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Problems with the new Free Application for Federal Student Aid have resulted in fewer students applying for college financial aid.
Given the current status of FAFSA submissions, the Department of Education is on track to see 2.6 million fewer FAFSAs submitted this year, a nearly 20% decline, according to higher education expert Mark Kantrowitz.
Studies show students are more likely to enroll in college when they have the financial resources to help them pay for it.

As enrollment deadlines approach, fewer students have figured out how they will afford college next year.
Ongoing problems with the new Free Application for Federal Student Aid have delayed financial aid award letters and even prevented many high school seniors and their families from applying for aid at all.

As of the latest update, roughly 7.3 million 2024-25 FAFSA applications have been submitted and sent to schools, according to the U.S. Department of Education, less than half of the more than 17 million students who use the FAFSA in ordinary years.
At the current rate, the number of FAFSAs submitted by the end of August will be about 2.6 million fewer than the same time last year, a decrease of 18%, according to higher education expert Mark Kantrowitz.
“This is a complete disaster,” he said.
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Still, it’s too soon to say whether those remaining students will ultimately apply for aid and how that could impact their decisions about college in the fall, according to Sandy Baum, senior fellow at Urban Institute’s Center on Education Data and Policy.

“The question is really, ‘What is the long-term impact?’ We just don’t know yet,” she said.
Many institutions are now issuing aid with the information they have on hand, according to the Department of Education.
“Students should know that they are not going through this alone, we will remain in regular communication with schools and students and encourage students to stay in touch with us and with their colleges,” an Education Department spokesperson said.

Ramon Montejo García, 17, a senior at the KIPP Northeast Denver Leadership Academy in Colorado.
Credit: Ramon Montejo García

Ramon Montejo García, a 17-year-old senior at the KIPP Northeast Denver Leadership Academy in Colorado, has been accepted to his first-choice school, Wheaton College in Massachusetts. 
But with a sticker price of nearly $80,000 per year, including tuition, fees, and room and board, Montejo García, like many college hopefuls, will need financial aid to bring the cost down. However, he hasn’t submitted a FASFA yet, which serves as the gateway to all federal aid money, including loans, work-study opportunities and grants.
One issue with the new form specifically concerned parents without a Social Security number. Although Montejo García’s parents have lived in the U.S. since 2001, they are both undocumented. (The U.S. Department of Education said this issue has been resolved.)
Without aid, Montejo Garcia said he will likely attend an in-state school but added that “it’s been really emotional.”
“How will this work out? I don’t have a lot of time,” he said.
Other students may default to their local public college as well, according to Charles Welch, president and CEO of the American Association of State Colleges and Universities.
“So many of our students are more likely to attend an institution that is close by,” he said. “For many of our students it’s less about comparing offers and more about, ‘Can I go at all?'”

Fewer grants going out

As of April 5, only 28% of the high school class of 2024 has completed the FAFSA, according to the National College Attainment Network, a 38% decline compared with a year ago.
Of all the financial aid opportunities the FAFSA opens up, grants are the most desirable kind of assistance because they typically do not need to be repaid.
Under the new aid formula, an additional 2.1 million students should be eligible for the maximum Pell Grant, according to the Department of Education.
However, given the slower pace of FAFSA applications being submitted, “the number of Pell Grant recipients will be about the same as last year, despite the new Pell Grant formula making it easier for students to qualify,” Kantrowitz said.

FAFSA completion paves the way for college

Submitting a FAFSA is one of the best predictors of whether a high school senior will go to college, the National College Attainment Network found. Seniors who complete the FAFSA are 84% more likely to immediately enroll in college. 
However, in the past, many families mistakenly assumed they wouldn’t qualify for financial aid and didn’t even bother to apply. Others said a lengthy and overly complicated application was a major hurdle. Some said they just didn’t have enough information about it.
In ordinary years, high school graduates were already missing out on billions of dollars’ worth of federal grants because they didn’t fill out the FAFSA, experts say.
“We really want to think about the students considering forgoing the process altogether,” said Ellie Bruecker, interim director of research at The Institute for College Access and Success.
The goal of FAFSA simplification was to improve college access, she added. “The number of students left out of the college pipeline is huge.”
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Certain heirs have to deplete inherited retirement accounts within 10 years due to a provision in the Secure Act.
However, the rules have confused taxpayers and the IRS has again delayed penalties for missed required minimum distributions.

