The Latest Personal Finance News for May 2024

Biden Administration Announces New Student Loan Forgiveness Plans

President Biden has released a new proposal for broad student loan forgiveness, and the public has until May 17 to submit comments. Compared to the administration’s original plan laid out in 2022, the new program has a narrower scope. Here are some of the groups of borrowers who may benefit:

• Certain borrowers on income-driven repayment plans whose balances have grown due to unpaid interest could get up to $20,000 in forgiveness.
• Borrowers who have been in repayment for at least 20 years for undergraduate debt or 25 years for graduate debt could qualify for full forgiveness.
• Those who are eligible for relief under an existing forgiveness program but aren’t enrolled could benefit.
• Former students of educational institutions that have closed or failed to provide sufficient financial value to their students may qualify for full forgiveness.

Why It Matters

With the new proposal, President Biden expects tens of millions of borrowers to qualify. However, the rulemaking process is still far from complete, so there’s no guarantee that the program will still look like this, or even be approved at all for that matter. Republican critics have already signaled that another court battle is imminent.

What You Can Do

• Learn more about the new student loan forgiveness proposal.
• Read up on existing student loan forgiveness programs.
• Look into potential student loan forgiveness alternatives.
• Watch out for student loan forgiveness scams.

Nearly 1 Million Unclaimed Tax Refunds Are About to Expire

Almost 940,000 Americans are owed more than $1 billion in refunds from 2020, but they remain unclaimed because the taxpayers never filed a return. Federal law gives taxpayers who are owed a refund three years to claim it. Due to accommodations at the start of the coronavirus pandemic that pushed back the traditional April filing due date, that three-year deadline is May 17, 2024.

Why It Matters

If you never filed a 2020 tax return, you could be leaving hundreds or even thousands of dollars on the table. If you don’t file a return by this month’s deadline, your unclaimed refund will become the property of the U.S. Department of the Treasury.

The average tax refund for returns filed in 2021 for the 2020 tax year was $2,815, according to the IRS.

What You Can Do

• Learn more about how tax returns work.
• Check your records for documents you’ll need to file a return.
• Get some tips on making the filing process go smoothly.
• Decide what you’ll do with your tax refund.

Inflation Remains Stubborn, Leaving Interest Rate Cuts up in the Air

Through March, the Federal Reserve anticipated cutting interest rates three times in 2024. But after falling from a 40-year high of 9.1% in June 2022 to 3% a year later, the inflation rate has been sticky since then, with the latest report showing prices rising 3.5% year over year in March 2024.

The Federal Open Market Committee (FOMC) is hesitant to lower interest rates too soon, and without more meaningful progress toward the agency’s target of a 2% inflation rate, some economists don’t expect rate cuts to start until September—and some are concerned the FOMC will wait until 2025.

Why It Matters

The FOMC’s federal funds rate has a direct impact on interest rates for several consumer loans, including personal loans, auto loans and credit cards. A high inflation rate also influences mortgage rates, which have exceeded 7% for the first time this year, according to Freddie Mac.

Both inflation and high interest rates have put significant pressure on household budgets over the past few years, and it’s tough to predict when Americans will get some relief.

What You Can Do

• Look for the next inflation report on May 15.
• Read up on ways you can fight inflation.
• Learn more about the federal funds rate.
• Look for ways to reduce your risks when borrowing money.

Gas Prices Are Ticking up Ahead of Summer

In January, the national average price per gallon of gas nearly dipped to the $3 mark for the first time in nearly three years, according to the U.S. Energy Information Administration. But since then, it’s been on the rise. According to AAA, the national average hit $3.667 to close out April. On the West Coast, drivers are seeing averages that exceed $4 or even $5.

Why It Matters

There are many factors that influence gas prices, one of which is seasonal demand. As the weather warms up, gas prices typically start to increase. But while inflation has touched on several other areas of U.S. household budgets, gas prices are roughly on par with where they were a year ago, according to AAA. Still, it’s important to be mindful of ways to cut back on driving to minimize your fuel expenses.

What You Can Do

• Read up on ways to save money on gas.
• Consider gas apps that can help you reduce your costs.
• Compare top credit cards that offer great gas rewards.
• Learn about whether hybrid and electric vehicles can save you money.

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.