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CNBC
4 days ago
- Business
- CNBC
Older student loan borrowers face high delinquency rates as Trump administration ramps up collections
More older student loan borrowers are struggling to pay their monthly bill, as the Trump administration ramps up its collection efforts. Nearly 1 in 5 — or roughly 18% — of student loan borrowers who are 50 and older became "seriously delinquent," or 90 days or more late on their payments, in the second quarter of 2025, according to the Federal Reserve Bank of New York. The rate for that age group was closer to 10% in 2019. For comparison, closer to 8% of student loan borrowers between the ages of 18 and 29 became seriously delinquent during that time frame, and around 11% of those aged 30 to 39 did. "Being delinquent on student loan debt is difficult for people who are approaching their retirement years," said Lori Trawinski, director of finance and employment at AARP. "People end up having to make extremely difficult choices," Trawinski said. Some of the repayment troubles may stem from older Americans borrowing more than they can afford for their children's college education, experts say. Other people run into financial difficulties after returning to school later in life and then not accessing the career opportunities they'd hoped for. More from Personal Finance:Trump floats tariff 'rebate' for consumersStudent loan forgiveness may soon be taxed againStudent loan borrowers — how will the end of the SAVE plan impact you? Tell us Whatever the reason, falling behind on your education debt may quickly have more financial consequences. Earlier this summer, the Trump administration announced that it would soon resume collection activity against student loan borrowers who aren't making their payments. This comes after a nearly five-year period during which student loan holders were shielded from the consequences of missing their bills, a policy that began at the start of the Covid-19 pandemic. Here's what older borrowers in the red need to know. There are key differences between student loan delinquency and default. While becoming delinquent for 90 days or more on your student loans can show up on your credit report and lower your score, the more severe consequences of federal collection activity don't usually start until you're more than 270 days late and eventually fall into default, said higher education expert Mark Kantrowitz. Meanwhile, private lenders typically consider student borrowers in default after 120 days without a payment, he said. Delinquent student loan borrowers have time to get current, said certified financial planner Douglas Boneparth, president of Bone Fide Wealth in New York. "For those struggling, the first step is to explore all available federal repayment options, especially income-driven repayment plans, which can significantly lower monthly payments and prevent default," said Boneparth, who is also a member of the CNBC Financial Advisor Council. You can try to find a repayment plan with monthly bills you can afford at The so-called Income-Based Repayment plan is one of what may be a dwindling number of manageable repayment options left to borrowers, after recent court actions and the passage of President Donald Trump's tax and spending bill. That legislation phases out several other repayment plans. There are tools from the Education Department to help you determine how much your monthly bill would be under different plans. Struggling borrowers can also see if they're eligible to pause their payments, such as through a forbearance or economic hardship deferment — though it's important to check if your debt will accrue interest during the reprieve. "Requesting a temporary forbearance can buy time, but ideally, borrowers should aim for an affordable, sustainable payment plan rather than stop-gap measures," Boneparth said. Older student loan borrowers who are behind on their payments received some good news earlier this summer: The Department of Education has paused its plan to garnish defaulted borrowers' Social Security benefits. Normally, Social Security recipients can see their checks reduced by up to 15% to pay back their defaulted student loan. An Education Department spokesperson told CNBC in an email Tuesday that the department has not offset any Social Security benefits since restarting collections on May 5 and has paused future Social Security offsets. Still, older borrowers should take steps to get their debt out of delinquency as quickly as possible and avoid becoming at risk for more punishing collection activity, said AARP's Trawinski. While the Trump administration said in June that it was pausing Social Security offsets, "what they did not do is issue a formal rule or regulation saying they won't do so in the future," Trawinski said. As a result, she said, "there's an expectation that they will at some point resume those garnishments." For those older borrowers who are still working, the Education Department can also garnish up to 15% of your disposable, or after-tax, pay, toward a defaulted student loan, Kantrowitz said. "We anticipate wage garnishment to begin later this summer," a spokesperson for the Education Department told CNBC on Aug. 5.
