financial

The Trump administration sunsets several Biden-era SBA loan policies

Starting this financial year, small business owners looking to fund their ventures through an SBA loan might face new challenges. An overhaul of SBA lending standards is about to make borrowing more expensive and significantly harder to qualify for. 

Under the Biden Administration, restrictions and requirements surrounding SBA loans were relaxed, however the 7(a) program lost money for the first time in over a decade. The Trump Administration is reversing many of these changes and adding more stringent regulations in what they say is a move to “prioritize eliminating fraud and waste,” SBA Administrator Kelly Loeffler announced. However, for business owners, these new rules may make securing financing more difficult.

Credit Score Requirements Tightened: The “SBSS” Score Went Up

Previously, you could qualify for an SBA loan with an SBSS (Small Business Scoring Service) credit score of 155. Now, the minimum has been raised to 165. This change was designed to reduce defaults, especially among applicants who previously were approved under more lenient COVID-era scoring thresholds.

“Do What You Do” Underwriting Eliminated

Under the Biden Administration, lenders could set their own standards to assess creditworthiness. This was meant to reduce administrative hurdles and streamline loan applications. Through this, lenders could use their internal guidelines and case-by-case judgment to offer borrowers flexible selection criteria.

This provision has now been removed and lenders have to use standard SBA criteria, making qualification rules more rigid.

SBA Guarantee Fees Are Back

Small Business Administration loans are funded through lender fees, not taxpayers’ money. The Biden Administration had removed these fees, which are “projected to cost taxpayers billions,” according to the new SBA management under the Trump Administration.

“Reduced fee revenue left the agency in a shortfall and unable to cover the cost of failed loans,” an SBA press release read. It said that from 2022 to 2024, the SBA estimated that over $460 million in upfront lender fees were not collected. As a result, the SBA’s 7(a) loan program saw negative cash flow of about $397 million in FY 2024, which was the first time negative cash flow was noted in over a decade.

As a result, SBA has now reintroduced the guarantee fees. While this will help the program go back to its zero-subsidy status, it will add barriers for businesses on a tight budget.

Hazard Insurance Is Required, Even for Small Loans

Previously, hazard insurance was only required for SBA 7(a) and 504 loans above $500,000, but the threshold amount has been lowered to just $50,000. This applies to assets like real estate used as collateral for the loan.

This change will make borrowing more expensive, adding to the expense of the additional guarantee fees. 

Note

Currently, SBA Express loans are exempt from this rule.

Small Loans Got Smaller ($500K to $350K)

The SBA has changed the definition of a 7(a) small loan of a loan under $500,000 to under $350,000. This will make applications and the qualification process more difficult as small loans under the threshold require less documentation and typically have faster approval.

Now, loans above $350,000 will be treated as standard loans, requiring more stringent underwriting procedures. 

More Verification Checks 

To apply for an SBA loan, the borrower must pass the “no credit elsewhere” test, which means they don’t have access to funds and can’t get approved for a traditional loan.

Earlier, this criterion didn’t include personal finances, but that’s about to change. The SBA will ask lenders to consider the borrower’s income and assets as part of available credit.

For example, if you have a sizeable savings account and/or an income source that could easily fund your business, you may be disqualified from the SBA loan.

The Bottom Line

While the new SBA loan changes are meant to reduce program risk, they’re likely to make it harder for small business owners to access capital. Borrowers who previously could get a loan with less-than-perfect credit, low liquidity, or untraditional business models may now be denied a loan.

Moving forward, getting an SBA loan may not be the easiest and cheapest option for business owners looking for financing. It’ll require more money, documentation, and patience. If an SBA loan doesn’t fit your current financial situation, consider exploring alternative funding options. 

If your federal student loan servicer changes, it means you’ll be dealing with a different company for loan management, payment processing, and customer service. This usually happens when federal contracts expire or your loan status changes. While the transition is designed to be seamless, it’s your responsibility to confirm that everything updates correctly.

Key Takeaways

• Student loan servicers may change due to contract expiration or repayment plan updates.
• Keep an eye out for notices from both your old and new servicers, and update your contact and banking information with the new servicer right away.
• You’ll want to make copies of relevant documents, especially if you’re working toward loan forgiveness or enrolled in an income-driven repayment (IDR) plan.

Understanding Loan Servicer Changes

You don’t get to choose your student loan servicer, but you might be assigned a new one under certain circumstances. This typically happens when your servicer’s contract with the United States Department of Education ends. You may also get reassigned if you consolidate your loans, apply for Public Service Loan Forgiveness (PSLF), or go into default.

