The Latest Personal Finance News for March 2024

The First Wave of Forgiveness for SAVE Plan Borrowers Is Happening

In late February, the U.S. Department of Education announced the first wave of forgiveness for eligible federal loan borrowers who have enrolled in the new SAVE income-driven repayment plan.

The Biden administration introduced the new plan in August 2023. Among other things, the plan offers forgiveness after 10 years of payments for borrowers who took out $12,000 or less in federal loan debt. For each $1,000 in additional debt, borrowers can receive forgiveness after an additional year of payments. Nearly 153,000 borrowers have already qualified for $1.2 billion in forgiveness under the program.

The administration has also begun to notify federal loan borrowers who aren’t yet on the SAVE plan but qualify for forgiveness based on its terms that they’re eligible if they switch.

Why It Matters

Student loan debt can be a significant financial burden, and the SAVE plan offers more relief than other income-driven repayment (IDR) options, which don’t offer forgiveness until after 20 or 25 years of payments. Even if you aren’t eligible for immediate forgiveness, the plan could reduce your monthly payment even more than IDR plans and eliminate the possibility for your balance to grow with capitalized interest.

What You Can Do

• Read up on the new SAVE plan.
• Learn about other student loan forgiveness programs.
• Understand how income-driven repayment plans can lower your monthly payment.
• Get the details on taxes and student loan forgiveness.

Tax Adjustments Could Result in a Larger Refund for Many

Each year, the IRS adjusts deductions, credits and tax brackets based on inflation and updates to the tax code. For the 2023 tax year, the federal agency increased the standard deduction by an average of 7% and hiked the minimum income requirement for the earned income tax credit and each tax bracket. After more than three years of no payments, federal student loan borrowers can once again take advantage of the student loan interest deduction—though it’s unlikely to move the needle much, considering interest resumed in September.

Why It Matters

Based on the IRS adjustments, some taxpayers could see their tax bill reduced by hundreds of dollars, resulting in a larger refund. That said, if your income has increased since 2022, you changed your filing status or your tax withholding, sold investments or experienced other developments, your results may vary.

What You Can Do

• Know the 2024 tax deadlines.
• Read up on ways to get a bigger tax refund.
• Learn about how tax brackets work.
• Consider tips for making tax filing easier.

Mortgage Rates on the Rise Again

After a brief dip in late January, the average interest rate for a 30-year fixed-rate mortgage has breached 7% again, according to Mortgage News Daily. Experts blame the inflation rate, which isn’t coming down as quickly as expected. In turn, the Federal Reserve’s first anticipated interest rate cut in 2024 has been pushed back.

Why It Matters

Despite coming down from a two-decade high since October 2023, mortgage rates are still elevated compared to pandemic-era lows. With home prices remaining high, prospective homebuyers have become increasingly sensitive to interest rates, resulting in drops in demand for both home purchase and refinance loans.

Economists still expect mortgage rates to fall throughout 2024, but with a rate cut from the Federal Reserve unlikely in March, homebuyers may not get relief until later in the spring.

What You Can Do

• Learn how to deal with high mortgage rates.
• Read up on how mortgage interest works.
• Consider whether to buy a house when rates are high or wait.
• Understand the pros and cons of refinancing a mortgage loan.

Inflation Continues to Drop, but Slower Than Expected

In its January 2024 inflation report, the Bureau of Labor Statistics (BLS) reported a 3.1% annual increase in the consumer price index (CPI). While that’s down from a 3.4% annual increase in December 2023, it’s hotter still than the 2.9% that economists had expected.

Removing food and energy prices, which tend to experience more volatility than other consumer goods and services, the core CPI rose by 3.9%, nearly double the Federal Reserve’s target of 2%.

Why It Matters

The inflation rate is marching toward the Fed’s 2% target, but with a slower-than-expected pace, the Federal Reserve remains hesitant to start cutting its federal funds rate, which influences the cost of borrowing in the U.S.

While the Fed has signaled plans to cut interest rates multiple times in 2024, a stubborn inflation rate could delay those decisions and continue to put pressure on Americans’ wallets.

What You Can Do

• Check the CPI page on the BLS website on March 12 for February inflation numbers.
• Read up on how inflation works.
• Research ways to fight inflation and save money.
• Learn how to improve your financial health.

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian’s free credit monitoring service, you’ll get access to your FICO Score and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.