Hero Images | Getty Images

The IRS has again waived required withdrawals for certain Americans who have inherited retirement accounts since 2020. It may not be a good thing for heirs, experts say.
Before the Secure Act of 2019, heirs could “stretch” retirement account withdrawals over their lifetime, which reduced year-to-year tax liability. Now, certain heirs have a shorter timeline due to changed rules for so-called required minimum distributions, or RMDs.

Under the Secure Act, certain heirs must empty inherited accounts by the 10th year after the original account owner’s death. Otherwise, they could face a hefty penalty. In 2022, the IRS proposed mandatory yearly withdrawals if the original account owner had already started distributions.
Amid questions, the IRS has previously waived the penalty for missed RMDs, and the agency on April 16 extended that relief for 2024.
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“It’s so confusing,” said individual retirement account expert and certified public accountant Ed Slott, speaking about the 10-year rule.
“Even the IRS has to give people a break until they can figure out if [beneficiaries] are subject to RMDs or not,” he said.

The latest penalty relief only applies to certain heirs, known as “non-eligible designated beneficiaries,” subject to the 10-year withdrawal rule under the Secure Act. Non-eligible designated beneficiaries include heirs who aren’t a spouse, minor child, disabled, chronically ill or certain trusts.

New rule ‘could be a little dangerous’

The latest IRS update says those heirs won’t incur a penalty for missed RMDs for inherited accounts in 2024. But they still must empty the account by the original 10-year deadline.
That “could be a little dangerous because it is potentially just letting you kick the can down the road on making a decision,” according to certified financial planner Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts.
With years of delayed RMDs, heirs with sizable pretax inherited retirement accounts may need larger future distributions to empty the account within 10 years.

Before 2018, the federal individual brackets were 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. But five of these brackets are lower through 2025, at 10%, 12%, 22%, 24%, 32%, 35% and 37%. Without changes from Congress, tax brackets will revert to 2017 levels.
Depending on your tax bracket, it could make sense to start making withdrawals in 2024, especially with higher tax brackets on the horizon, Slott said.
Of course, you need to weigh your entire financial situation while planning for inherited retirement account withdrawals. “It’s one of many moving parts,” Jastrem added.

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Women and Wealth Events
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From now until 2030, 30.4 million Americans are expected to turn 65.
Women who are entering retirement now face more financial risks than their male counterparts, new research finds.

Antonio Suarez Vega | Istock | Getty Images

The largest cohort of baby boomers is poised to reach age 65 between now and 2030.
And women — who make up 52% of those “peak 65” boomers — are more likely to struggle in retirement compared with their male peers, according to a new economic impact study released by the Alliance for Lifetime Income, a Washington, D.C.-based nonprofit focused on retirement education.

“There is a very persistent disparity between the assets of men and the assets of women,” said economist Robert Shapiro, study co-author and former undersecretary for economic affairs in the Commerce Department, during a Thursday morning presentation.
From now until 2030, 30.4 million Americans are expected to turn 65.
A majority of those baby boomers are not financially prepared for retirement, according to the research.
As income from employer pensions has largely diminished or disappeared, individuals who enter retirement age are now more dependent on personal savings and Social Security.
Women are not the only peak boomers who are at a greater economic disadvantage, the research found.

People who are Black, Hispanic, or without college degrees are also at higher risk for financial insecurity in this later stage of life, according to the report’s findings.
On the flip side, the peak boomers who are best poised to financially handle the retirement phase of life are men, white people and those with college degrees, the study said. Individuals in those categories are more likely to have multiple types of retirement accounts and larger balances, according to the research.
The median retirement savings for peak boomers is $225,000.
Yet, while the median savings is $269,000 for men, it is just $185,000 for women.