You’ll typically receive a notice two weeks prior to your loans being transferred. Said notice will include your new servicer’s name and contact information. Once the transfer is complete, you may need to set up a new online account and re-enroll in autopay.

Fortunately, a servicer change won’t alter your loan status, balance, or interest rate. It may show up on your credit report as a new account, but it shouldn’t affect your credit score. That said, it’s a good idea to review your credit report after a transfer to confirm that your loan details were reported accurately.

Immediate Steps to Take

When you find out your servicer is changing, here’s what you can do to stay on top of the transition.

• Check your mail and email regularly for updates from both your old and new servicers.
• Log in to your new servicer’s portal to verify your loan details, payment due date, and contact information.
• Save your past payment records and communications with your previous servicer.
• Watch out for duplicate autopay withdrawals during the first month and contact the servicer if anything looks off. 

Ensuring Payment Continuity

Your most important responsibility during a servicer change is ensuring your monthly payments are still made on time. Even a brief disruption can lead to late fees or affect your progress toward student loan forgiveness.

Should you find that your payments aren’t being processed correctly, you can contact your old and new servicers for assistance. If the issue persists, you should file a complaint with the Education Department’s Office of Federal Student Aid.

Be sure to save copies of your account information and payment history, as well as communications with your old and new servicers, especially if you’re enrolled in programs like PSLF or an income-driven repayment (IDR) plan. Having documentation can help if anything needs to be corrected later.

Important

The future of current IDR plans is up in the air following a federal court injunction stopping the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.

The Bottom Line

Servicer changes are routine, but mistakes can still happen. The best way to protect your finances is to stay informed and be proactive. Check any emails you get from your servicers, log into your accounts regularly, and keep records of everything. By monitoring your student loans during a transfer, you can ensure the change won’t interfere with your payments or your peace of mind.

Fact checked by Vikki Velasquez

When most people think about retirement, they imagine downsizing to a smaller home, thus enjoying fewer responsibilities and embracing a lighter financial load. Downsizing often brings perks such as reduced maintenance, lower utility bills, and freeing up extra money that can be spent on travel and hobbies.

But for some, retirement sparks the opposite idea: upsizing. Whether it’s to be closer to family, accommodate caregiving, or finally purchase a dream home, some retirees consider buying a larger, more expensive property.

Key Takeaways

• Upsizing is often driven by personal and lifestyle reasons, not financial benefits.
• Due to having a fixed income in retirement, upsizing could potentially strain retirees’ finances.
• Before upsizing, evaluate if your retirement budget can sustain the long-term financial responsibility of the higher home costs.

Why Upsizing Appeals to Retirees

Retirement is a significant life transition, and for some, a bigger home represents a new beginning. Some retirees may feel ready to invest in this costly change, and the emotional and lifestyle reasons behind this choice are real and valid. However, the benefits aren’t always financial.

“The pros are usually on the personal level, such as happiness, well-being, quality of life, etc.,” said Kassi Fetters, certified financial planner and owner of Artica Financial Services LLC.

People choose to upsize their homes for a variety of personal and practical reasons. Common motivations include:

• To gain extra space for hosting family gatherings
• To support multi-generational living
• To accommodate caregiving needs
• To be closer to adult children and grandchildren
• To enjoy communities with better amenities and lifestyle options

The Financial Reality of Upsizing

While upsizing may feel like a fresh start, it can quickly become a financial strain, even if the reason is to move into a space that better accommodates your lifestyle and goals.

“There aren’t really any financial pros to upsizing your house in retirement,” says Fetters.

This makes sense when you consider how retirement is often structured. Your income at this phase in your life is typically fixed, and larger homes often bring higher expenses: property, taxes, utilities, insurance, and maintenance costs. Even if you’re taking out a loan, you could be stretching your monthly budget. And if you’re purchasing with savings, that money is no longer working for you in the market.

“The cons to purchasing a bigger house are locking up your investable assets in an asset that doesn’t grow at the same rate as the market,” Fetters says. “Being invested in residential (non-renting) real estate doesn’t increase your monthly income, and maintenance/utilities are usually more.”

Also, you can’t forget to consider the market you are buying in. Home supply has increased by 20% since last year, and mortgage rates are down (albeit still high), but high home prices make affordability a struggle.

