments because they hope to see their loans reduced or forgiven by the federal government and 23% have stopped their student loan payments altogether for the same reason. NerdWallet polled more than 600 adults with student loans in July.

It’s still too soon to get an accurate read on how expectations of federal student loan forgiveness may filtering down to decisions about education debt, according to Sameer Gadkaree, president of the Institute for College Access and Success, a nonprofit organization that promotes college affordability.
“Given that the debt relief plans have been tied up in courts, it’s unclear how that would affect student borrowing,” he said.

The status of student loan forgiveness

‘A confusing climate’ for borrowers

“With so much litigation pending, it’s a confusing climate for student loan borrowers,” said NerdWallet loans expert Kate Wood.
For borrowers taking on new debt, consider both choice of major and future earnings potential, experts often say. Often, a good rule of thumb is not to borrow more than you expect to earn as a starting salary.
Most experts also caution against taking on student loan debt you may not be able to afford in anticipation that it will be wiped out.
For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including economic hardship and unemployment deferments, while the income-based student loan repayment plan, known as SAVE, is currently on hold.
“Those considering repayment options should try to find the best option for them based on what’s available now, not on what they think might happen in the future,” Wood said.
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Vice President Kamala Harris is calling for the forgiveness of medical debt for millions of Americans.
People in the U.S. owe at least $220 billion in medical debt, a February KFF analysis found.

Vice President Kamala Harris addresses the Democratic National Convention at the United Center in Chicago on Aug. 19, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

Vice President Kamala Harris wants to forgive medical debt for millions of Americans.
The economic plan Harris rolled out last week notes that the Democratic presidential nominee and her running mate, Minnesota Gov. Tim Walz, would work with states to relieve people of their medical debt and “to help them avoid accumulating such debt in the future, because no one should go bankrupt just because they had the misfortune of becoming sick or hurt.”

Some 15 million Americans have medical bills on their credit reports, according to Consumer Financial Protection Bureau research published in April. People in the U.S. owe at least $220 billion in medical debt, a February KFF analysis found.
“Medical debt affects an enormous number of people, so it’s an issue that resonates with voters,” said Larry Levitt, executive vice president for health policy at KFF.

Indeed, 51% of adults say it is extremely or very important for the federal government to forgive medical debt, compared with 39% who said the same about student loan debt, according to a May poll conducted by the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research. The groups surveyed 1,309 adults.
“Vice President Harris may see student loan forgiveness and medical debt forgiveness as both addressing inequities that prevent people from achieving the American dream,” said higher education expert Mark Kantrowitz.
The Harris campaign did not respond to a request for comment.

Former President Donald Trump hasn’t come out with a medical debt cancellation proposal, but as president he pushed for more price transparency for patients and to curb surprise medical bills.
The Trump administration also tried but failed to repeal the Affordable Care Act. Overturning even portions of that law would lead to more Americans becoming uninsured and higher premium costs for policyholders, according to an estimate by the Congressional Budget office.

Harris differentiates herself with focus on medical debt

By coming out with a medical debt forgiveness plan, Harris may be looking to differentiate herself from President Joe Biden and his student debt efforts, said Braxton Brewington, press secretary for the Debt Collective, an organization that advocates for debt cancellation.
Biden has forgiven more student debt than any other president.
“She has the freedom to move into another space,” Brewington said, adding that Harris would likely continue Biden’s work on student debt, as well.
“I’m sure she’ll do both,” he said.
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The American health-care system has long been on Harris’ radar.
As a presidential candidate in 2020, Harris pushed for a version of “Medicare for All,” a plan she no longer backs as she shifts to the center of her party. But Harris continued to show a concern with health-care costs as vice president, leading a White House effort in June to clear medical bills from Americans’ credit reports.
This focus may come, in part, from her own experience.
In a 2019 interview with the late activist Ady Barkan, Harris described the day her mother informed her she had cancer.
“My mother, she said to my sister and me, ‘I want to meet you guys for lunch,’ and she showed up at the restaurant wearing makeup — my mother never wore makeup, and her hair was blow dried,” Harris said, tearing up. “She took our hands, and she’d said she’d been diagnosed with colon cancer.
“That was one of the worst days of my life, truly.”
That families experiencing this “would also have to worry about how to pay the bills,” Harris told Barkan was “just inhumane.”
Harris’ mother, who was a cancer researcher, died in 2009 at 70.

How medical debt could be canceled

Harris’ economic plan didn’t include specific details on how the medical debt jubilee would happen, but experts say an investment by the government would go far.
“Amazingly, medical debt can be bought from collection agencies for a penny on the dollar, a reflection of the fact that so few people can afford to pay their overdue medical bills,” KFF’s Levitt said.
Allison Sesso, president and chief executive officer of Undue Medical Debt, a nonprofit that partners with local governments to cancel people’s medical debts, said the group can usually wipe out around $1,000 of the debt for every $10. It often buys the debt directly from hospitals, Sesso said.
States, counties and cities across the U.S. are already using funds from the American Rescue Plan passed during the Covid pandemic to purchase and eliminate around $7 billion in medical debt for roughly 3 million Americans by the end of 2026. As many as 1 million residents in Arizona could benefit, for example, and 400,000 people in New Jersey, according to the White House.

Medical debt affects an enormous number of people, so it’s an issue that resonates with voters.

Larry Levitt
executive vice president for health policy at the Kaiser Family Foundation

Recent research has raised some doubts about the benefits of forgiving medical debt. The relief has no impact on people’s mental health, credit access or financial distress, according to a National Bureau of Economic Research study published in April.
Experts say this may be due in part to the fact that, beginning last year, the major credit reporting companies cleared most medical collections under $500 from people’s records. Those past-due bills are now less likely to affect people’s credit. Harris is now trying to get even more, if not all, medical debts off people’s credit reports.
However, Sesso said Undue Medical Debt hears from people all the time about how canceling their medical debt improved their lives. In extreme cases, unpaid medical bills can lead to wage garnishments and seized assets, she said.
Frequently, people who still owe a hospital or doctor a bill will avoid necessary treatments, she said.
“People don’t go back to the doctor because they feel they’ll be asked for the bill,” Sesso said. “And then the problem gets worse, and the interventions much more expensive.”

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