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Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

A shortfall for women shows up in every area of retirement assets, Shapiro noted.
That includes defined contribution plans like 401(k) plans, individual retirement accounts, investments outside of retirement accounts, savings accounts and home equity.
“This shouldn’t be surprising in the sense that there are persistent disparities in earned income between men and women, and savings comes out of earned income,” Shapiro said.
The retirement income gap for women also shows up in other ways, the research found.
For example, the study said there is a disparity of about 33% between the median Social Security benefit for retired peak boomer women and their male counterparts. Men get about $28,400, while women take in $21,400, according to the study.
While boomers of both genders are equally likely to own annuities, the average initial payout is $15,700 for men compared with $13,700 for women, according to the results.
By 2030, an estimated 48,400 peak baby boomers will qualify for Supplemental Security Income, federal benefits for individuals who are 65 and over, disabled or blind and who have little or no income or resources. That is anticipated to include 69% of women versus 31% of men.

To help women become better prepared for retirement, it’s necessary to address the root causes, explained Caroline Feeney, executive vice president and CEO of U.S. businesses at Prudential Financial.
Women today are still earning 80 cents for every dollar earned by men, Feeney said.
Additionally, women live on average six years longer than men, which means they need more savings.
Because women on average often have a lower risk tolerance than men, that typically translates to lower returns on the money they do have set aside.
Moreover, because two-thirds of all caregivers are women, that often requires them to sacrifice income they could otherwise earn for that time.
“You pull all of that together, of course it makes it far more difficult for women to be able to be in a position to live a secure financial retirement,” Feeney said.
While employers can help address those root causes, the financial industry also needs to make expert guidance more appealing to women, she said.
“There are no silly questions, they should rely on the financial experts,” Feeney said. “Unfortunately, we’ve made this a little bit complicated sometimes in terms of our solutions and products.”

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While the cost of a new house depends on multiple factors, the sticker price might jump based on the finishes a buyer add, a financial advisor says.
To save on costs with a new build, it may be in a potential buyer’s best interest to hire a contractor later on to add desired finishes, experts say.

Peter Cade | Stone | Getty Images

Buyers of newly built homes can come across a number of sticker shocks.
In February, the median sale price for new construction sold in the U.S. was $400,500, according to the U.S. Census Bureau and the Department of Housing and Urban Development.

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But the value of a newly built house will depend on multiple factors, including the finishes that are added, said certified financial planner Veronica Fuentes, a wealth management advisor based in Washington, D.C.
“They want to know what kind of windows you want, flooring, siding, window panels, what kind of doors, where you want the outlets, what kind of light switches do you want. Depending on what you’re picking, they’re adding up the tab,” Fuentes said.
To save on costs with a new build, it may be in a potential buyer’s best interest to hire a contractor later on to add desired finishes, experts say.
“Think about those elements that could be easily added at a later date,” said Angie Hicks, home expert and co-founder of Angi, an online marketplace that connects homeowners with professional contractors for home maintenance or renovations.

How to save on construction costs

While multiple elements contribute to the overall cost of a newly built house, one way to keep the price within range is by deferring elements for future renovations or upgrades, experts say.
To that point, homeowners spent on average $13,667 across 11.1 projects in 2023, a slightly higher level compared with 2022, according to the State of Home Spending by Angi. The survey polled 6,400 consumers between Oct. 22 and Oct. 23.
Almost half (46%) of homeowners used cash from savings to cover renovations. About 20% used credit cards, while a minority, 7%, refinanced an existing loan and 5% used a home equity line of credit loan.
“I tell my clients to be very conservative,” said Fuentes, as buyers can always change the knobs, the flooring and the paint on the walls through hired contractors.
To that point, experts recommend focusing on the structural elements.
While costs range depending on materials, labors and location, most homeowners paid between $14,611 and $41,440 to remodel a kitchen in 2024, Angi found. Meanwhile, bathroom remodels can range from $6,629 to $17,536.
If you know you will be upgrading features in the house, go with the basic or lowest priced features for now, Hicks said.