Before making any decision, model the impact of an upsized home on your overall retirement plan. This is the perfect time to be honest with yourself about whether the new home will be affordable and sustainable in the long term.

“After inputting an upsize into your financial plan, you need to determine whether your portfolio can handle the upsize purchase (including taxes), whether your monthly budget can sustain the maintenance/utilities increase, and whether the upsize negatively affects your future long-term financial goals,” Fetters said.

The Bottom Line

There is nothing wrong with wanting a bigger home and retirement, but it’s important to understand what you may be giving up. Upsizing can enhance your lifestyle, but it often comes at a large financial cost. If you’re emotionally drawn to the idea and have the financial plan to back it up, go ahead but make the decision with full clarity.

“To be very clear, upsizing is a want, not a need,” said Fetters. “However, if you have a detailed financial plan that shows it’s a possibility you can afford, then go for it.”

Student loans can be costly, but securing a lower interest rate can help you save money by reducing your monthly payments. From applying for consolidation (or a refinance) to setting up autopay, there are a few smart tactics you can employ to reduce your rate and make your debt more manageable.

Key Takeaways

• Interest rates on student loans vary based on the loan type, the borrower’s credit score, and the lender.
• Consolidating or refinancing your loans can simplify payments and may grant you a lower interest rate.
• Depending on the lender, you may earn an interest rate discount for setting up autopay.

What Factors Influence Interest Rates?

As with other forms of debt, a student loan interest rate determines the amount of interest that will accrue on the borrowed principal balance. Interest rates for private student loans are determined by creditors, who base their decisions on your overall creditworthiness and economic factors, and they can be either fixed or variable.

Federal student loans, meanwhile, only have fixed interest rates. Federal loans usually have lower interest rates and fees than their private counterparts. The table below lists the interest rates for direct loans disbursed on or after July 1, 2025, and before July 1, 2026:

Loan Type	Borrower Type	Fixed Interest Rate
Direct subsidized loans and direct unsubsidized loans	Undergraduate	6.39%
Direct unsubsidized loans	Graduate or professional	7.94%
Direct PLUS loans	Parents and graduate or professional students	8.94%

Source: Federal Student Aid

Note

Federal student loan rates are set by federal law and updated annually, but loans that have already been disbursed aren’t affected when this happens.

Strategies to Lower Your Student Loan Interest Rate

• Set up autopay: By enrolling in autopay, you can get 0.25% off your federal student loan interest rate and ensure you never miss a payment. Some private lenders also offer a similar discount.
• Refinance or consolidate your student loan: Most federal student loans may be consolidated into a direct consolidation loan, which could result in you getting a lower interest rate. Private student loans cannot be consolidated into a direct consolidation loan, but they can be refinanced to much the same effect. You can also refinance federal student loans with a private lender, but doing so means you’ll lose out on the benefits and protections that the government offers.
• Improve your credit score: You may be able to secure more favorable interest rates from private lenders if you take the time to raise your credit score. On-time payments, a lengthy credit history, a low credit utilization ratio, and disputing any errors on your credit report can help improve your score. While having a higher credit score won’t help with the rates on your outstanding private student debt, it can help if you apply for additional loans or a refinance.
• Consider a new repayment plan: While it won’t help with your interest rates, borrowers may be able to lower their monthly federal student loan payments by enrolling in an income-driven repayment (IDR) plan. Private lenders generally don’t offer flexible repayment plans.

Important

The future of current IDR plans is up in the air following a federal court injunction stopping the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.

The Bottom Line

Lowering your student loan interest rate can free up funds in your monthly budget and reduce the overall cost of taking on debt. It’s important to understand the options available to you and take proactive measures so that burdensome student loan payments won’t drag you down.

You may fantasize about owing a comfortable lake house in a quiet rural setting, but such homes often come with their own problems. Among other issues, well water can contain higher-than-acceptable levels of uranium and/or radon. Fortunately, you don’t have to give up on your dream of having a vacation home, as there are systems you can have installed that filter out these contaminants.

Key Takeaways

• Uranium and radon occur naturally but can be hazardous to your health if they exceed certain levels.
• Municipal water systems filter out these contaminants, but homeowners who rely on well water may need to mitigate the problem on their own.
• If you’re considering getting a mortgage for a home with contaminated well water, you may be in a position to negotiate a lower price with the seller.

