Student loans are back — here’s what you need to know

Wednesday, October 4, 2023

Federal student loan payments are due for the first time since 2020 – what you need to know

October has arrived and with it, the resumption of federal student loan payments. 

This month, borrowers are expected to make the first mandatory payments in the more than three years since former President Donald Trump enacted forbearance on payments and interest in response to the Covid-19 pandemic. Interest started accruing on loans again in September. 

Your exact due date depends on your loan servicer. You should be notified of the amount you owe and the day by which you must pay at least 21 days before your payment is due. 

If you can’t afford to resume making payments, you have some options. For one, the Biden administration has issued a yearlong on-ramp period during which late or missed payments will not be reported to credit bureaus. 

For another, you may be able to score a lower monthly payment by applying for an income-driven repayment plan. The new Saving on an Affordable Education plan can bring your minimum payment down to as low as $0 if you earn $15 an hour or less. 

The White House says it’s exploring new paths toward student debt relief after the Supreme Court struck down Biden’s plan to forgive up to $20,000 of debt per borrower. 

Americans aren’t holding their breath. Just 28% think there will be an expansion of student loan forgiveness policies in the next year, according to the latest Survey of Consumer Expectations from the Federal Reserve. 

Money Tip of the Week: What to do with an old 401(k)

As of earlier this year, job switchers had left money in some 29 million 401(k) accounts with former employers, according to estimates from financial services firm Capitalize.

Generally, when you change jobs, you have three tax-efficient options for your old 401(k) account. Here are the pros and cons of each. 

Leaving your money in your old 401(k).

Upside: Simplicity. Generally, if you have more than $5,000 in your old 401(k), you can let it stay put. Provided you’re invested in mutual funds you like, you may enjoy relatively low investment costs — one of the benefits of investing as part of a large group instead of by yourself.

Downside: Your old plan may come with mediocre mutual funds or high costs — both reasons to leave. You also run the risk of forgetting about your account, which could screw up your financial planning. 

Rolling over to your new employer’s 401(k).

Upside: Consolidation. With everything in one place, you can keep an eye on your entire portfolio each time you log into your account. Your new plan is likely to have some basic, low-cost investments and may also come with financial resources, such as consultations with advisors. 

Downside: You may just not be into the new plan. If it has, say, poor investment choices or a clunky website, you may want to opt for an option with more flexibility. 

Rolling into an IRA.

Upside: Flexibility. If you want to take a more hands-on approach with your investments, IRAs give you access to virtually any investable asset, including exchange-traded funds, stocks and sometimes even cryptocurrency. This flexibility comes with the added benefit of allowing account holders to keep costs extremely low.

Downside: It can be tedious. You’ll likely have to get on the phone with your old 401(k) company and the brokerage you open an IRA with. You may owe tax penalties if you don’t get the transfer right. And if you’d be tempted to use your retirement money to make risky bets, you might be better off leaving it in an employer plan. 

Next Gen Investing: 3 ways to use AI to get ahead at work

If you’re only using artificial intelligence to edit selfies or find dinner recipes, you aren’t getting the most out of it.

AI tools can help you get ahead in your career, according to Sarah Hoffman, vice president of AI and machine learning research at Fidelity Investments. She’s a particular fan of using ChatGPT, OpenAI’s popular generative AI chatbot, in a professional context.

Here are three ways you can use generative AI tools to get ahead in your career, Hoffman said recently at the Fast Company Innovation Festival 2023. 

1. Improve productivity and efficiency. Whether you’re drafting a report or writing software code, generative AI can help you “just speed up the process,” Hoffman said.

If you ask ChatGPT to “write me a template for a presentation about fashion merchandising,” the tool will create a detailed outline for you in seconds. Now, your job isn’t to write a presentation from scratch. It’s to work from a template that already exists.

2. Get better at brainstorming. Hoffman uses ChatGPT “as a brainstorming partner,” she said. In this context, the tool’s mistakes and fabrications don’t matter — you’re only using it for inspiration.

“I’m not using it as a research [or] factual tool,” Hoffman said. Instead, she uses it to orient her thinking. 

3. Ask dumb questions. Hoffman uses AI as a nonjudgmental tutor. “I might ask a co-worker … ‘Hey, can you explain this topic to me?’ If I still don’t understand it, I probably will not ask a second time,” Hoffman said. “But I will go into a generative AI tool and say, ‘I still don’t understand. Can you explain it to me as a college student? Can you explain it to me as a fourth grader?’”

Want to earn more and land your dream job?

Join the free CNBC Make It: Your Money virtual event on Oct. 17 at 1 p.m. ET to learn how to level up your interview and negotiating skills, build your ideal career, boost your income and grow your wealth. Register for free today.

Worth the Money: $55 clothing steamer

Does anyone iron anymore? My boyfriend and I certainly don’t, which is why we were so delighted to find this clothing steamer from Conair ($55), which gets our clothes wrinkle-free without the need to unfurl an ironing board. And unlike our last steamer (and the majority of hotel irons I’ve used) this one doesn’t leak or drip water all over our shirts. It also heats up in about 30 seconds — a bonus for those of us who tend to get outfits together at the last possible second. 

— Ryan Ermey, Senior Money Writer

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