“There’s no reason to finish it out right when you build the house necessarily,” Hicks said. “Those are things that can be added later and can potentially save you in the near term.” More

The Biden administration released its new proposal to forgive student debt for millions of Americans.
It hopes the plan will survive legal challenges this time.

US President Joe Biden gestures after speaking about student loan debt relief at Madison Area Technical College in Madison, Wisconsin, April 8, 2024. 
Andrew Caballero-Reynolds | AFP | Getty Images

The Biden administration has published its new student loan forgiveness proposal, putting it on the path to start clearing debt for millions of borrowers this fall.
The public has 30 days, through May 17, to comment on the details of the revised aid package.

Since the U.S. Supreme Court rejected President Joe Biden’s first attempt at wide-scale loan cancellation last summer, his administration has been working on this do-over plan.
Biden wants the program to survive legal challenges this time. To that end, the U.S. Department of Education has made the relief more targeted and turned to the regulatory process. The president initially attempted to forgive student debt through an executive action.
Outstanding federal education debt in the U.S. stands at around $1.6 trillion, and burdens Americans more than credit card or auto debt. More than 40 million people hold student loans.
Here’s what to know about Biden’s new relief plan.

What the revised plan calls for

While Biden’s previous relief plan forgave student debt for most borrowers, this aid package targets specific groups of people, and the interest on the loans.

It calls to cancel “the full amount” of someone’s debt that has grown from their original balance when they first entered repayment. To qualify for this provision, these borrowers would also need to be enrolled in one of the Education Department’s income-driven repayment plans and to earn under a certain amount, including $120,000 or less as a single filer.
Regardless of their income, borrowers would be eligible for up to $20,000 in cancellation on the portion of their debt that is unpaid interest.
Consumer advocates have long criticized the fact that interest rates on federal student loans may exceed 8%, which can make it tough for borrowers who fall behind or are on certain payment plans to reduce their balances.
More than 25 million federal student borrowers owe more than they originally borrowed, according to the Biden administration.
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Borrowers who have been in repayment for 20 years or longer on their undergraduate loans, or more than 25 years on their graduate loans, would get full debt cancellation.
The plan also erases the debt of people who are already eligible for that relief but haven’t received it or applied for it. Such stories are common.
Lastly, it delivers relief to borrowers who enrolled and took out debt to attend low-financial-value schools and programs or institutions that failed to provide sufficient financial value.
The Education Department left out from its relief proposal, for now, the group of borrowers experiencing financial hardship. Previously, its plan was expected to include people in this situation.

“As President Biden said last week, our Administration is working as quickly as possible to deliver relief to as many borrowers as possible,” an Education Department spokesperson said in a statement.
As a result, while it continues to create a proposal for those struggling financially, it moved forward “with these proposed rules today so we can begin delivering relief to borrowers as early as this fall,” the spokesperson said.

And what comes next …

After the 30-day public comment period, the Biden administration needs to review the feedback it received for its plan. It will then release its final rule, probably at some point this summer. Soon after, it could begin reducing and eliminating borrowers’ balances.
However, legal challenges could disrupt that timeline.
After Biden first touted his revised relief program on April 8, Missouri Attorney General Andrew Bailey, a Republican, wrote on X that the president “is trying to unabashedly eclipse the Constitution.”
“See you in court,” Bailey wrote.

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Investors in Trump Media are betting on the former president, one expert says.
The stock’s volatility may lead to investors who either bet on it by buying shares or against it by shorting it to get burned.

A screen displays trading information about shares of Truth Social and Trump Media & Technology Group outside the Nasdaq MarketSite in New York City on March 26, 2024.
Brendan Mcdermid | Reuters

Trump Media has become the latest stock to watch.
But rather than a meme stock — an investment that becomes popular for individual investors through social media — the company is more of a personality stock, according to John Rekenthaler, vice president of research at Morningstar.