Understanding the Contaminants

Uranium in Drinking Water

Uranium is a naturally occurring radioactive element that’s widely found in water, soil, and rock. According to the International Atomic Energy Agency, “Uranium is among the more common elements in the earth’s crust—about 500 times more common than gold.” Some 99% of the earth’s uranium is known as U-238, which isn’t the type primarily used to power nuclear reactors or build atomic bombs.

However, just because uranium is ubiquitous in nature doesn’t mean that it’s good for you. Uranium can accumulate in the human body when it’s ingested or inhaled. In sufficient quantity, that can potentially lead to kidney damage, weakened bones, respiratory diseases, and lung cancer. However, it’s worth noting that people who frequently come in contact with high amounts of uranium, such as miners, are at far greater risk than the general population.

The Environmental Protection Agency (EPA) sets a maximum contaminant level (MCL) for uranium in drinking water of 30 micrograms per liter (µg/L), and public water systems are expected to comply.

Radon in Water

Radon is an odorless, radioactive gas that’s found in both soil and water. While it’s of little danger outdoors, it can be hazardous when it builds up inside your home. Radon gas is associated with an increased risk of developing lung cancer and is of particular danger to people who smoke.

Most radon enters homes through the air, but it can also be released when you shower or run water for other purposes. Drinking radon-contaminated water is associated with a very small number of stomach cancer deaths each year, making that far less of a concern than breathing it.

The EPA doesn’t set enforceable standards for radon in water, but it recommends that “because there is no known safe level of exposure to radon,” Americans consider taking action if the radon level in their home (from all sources) exceeds 2 picocuries per liter (2 pCi/L).

Important

Uranium and radon aren’t the only health concerns raised by the use of well water or perhaps even the most likely or imminent dangers that the water poses. In fact, while the EPA suggests testing well water every three years for radionuclides, such as uranium and radon, it recommends testing for bacteria, nitrates, viruses, and similar contaminants on an annual basis.

Should You Walk Away or Move Forward?

In many states, home sellers are required to disclose any of the home’s defects that they’re aware of. However, a seller who’s never had their water tested for uranium or radon can most likely plead ignorance. That means it’s up to the potential buyer to request the relevant tests. 

If you’re buying a home, you’ll usually want to have it professionally inspected before sealing the deal. Your lender, if you’re taking out a mortgage, may also require one. You can request that your water be tested as part of that process.

These are some questions to ask:

1. What are the current levels of uranium and radon in the water as well as that of radon in the home generally?
2. How do those compare to the EPA’s (or other relevant authority’s) recommended safe levels?
3. What, if any, effort is the current owner making to mitigate the problem?

Depending on the extent of the problem, you’ll want to look into what fixing it would cost you and how much risk your family, especially children or the elderly, might face in the meantime.

You may decide that, all in all, dealing with the problem wouldn’t be worth the cost or effort involved—especially if you were hoping to buy a place where you could unwind and relax rather than take on a big to-do list.

Mitigation Options and Costs

Homeowners have a variety of options for mitigating problems associated with contaminated well water, if that’s the route you choose to take.

The EPA says that it has found ion exchange and reverse osmosis systems effective in removing radionuclides. That can include both uranium and radium, the latter of which breaks down to form radon gas.

These systems can be either “point-of-use” (installed on individual taps) or “point-of-entry” (connected to the waterline entering your home for whole-house coverage). Which type you might prefer will depend on the contamination problems you have, what you use your water for, and how much you can afford to spend.

For radon specifically, the EPA recommends either granular activated carbon (GAC) filters, which filter radon gas out of the water and store it, or aeration devices, which expel the radon gas before it can enter the home.

Costs for these systems can vary widely, depending on their type and complexity. For example, the website Angi reports that reverse osmosis systems may range anywhere from $150 to $10,000. Countertop point-of-use models averaged $200 to $700, undersink models $200 to $800, and whole-house systems $1,000 to $4,800.

Note that you’ll most likely want to use a professional installer, such as a licensed plumber with experience in this area. The Water Quality Association, a trade group, also has a certification program leading to several professional designations, including certified installer and certified service technician. In addition, you should have your system inspected periodically, which can add to the cost.

Negotiating With the Seller

If you discover that a home you wish to buy has problems with well water, and you like the place too much to just walk away, consider negotiating. You might, for example, ask for a price reduction that’s adequate to compensate you for the cost and hassle of fixing the issue.

As an alternative, you could ask the seller to fix it before you complete the transaction and move in, writing that into the purchase contract as a contingency.