CNBC
09-08-2025
- Business
- CNBC
Crypto may be coming to 401(k) plans, but it'll be a while before it's easily accessible
The crypto market this week cheered as President Donald Trump signed an executive order meant to open retirement plans to alternative assets including cryptocurrencies. The move from the White House has the potential to be a game changer for the adoption of digital assets. It could help turn them into mainstays of the U.S. financial market by expanding access and encouraging longer-term investing in crypto. Bitcoin , which has been riding a big wave of institutional acceptance and adoption since last year's debut of U.S. bitcoin ETFs , could one day become more established within financial services. It probably won't happen soon based on the White House's greenlight alone. It's even more unlikely investors will be directing BONK , Pudgy Penguins or other meme coins to their retirement accounts. "On the surface, it's exciting to see digital assets getting presidential-level attention," said Doug Boneparth, certified financial planner and founder of Bone Fide Wealth. "It signals continued legitimization of the space and shows how far we've come since bitcoin was just an internet curiosity. But the reality is a lot more nuanced." Employer adoption is key First of all, under the Employee Retirement Income Security Act of 1974 (better known as ERISA), major changes to investment menus require thoughtful guidance and buy-in from plan sponsors – especially if they involve volatile and still-maturing asset classes like crypto, Boneparth noted. For example, Fidelity in 2022 became the first retirement plan provider to give savers the option of putting bitcoin in their 401(k)s. However, employers must be willing to adopt the offering in the first place. That "came down to employers' risk tolerance and fiduciary responsibility. That's not changing overnight with an [executive order]," Boneparth said. Employers' fiduciary duty requires them to comply with ERISA and to run the plan in the best interest of the participants and beneficiaries. Further, too many investment options can be a barrier to participation, said Preston Cherry, CFP and founder of Concurrent Financial Planning. While increased access to crypto may be a plus, "people become overwhelmed with the investment menu options" which leads to a "lack of participation," he said. Even when there is education available on these investment options, employees have to elect to receive it — and those participation rates are typically low, Cherry added. Combine those considerations with high-risk assets, and employers' fiduciary responsibility has to kick in. "What happens with all the other altcoins?" Cherry said, separating out bitcoin, ether and the Solana token. "There should be oversight on that from the investment committee or plan sponsor overseeing what digital currencies actually get accepted and should for sure be educating on it." "There's potential upside in digital currencies, but a lot of folks can't understand 30%, 40%, 50% drawdowns – and it could be destructive," he added. "I'm not saying don't invest in crypto, but be crypto cautious." It depends on recordkeepers and 401(k) plan providers The retirement market had $43 trillion in assets in the first quarter, almost $9 trillion of which was held in 401(k) plans, according to the Investment Company Institute. The crypto market cap is nearly $4 trillion today. The executive order is the latest in a series of efforts under the Trump administration to make the U.S. the "crypto capital of the world." In July, he signed stablecoin legislation known as the GENIUS Act into the first official U.S. crypto law . The Securities and Exchange Commission recently debuted " Project Crypto ," an initiative to modernize securities regulations to allow for crypto-based trading. "The plan providers, the third-party providers, the recordkeepers, are going to decide the end result here, if they want to put crypto in or not," said Tyrone Ross, CEO of registered investment advisor 401 Financial. "This is part of this administration's goal to make crypto the epicenter of the world and to have it grow here," he added. "They're all-in, but the Fidelities of the world, the Schwabs, the MassMutuals, the Vanguards of the world – I don't know if they're just going to go, 'OK, we're going to do it.'" Boneparth echoed that the order is more "more symbolic than structural right now." However, this shouldn't diminish the significance of Washington's blessing of the crypto industry. Further, an education opportunity has just opened up in the retirement sector. "As someone who believes in the long-term role of bitcoin in a diversified portfolio, I'm hopeful," Boneparth said. "But as a fiduciary, I know our job is to help clients weigh the opportunity and the risk." "If we do this right, the door opens a little wider to the future of retirement investing," he said. "If we don't? Well then, who knows what meme coin we're going to see on a retirement plan statement."
CNBC
23-05-2025
- Business
- CNBC
Robotaxis will hit streets in June: If you want to invest in autonomous vehicles, 'look under the hood' first, says ETF researcher
The act of investing is, in many ways, a bet on the future. And sometimes, the future arrives quickly: Tesla will have "robotaxis" on the streets of Austin, Texas, by the end of June, CEO Elon Musk told CNBC on Tuesday. The program will start with about 10 self-driving vehicles and rapidly expand to thousands if the launch goes off without incident, Musk said. That sort of announcement may give you the itch to open your brokerage app, if you think autonomous vehicles are the way of the future. But wise investors, even when presented with exciting opportunities, are still deliberate in their approach, says Douglas Boneparth, a certified financial planner and president of New York-based wealth management firm Bone Fide Wealth. "Whether it's self-driving vehicles or any future technology — AI being the largest of the categories here — when we're thinking about opportunities to invest, you don't treat it any different than any other investment opportunity that you have," says Boneparth, a member of CNBC's Advisor Council. "You're going to work with your client to see what their appetite for risk is and where an investment like that fits in their overall financial plan or their overall investment plan." Here's how he and other financial pros think about investing in technology themes of the future. If you're looking to up your portfolio's exposure to a certain technology or investing idea, consider a thematic exchange-traded fund. These ETFs tend to hold a basket of stocks that the fund company believes will benefit from the rise of a particular technology or industry. Prospective investors in generative artificial intelligence, autonomous vehicles or humanoid robots, can choose between several dedicated, specialized ETFs, each with their own mix of