“The reason that people own this stock is because, in one way or another, they support Donald Trump,” Rekenthaler said.
“It’s an act of faith,” he said.
The former president is the majority shareholder in Trump Media, which trades under the initials of his name, DJT, on the Nasdaq. The stock got off to a rocky start this week, with two straight days of losses, though it was up more than 20% on Wednesday afternoon.
The company’s mission statement is to end “Big Tech’s assault on free speech by opening up the internet and giving the American people their voices back,” according to its website.

The closest company comparison to Trump Media is Tesla, according to Rekenthaler. He said investors backed Tesla because they believed in Elon Musk, which helped send the company to its peak value in 2021.

A key difference is that Tesla was a “much larger company,” according to Rekenthaler, who on April 10 wrote an op-ed criticizing Trump Media’s valuation.
Trump Media is currently a $4 million business through social media, he said. Meanwhile, the company is currently valued at more than $3 billion, down from around $9 billion when it came out.
“The problem is there is still more room to fall,” Rekenthaler said.
Like investors in any publicly traded company, Trump Media’s shareholders are hoping to eventually redeem their shares for more than they paid. However, there is no guarantee of that happening, Rekenthaler said.
Other investors have chosen to bet against the stock through short selling. That, too, can be “dangerous,” Rekenthaler said.
“This stock is just so unpredictable,” Rekenthaler said. “It certainly could go up in the short term and hurt the shorts.”
The company responded to a request for comment by referring to its frequently asked questions webpage. Trump Media outlined the risk factors to its business in a recent filing with the Securities and Exchange Commission tied to its public stock listing. Among them are risks related to the former president, including his reputation and popularity; the possibility of his death, incarceration or incapacity; or the possibility that his relationship with the company could be discontinued or limited.
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Investing in a company that is tied to a prominent celebrity carries certain risks, noted Preston D. Cherry, PhD, founder and president of Concurrent Financial Planning in Green Bay, Wisconsin.
The alignment with a well-known figure can lead you to trust a company more as a result, said Cherry, who’s also a certified financial planner. But if the celebrity and company part ways — as with Adidas and Ye, also known as Kanye West, or Weight Watchers and Oprah — that can affect the investment prospects.
Moreover, investors may get caught up in the enthusiasm around a newly public stock, Cherry said.
“Retail investors have a sense of FOMO or fear of missing out specifically with popular IPOs [initial public offerings],” Cherry said.
That can lead to those companies becoming overvalued when they come out as a result of that hype, he said.
Because the early-stage company’s stock may be highly volatile, average investors may face a lot of danger if they’re tempted to day trade or short it, said CFP Ted Jenkin, CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta.
“These kinds of stocks are speculative at best,” Jenkin said.
Both Cherry and Jenkin are members of the CNBC FA Council.

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The annual rate for Series I bonds could fall below 5% in May based on inflation and other factors, financial experts say.
That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.   
However, the fixed rate portion of I bond interest can be harder to predict, experts say.

Jetcityimage | Istock | Getty Images

The annual rate for Series I bonds could fall below 5% in May based on the latest inflation data and other factors, experts predict.  
That would be lower than the current 5.27% interest on I bond purchases made before May 1, but higher than the 4.3% interest offered on new I bonds bought between May 1, 2023, and Oct. 31, 2023.    

Despite the expected rate decline, I bonds are “still a good deal” for long-term investors, according to Ken Tumin, founder and editor of DepositAccounts.com, which closely tracks these assets.  
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Meanwhile, short-term investors currently have higher-yield options, such as Treasury bills, money market funds or some certificates of deposit.
Backed by the U.S. government, demand has soared for I bonds amid higher inflation, particularly after the annual rate hit 9.62% in May 2022. Next month, the rate could drop to around 4.27%, some experts predict. 

How the I bond rate works

The U.S. Department of the Treasury adjusts I bond rates every May and November. That yield changes based on a variable and fixed portion.

The Treasury adjusts the variable part every six months based on the consumer price index, which is a key measure of inflation. The agency can change the fixed portion or keep it the same.
The fixed portion of the I bond rate stays the same for investors after purchase. The variable rate portion resets every six months starting on the investor’s I bond purchase date, not when the Treasury Department announces rate adjustments. You can find each rate by purchase date here.