The Bottom Line

Contaminated well water is common in many parts of the United States where homeowners aren’t connected to a municipal water system. The problem is fixable and needn’t be a deal-breaker for buyers who otherwise like a particular property. But because of the potential health risks, contamination isn’t something you should ignore, so be sure to get an inspection before you move in and periodically after you take possession of the home.

Debt consolidation can cut interests costs, but only if your credit score measures up

Debt consolidation can be a smart strategy to reduce how much you pay in interest. However, your ability to save depends heavily on your credit score. If your score is strong, you may qualify for a lower interest rate and lower your total debt costs. If not, consolidation could cost you more in the long run.

Key Takeaways

• Your credit score directly affects your interest rate, which determines whether debt consolidation will save you money.
• Higher credit scores typically qualify for lower rates, increasing your potential savings.
• Lower credit scores may result in high interest rates, eliminating any benefit from consolidating.
• Improving your credit score before applying may increase your chances of securing a favorable rate.

What Are You Paying Now?

To evaluate whether debt consolidation will save you money, start by understanding what you’re currently paying.

For example, let’s say you have a $10,000 credit card debt with a 24.25% APR that you want to pay off. If you only make a payment of $327.40 for 48 months, you’ll pay $5,715.30 in interest, bringing your total repayment to $15,715. (Try a loan calculator to compare different scenarios.)

Consolidating high-interest rate debt into a new loan with a lower fixed interest rate can reduce your monthly payment and the total interest you pay over time. This can also provide immediate cash flow relief.

Important

If you’re making minimum payments on high-interest rate credit cards, most of your payment goes toward interest, not the balance.

What Rate Can You Get?

Your credit score is a key factor in determining your interest rate on a debt consolidation loan or balance transfer credit card. Generally, the higher your credit score, the lower interest rate you’ll receive. According to an Investopedia analysis of May 2025 data: 

Credit Score Range	Average Personal Loan APR
Excellent (720+)	19.02%
Good (660-719)	26.07%
Fair (620-659)	30.04%
Poor (<620)	30.62%

For credit cards used to consolidate debt, average interest rates also vary:

• Bad/Fair Credit: 27.52%
• Good/Excellent Credit: 23.33%

The average for all debt consolidation cards is around 22.11% APR.

Do the Math

Let’s compare the total costs of two scenarios using the same $10,000 debt over a 48-month term:

	Consolidation Loan	Paying Down Debt
APR	19.02%	24.25%
Monthly Payment	$299.11	$327.40
Term	48 months	48 months
Total Interest	$4,357.12	$5,715.30

In this example, consolidating would save $1,358.18 in interest and lower your monthly payment by $28.29, making it less expensive to get out of debt. The higher your current APR–and the lower rate you qualify for–the more you stand to save.

Warning

Consolidating could cost you more if you’re offered a higher-rate loan. This can happen if you have a low credit score. Also, be sure to include any loan origination or other fees in your cost comparison.

The Bottom Line

Debt consolidation is only financially beneficial if you can secure a lower interest rate than you’re currently paying. Your credit score is the main factor that determines whether that’s possible. Before applying, check your credit score to understand your potential range. Prequalify with multiple lenders to compare offers without affecting your credit. If needed, take time to improve your credit to increase your chances of locking in a better interest rate.

Students taking on a massive amount of debt to cover college costs has become the norm, with many juggling multiple education loans just to reach graduation. However, nearly two out of three borrowers have difficulty repaying these loans. Staying on top of your loan terms, creating a detailed budget, and picking a repayment strategy can help you better manage your student debt.

Key Takeaways

• Reviewing and revising your budget is crucial for understanding where your money is going and how you might afford your student loan payments.
• The debt avalanche strategy can help you determine which of your debt payments to prioritize in a cost-effective way. 
• Refinancing or a federal debt consolidation loan will allow you to combine multiple loans into a single payment, and possibly with a lower interest rate.

Get in Tune With Your Loan Terms

To stay ahead of debt, borrowers with multiple student loans need to know the exact details of each of their loans. This includes:

• Name of lender: Student loans can be transferred between servicers. Keep track of these moves so you know who to contact if you ever have questions about your debt. 
• Loan amount: Knowing your outstanding balance is essential for effective repayment planning.
• Repayment dates: Being aware of when your payments are due and for how long you’ll have to make them will make it easier to stay on top of your debt and ensure your accounts remain in good standing.
• Interest rate: This determines how much you’ll owe the lender in interest each month. The lower the rate, the less you’ll pay in the long run.