stocks based on different portfolio-building methodologies. Essentially, instead of trying to pick which companies in a nascent industry will eventually succeed, you could just buy the whole thing, owning the winners and eventual losers. "The hook for some of these ETFs is, a lot of people say, 'If only I had invested in the internet in its early days, I would have made so much money,'" says Roxanna Islam, head of sector and industry research at TMX VettaFi. "You're investing in its early days, and you're going to see it grow and play out in the future." Examine what each fund holds before you buy. Many of them are weighted by company size, so they may own a number of large-company stocks that are already in your portfolio — not exactly providing new exposure to a particular theme. Lots of autonomous vehicle ETFs, for instance, include Tesla and industry "enablers" like Nividia and Microsoft, says Islam. Some investors may be fine with this, while others may want to seek out an ETF that sticks to "pure plays" on the theme, she adds. "You have to look under the hood and see if what the fund holds is right for you." Whether you're interested in buying thematic ETFs or picking individual stocks, financial experts recommend setting up some guardrails before you do so. First, some classic advice: Make sure the vast majority of your investments are in a broadly diversified core portfolio of low-cost mutual funds and ETFs. Then, once you have that set up, financial pros say you can branch out into investments that you find more exciting — carefully. "If we're talking about opportunity portfolios, or if you want to call it 'core and explore' – whatever terminology — 5% to 10% of your overall investable net worth being put towards things that are more adventurous or opportunistic is usually where we start the conversation," says Boneparth. The idea here is to use a small portion of your portfolio to have fun. If it does well, great — and if it doesn't, you won't lose a significant chunk of your net worth overnight. Islam recommends devoting no more than 5% of your portfolio to thematic ETFs, for example. And remember: Investing solely based on headlines is rarely a great idea, no matter how promising the news may seem. "Just because it's extremely popular and extremely exciting doesn't mean you treat it any differently from the amount of due diligence and research you would do for that specific company or sector," Boneparth says. ,
CNBC
23-05-2025
- Business
- CNBC
Bitcoin, mid-caps, and infrastructure: where the bulls are heading now
Douglas Boneparth, President at Bone Fide Wealth, and Simeon Hyman, Global Investment Strategist at ProShares, discuss market disruption, Bitcoin, tax cuts, and top equity picks.
CNBC
24-04-2025
- Business
- CNBC
27-year-old lost $80,000 of his savings trading stock options: I was 'devastated'
While many investors may have gotten nervous watching the stock market plummet and bounce back amid President Donald Trump's recent tariff announcements, some may have seen an opportunity. Paul fell into the latter camp. In early April, the 27-year-old saw news of upcoming auto tariffs and believed it would send stock prices down for major carmakers like Tesla. He thought he could make some money on that movement, he told self-made millionaire Ramit Sethi in an episode of his "Money for Couples" podcast, which was recorded live on April 8. Paul and his wife Vicki's last names were not used. Paul was initially successful, earning around $4,000 trading Tesla options, he said. But then his "obsession" with making more tempted him to place an even bigger bet, and he woke up the next day to an $80,000 loss, he said. Options are contracts that give an investor the option of buying or selling an asset, like a stock, at a certain time and price point. It's considered a riskier investment strategy than buying and holding stocks because it's speculative and relies on the investor timing the market — which even the most seasoned investors can't do with perfect precision. "I thought I had enough information to make the right choice with the money that we had in our brokerage account and it ended up not being the right choice," Paul said. He started options trading in 2021, and said he is currently "in the red" on that front. "If I were to put all the money that I lost into an index fund, we would be sitting really really pretty," he said. The couple earns $169,000 a year and the $80,000 Paul lost came from their emergency savings. They still have $110,000 in their retirement accounts and $23,000 left in their emergency savings after Paul's recent loss. The couple's situation illustrates why a "boring" investing strategy makes sense for most people, Sethi said. As Paul knows, options trading can come with a major payoff, but not without taking on significant risks. "Options trading can be incredibly risky for casual investors because it often requires a deep understanding of market mechanics, volatility and timing," says Douglas Boneparth, a certified financial planner and founder of Bone Fide Wealth. "Unlike simply owning a stock, options are leveraged instruments. This means small moves in the market can have outsized consequences, both gains and losses." This isn't the first time Paul has lost a significant amount of money on options trading, he said. He enjoys it for the income potential — he made $80,000 in about three months when he was first starting out in 2021, he said — and the rush he gets from seeing his money move around. But waking up to his recent loss "devastated" him, he said. "For most retail investors, options trading is not a good strategy," Boneparth says. "It's often misunderstood, and many people treat it like a lottery ticket or a quick-win gamble. In reality, successful options trading requires discipline, experience, and often, access to tools and data." Investing should be boring for most people, Sethi said on the podcast. That often means setting up automatic contributions to investment accounts and utilizing passive strategies like index funds, which offer automatic diversification. Passive investing strategies are often cheaper than active strategies because they typically have lower fees. They also regularly outperform actively managed portfolios, according to research from S&P Dow Jones Indices. Sethi has witnessed this firsthand with the couples he interviews. "By the time [investors] are talking to me, they've probably lost a lot of money in active trading," Sethi said. "Meanwhile, their passive trading is crushing it." For Paul, losing $80,000 was a turning point, he told Sethi. He acknowledged he needed to stop options trading altogether, something he's said in the past as well. Losing that money felt like losing "the feeling of freedom" it offered as an emergency fund, Paul's wife Vicki said. "With the loss of that comes the loss of security, not just in the betrayal of trust, but the loss of that [safety net]," she said.