Currently, the variable rate is 3.94% and the fixed rate is 1.3%, for a combined rounded yield of 5.27% for I bonds purchased between Nov. 1 and April 30.
The 1.3% fixed rate “makes it very attractive” for investors who want to preserve purchasing power long term, according to Tumin.

How the fixed rate could change

Since the variable rate for I bonds is based on six months of inflation data, experts agree it will fall from 3.94% to 2.96% in May. The fixed portion is harder to predict because the Treasury does not disclose its formula for changes.
David Enna, founder of Tipswatch.com, a website that tracks Treasury inflation-protected securities, or TIPS, and I bond rates, expects the fixed rate will be 1.2% or 1.3% in May.
But “1.4% is not out of the question,” he said.
Enna looks at a half-year average of real yields for 5- and 10-year TIPS to predict fixed rate changes. The real yield reflects how much TIPS investors earn yearly above inflation until maturity.
A possible fixed rate change from 1.3% to 1.4% “isn’t enough to make a huge difference,” but investors always prefer the higher rate, he added.

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President Joe Biden and Vice President Kamala Harris on Monday released their 2023 tax returns.
The president and first lady Jill Biden reported a joint adjusted gross income of $619,976 for 2023, which was 7% higher than 2022.
Harris and her husband, Douglas Emhoff, showed an adjusted gross income of $450,299, which was slightly lower than their 2022 earnings.

President Joe Biden and Vice President Kamala Harris deliver remarks about healthcare in Raleigh, North Carolina on March 26, 2024.
Peter Zay | Anadolu | Getty Images

President Joe Biden and Vice President Kamala Harris released their annual tax returns Monday, and there are lessons within for average Americans, according to tax experts.
The president and first lady Jill Biden reported a joint adjusted gross income of $619,976 for 2023, which was 7% higher than in 2022. They paid federal income taxes of $146,629, and their effective tax rate was 23.7%.

Vice President Kamala Harris and her husband, Douglas Emhoff, showed an adjusted gross income of $450,299, which was slightly lower than their 2022 earnings. Their federal taxes were $88,570, and their effective tax rate was 19.7%.
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Interest income can be a ‘big surprise’

In 2023, both couples earned most of their income from salaries, with federal and state taxes withheld from employers.
Both couples also had interest income, which can cause a “big surprise” at tax time, without increased paycheck withholdings or quarterly estimated tax payments, explained David Silversmith, a certified financial planner and senior tax manager at Eisner Advisory Group in New York.
That’s why investors need to track taxable activity — such as dividends or fund distributions — in brokerage accounts, said Silversmith, who is also a certified public accountant.

While both couples made extra tax payments, they each incurred a small estimated tax penalty, based on underpayments from each quarterly deadline and interest. The Bidens paid a penalty of $285, while Harris and her husband owed $451.

Tax planning for self-employment income

Over the years, the Bidens have reduced self-employment taxes by receiving some wages through their companies, which are structured as S corporations.
After paying “reasonable compensation” to shareholders, S corporation owners can take distributions without paying 15.3% for Social Security and Medicare taxes.
While the couple only made $4,115 in royalties for 2023, the structure has previously offered significant savings for the couple’s book deals and speaking gigs.  
However, working-age taxpayers with self-employment income would need to consider how lower wages could impact future Social Security income, said Catherine Valega, a certified financial planner and the founder of Boston-based Green Bee Advisory, who is also an enrolled agent.
Why that matters: The calculation for Social Security benefits uses up to 35 years of wages to calculate the monthly payments, she said.

Work with a tax professional

Typically, filers get a tax refund when they overpay levies throughout the year. Conversely, there’s generally a tax bill when filers don’t pay enough. Both tax returns showed the couples were fairly close on total taxes paid vs. owed.
When filing returns, “plus or minus $500 [for a refund or balance] is magical,” said Valega. “Both of them were spot on with that.” 
If you’re a higher earner with “a little bit of complexity,” such as multiple sources of income, she recommends working with a tax professional to “dive into each piece of the pie.”

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