Revise Your Budget

After analyzing the terms of your loans, your next step should be weaving those requirements into your budget. If debt repayment is a priority, then ceasing wasteful spending is also a goal you ought to have.

Start by analyzing your budget to get the most accurate picture of where your money is actually being spent. Next, take steps to improve that allocation. Create a detailed list of your income and expenses, including your student loan payments, and try to balance the two.

If you’re having trouble, consider distinguishing your needs from your wants and cutting back on discretionary expenses. Alternatively, you can try to get a side hustle or other source of additional income. 

Choose a Debt Payment Strategy

Once your budget is balanced, you’ll be ready to start making debt payments, but you’ll need to determine how best to do so. The debt snowball and debt avalanche methods are two commonly used repayment strategies for borrowers tackling multiple debts.

The debt snowball method entails tackling the smallest amount owed first and, once that debt is paid off, rolling that larger payment over to the next highest outstanding balance. The idea behind this strategy is that the relief from eliminating individual loans will motivate you to keep paring down your debt. However, because it doesn’t take interest rates into account, it typically isn’t the most cost-efficient option.

On the other hand, the debt avalanche method is likely better suited for someone with multiple loans. This strategy prioritizes putting larger payments toward the debt with the highest interest rate, then (once you’ve repaid the first loan) moving on to the next highest. While this may mean individual loans won’t be paid off as quickly, it’ll reduce the amount of interest you’ll pay in the long run.

Note

With each of these strategies, you’d still be making the minimum monthly payments required for whichever loans aren’t the highest priority.

Other Tips for Repaying Multiple Student Loans

When juggling multiple debts, setting up automatic payments is a great way to ensure you won’t miss any payments. Certain lenders, including the federal government, offer discounted interest rates or other benefits for using autopay.

Federal student loan borrowers also have certain benefits and protections that can make their monthly payments easier to manage. These include income-driven repayment (IDR) plans, forbearance and deferment options, and loan forgiveness opportunities.

Important

The future of current IDR plans is up in the air following a federal court injunction stopping the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.

You can also simplify having multiple student loans by rolling them into a single monthly payment. If you have federal student loans, you can combine them under a direct consolidation loan, while you can refinance private loans with a new lender. With either of these options, you may be able to secure a lower interest rate and/or a new repayment term that better suits your budget.

Note

You can refinance federal student loans with a private lender, but this may mean losing out on the benefits and protections this type of loan provides. You cannot consolidate a private student loan into a direct consolidation loan.

The Bottom Line

Having to repay multiple student loans can feel daunting, but it’s still doable. Through a combination of smart budgeting and a suitable repayment strategy, you can efficiently chip away at your debt over time.

Struggling to afford your student loan payments can feel overwhelming, but failing to address the problem can lead to serious financial consequences. If you can’t afford student loan payments, it’s important to immediately inquire with your student loan servicer about your options to avoid defaulting on your debt.

Key Takeaways

• Missing student loan payments can severely impact your credit score and eventually result in your wages being garnished.
• Refinancing your student loans can lower your monthly payments, but it will likely exempt you from certain federal benefits and protections.
• Developing healthy financial habits now can help mitigate future financial difficulties.

Understanding the Consequences of Missing Payments

Failing to repay your student loan debt can have some serious consequences, including delinquency or default. Your federal student loans are considered delinquent on the first day after you miss a payment, and they’ll remain so until you either repay the past due amount (plus any applicable fees) or successfully apply for deferment or forbearance. If you qualify for either, you’ll be able to put off student loan payments for a certain period, but interest may still accrue (depending on the type of loan).

If your federal student debt is delinquent for 90 days or more, it’ll be reported to the major credit bureaus, which can hurt your credit score and make it harder to borrow money in the future. If your loan remains delinquent for too long, it may go into default. Defaulting can carry more serious financial consequences, including wage garnishment, withholding of your tax refund, collection fees, and even legal action.

Note

The delinquency timeline for private student loans can vary between lenders—it could be as little as 30 days. Additionally, private lenders have fewer options for recourse in the event of a default, though these efforts may also include taking you to court.

Exploring Financial Solutions

Fortunately, you have a couple of options to avoid becoming delinquent or defaulting on your loans. If you have both federal and private loans, then one possibility is to refinance your student loans, which can potentially earn you a lower interest rate. However, private loans don’t carry the same benefits and protections that federal student loans do, which include:

• Deferment or forbearance options when you face financial hardship
• No interest accruing on subsidized loans during periods of deferment
• Access to income-driven repayment (IDR) plans that forgive the remaining balance after a certain period
• Access to several student loan forgiveness programs, such as Public Service Loan Forgiveness (PSLF)

Important

The future of current IDR plans is up in the air following a federal court injunction stopping the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.

Alternatively, if you have multiple federal student loans, you could consolidate them into a single direct consolidation loan (hopefully at a lower interest rate). You cannot consolidate private student loans in this way.

You could also negotiate a lump-sum payment with the Department of Education for less than the amount you owe, otherwise known as a settlement and compromise. One of the main benefits of this option is that you could have collection fees and a portion of your interest waived. However, it might be tricky to get the Education Department to agree to this kind of arrangement, and there may be tax consequences as well.

Lastly, you can simply contact your student loan servicer or lender to discuss deferment and forbearance options, or inquire about switching to a more affordable repayment plan.

Long-Term Financial Strategies

Once you’ve figured out the right financial solution to make your student loan payments more affordable, it’s worth developing better long-term financial habits to help avoid the risk of delinquency in the future. For example, using zero-based budgeting (ZBB) or the 50/30/20 rule can ensure your finances are organized and that every dollar is properly accounted for.

It’s also a smart idea to set up an emergency fund using a high-yield savings account. Not only will this help you prepare for a rainy day, but you’ll also earn interest along the way.

The Bottom Line

If you can’t afford your student loan payments, you still have options. Whether you apply for forbearance or deferment or reach out to your loan servicer for assistance, there are many ways to avoid delinquency and default. By implementing a budgeting strategy that works for you and building an emergency savings fund, you can ensure you’ll have no problems making your student loan payments in the future.

High inflation can both directly and indirectly make student loan repayments less affordable. As prices rise, borrowers may struggle to find sufficient room in their budgets for their monthly debt payments, especially if they have variable-rate loans that charge more amidst higher inflation. However, even fixed-rate student loans can be difficult to pay back during inflationary periods, due to the aforementioned budget constraints.

Key Takeaways

• The effects of inflation are often cyclical: Rising costs mean businesses have to pay more to provide their goods and services, which usually leads to them raising their own prices.
• Inflation can affect student loan repayments by influencing interest rates and borrowers’ disposable incomes.
• Borrowers can manage inflation’s impacts with strategies including consolidating, refinancing, and careful budgeting.

Understanding Inflation and Its Economic Impact

Inflation involves broad price increases along with decreases in purchasing power, meaning your money doesn’t go as far as it used to.

Inflation can be a difficult cycle to stop since as prices rise, companies usually have to pay more for materials and labor, which then typically causes them to increase their own prices as well. The solution often involves slowing down the economy via higher interest rates, so weakening demand causes companies to stop raising prices so quickly.

How Inflation Affects Student Loan Repayment

High inflation can make student loans harder to repay due to several factors.

• Interest rates: While existing fixed-rate loans—like all federal education loans since July 1, 2006—aren’t directly affected by inflation, some private student loans are variable, meaning that they could charge more in interest during periods of high inflation. Additionally, as federal student loan interest rates can be changed ahead of each academic year, new fixed-rate loans can also cost more due to inflation.
• Repayment thresholds: Some borrowers are on income-driven repayment (IDR) plans, which base monthly payments on your income in order to make them more affordable. However, if your employer gives you a raise to keep pace with inflation, you could end up paying more.
• Decreased disposable income: Higher costs in areas such as housing, food, and transportation can make it harder to afford student loan payments. A 2024 study found that students felt concerned and frustrated about inflation, and rising costs for necessities, including textbooks and internet access, hurt their studies.
• Potential for more debt: If you’re currently in school, rising costs may require taking out even more student debt to fund your education. Alternatively, if you’ve graduated but are struggling to make your budget work due to inflation, you might end up getting a new loan to cover your current payments and avoid defaulting on your old debt.

Important

The future of current IDR plans is up in the air following a federal court injunction stopping the U.S. Department of Education from implementing the Saving on a Valuable Education (SAVE) plan and parts of other plans.

While there are many potentially detrimental effects of inflation, some borrowers may actually end up benefiting from it. The flip side of higher interest rates is that they can also increase the earning potential of vehicles such as savings accounts and certificates of deposit (CDs). Of course, the degree to which this can help you afford your student debt payments will vary based on how inflation affects your other expenses.

Strategies for Borrowers to Manage Inflation’s Impact

One option to counter inflation is careful budgeting to determine where you can free up funds for student loan payments. That could also mean looking at the income side of the equation and searching for a higher-paying job, pushing for a promotion and raise, or starting a side hustle.

Another option is debt consolidation. With federal student loans, a direct consolidation loan allows you to streamline your monthly payments and potentially secure a lower interest rate—depending on the rates of your current loans.

Refinancing your student loans could also help, though with federal loans, you can only refinance with a private lender. In some cases, refinancing can help you get a lower rate, but federal loans often already have better rates than their private counterparts. Additionally, refinancing federal and private student loans together may mean losing out on the benefits and protections that the former offers, including deferment and forbearance options as well as loan forgiveness programs.

Refinancing can still be an effective option for private student loans. Not only can you simplify payments and potentially secure a lower interest rate, but you may also be able to switch from a variable rate to a fixed one.

The Bottom Line

Inflation can make repaying student loans more difficult, particularly by squeezing your budget and increasing interest rates for variable-rate loans. However, by cutting back on other expenses and finding opportunities to increase your income, the relative cost of your student loan balance can actually shrink.

Fact checked by Vikki Velasquez

Saving for retirement can be a worry at any age, but it’s particularly difficult for younger workers who may be at the bottom of the income ladder.

However, you don’t have to have a lot of money saved up to be on track. Fidelity recommends that young workers save one year of their salary by the end of their twenties. So if you make $50,000 a year, your goal should be to have $50,000 saved for retirement by the time you’re 30.

The sooner you start saving for retirement, the more you can benefit from compound interest. Fidelity recommends saving 15% of your income starting at age 25, which includes employer matching contributions. You should also put more than 50% of your investments in stocks, which are riskier but offer higher potential returns than other investments.

Ultimately, Fidelity suggests that people aim to have have ten years’ worth of income saved by the time they’re age 67. This projection assumes that people can rely on Social Security benefits and collect benefits when they reach full retirement age, which is age 67 for those born 1960 or later.

Key Takeaways

• People in their twenties should aim to save about 15% of their income for retirement.
• Fidelity recommends having one year’s salary saved by age 30, three years’ salary by age 40, and ten years’ salary by age 67.
• If you’re not putting away 15% of your salary annually, try gradually increasing your investing rate.

Juggling Retirement With Other Expenses

Your twenties and thirties can be an exciting time of life, between weddings, babies, paying for childcare, and buying a house. With all these expensive life events, it can be difficult to be consistent about saving for retirement.

“It’s okay to pause or scale back temporarily when managing major life events, but do it with a plan,” says Christopher Stroup, a CFP and founder of Silicon Beach Financial. “If you’re deferring retirement savings for childcare or housing, make sure it’s a short-term strategy with a specific timeline to resume contributions and rebalance priorities.”

You can start saving for retirement in a 401(k) plan or an individual retirement account (IRA_, such as a traditional IRA or a Roth IRA. If you’re investing in a 401(k) or another employer-sponsored plan, make sure to invest enough to get any matching contributions from your employer.

“Start slow by saving a little in your 401(k) or IRA and then increase that amount by 1 to 2% every year,” said Alex Caswell, a CFP at Wealth Script Advisors. “Create a habit of watching your expenses. Carefully evaluate what part of your expenses makes you truly happy and what part of your expenses are more frivolous and careless spending.”

Do your best to keep retirement at the top of your savings list. But if you can’t save 15% of your income, try to keep investing smaller amounts towards your retirement goal.

“If you’re able to save 15%, that’s great. But if you’re not, a great starting goal is to try and get to saving 10% of your salary towards retirement,” says Shaun Melby, a certified financial planner at Melby Wealth Management. “Once you reach 10%, try and increase it 1% every year or when you get a raise.”

Those small additions to your retirement savings can add up over time, especially through market gains and compounding interest.

Important

In addition to saving a year’s salary by age 30, Fidelity also recommends the following targets:

• Two years’ salary by age 35
• Three years’ by age 40
• Six years’ salary by age 50
• Seven years’ salary by age 55
• Eight years’ salary by age 60
• Ten years’ salary by age 67

The Bottom Line

To get their retirement savings on the right track, twenty-somethings should try to annually save 15% of their salary for retirement. As a rule-of-thumb, you should aim to have one year’s salary invested by age 30.

But anything is better than nothing. If you can’t save 15% of your salary, aim for 10% and gradually increase this amount.