Francis Creighton, the president and chief executive of the Consumer Data Industry Association, a trade group for the credit reporting industry, said it was important to have pay-later loans reflected on credit reports so lenders could have a true picture of a loan applicant’s overall credit profile. But because the loans are structured differently from traditional loans, he said, the credit bureaus first had to resolve “technical” issues to add them. “We have to make sure we do it right,” he said.

At the same time, the federal Consumer Financial Protection Bureau has stepped up scrutiny of pay-later companies. In mid-December, the bureau opened an inquiry, asking five companies to supply details about their business practices by March 1. The bureau, citing the “explosive growth” of pay-later during the pandemic and through the holiday shopping season, said it wanted to understand the potential benefits and risks to consumers better. The agency said it was also concerned about how the companies use the data they collect from customers.

The agency noted that if consumers use the loans for multiple purchases, they may have trouble keeping track of payments. “Because of the ease of getting these loans,” the agency said, “consumers can end up spending more than anticipated.”

Installment payments are usually deducted automatically from debit cards, so shoppers may be charged overdraft fees if they don’t have enough money in their accounts to cover the payments. If shoppers pay the installments with a credit card, they may run up additional debt and interest charges on their card if they don’t pay their installment balance in full.

Also, the consumer agency said, pay-later loans carry fewer protections than traditional credit cards, like the right to dispute a charge if a product is faulty.

Members of Congress, as well as consumer groups, have called for more oversight of the companies, noting that because the installment loans don’t use traditional credit checks, it’s not clear whether borrowers have the ability to repay multiple loans.

Here are some questions and answers about buy now, pay later credit:

What should I consider before using pay-later loans?

Ms. Saunders said consumers should be confident that they will be able to make the required installments in the time allotted. With traditional credit cards, customers have a consistent payment schedule and a statement summarizing all charges, but someone with multiple pay-later loans may have to juggle multiple due dates. “They definitely want to make sure they’re keeping track of their payments,” she said.

Article source: https://www.nytimes.com/2021/12/31/your-money/buy-now-pay-later-loans-credit.html

After gray divorce, women’s standard of living fell by 45 percent, Dr. Lin and her co-author found, while men’s decreased by just 21 percent. Repartnering, either through remarriage or cohabitation, helped divorced older women regain their financial footing, but only 22 percent of women repartnered, compared with 37 percent of men. (In Ms. Palazzo’s case: “Not going to happen.”)

Changes in Social Security eligibility and benefits could reduce some of this inequity. The benefit for a divorced spouse, for instance, is half what a widowed spouse can claim. Caregiver credits could partially compensate for years spent in child rearing or elder care.

“The basic rules were written in the 1930s,” Dr. Rutledge said. “They don’t recognize women’s increased employment. They don’t recognize that people don’t stay married for good.” Mandated retirement savings programs (Australia has one) would also help workers whose employers don’t offer them.

It’s possible to see progress in these patterns. “It’s good news that women are working and living independently, emerging as independent economic actors,” said Teresa Ghilarducci, an economist at The New School, noting that younger women were narrowing the gender gap in earnings and savings.

But many women currently approaching retirement may struggle, especially if they’re single like Ms. Hartt. She now lives frugally on a $2,500 monthly Social Security benefit. She drives a leaky 2001 Nissan she will be unable to replace when it dies. “Because I have no family and no savings, what worries me is if I were to become disabled, physically or mentally,” she said.

One piece of luck: In September 2020, she moved into a cheerful apartment in a Section 8 subsidized housing complex in New Haven, for seniors and people with disabilities. The rent comes to $670 a month, including utilities.

“I feel safe,” she said. “I’m at a kind of peace.” And because she hasn’t fully squelched her optimism, she buys a few lottery tickets each week.

Article source: https://www.nytimes.com/2021/12/26/health/older-women-financial-hardship-retirement.html

In recent months, pleas to take sweeping action on student loans have gone unanswered by Mr. Biden, who has said he has been reluctant to explore executive action to forgive large amounts of student loan debt, lest that relief go to people attending elite colleges. But last week, Vice President Kamala Harris spoke publicly about the need to provide relief to borrowers.

“I had student loans,” Ms. Harris said during an interview with the radio and television host Charlamagne tha God. “I mean, look, right now, we have so many people, tens of millions of people in the United States who are dealing with student loan debt and responsibilities, and it’s standing in the way of them being able to start a family or buy a home. And it’s real, and we need to deal with it.”

On Wednesday, the White House sought to give Ms. Harris credit for her role in persuading the president to approve the extension. Jen Psaki, the White House press secretary, said conversations with advisers, including Ms. Harris, had led to Mr. Biden’s decision to extend the moratorium. Ms. Psaki said the president’s endangered social spending plan was not the main reason for the student loan extension.

“This is something the president has thought a lot about over the past several days,” Ms. Psaki said, adding that conversations with Ms. Harris “led to the decision to extend until May.”

The Biden administration has already canceled some debt through more targeted measures — it wiped away nearly $13 billion in loans for nearly 640,000 borrowers, according to the Education Department, including more than $7 billion for people with a “total and permanent disability.”

Activists praised the administration’s decision.

“The Biden administration has thrown a lifeline to student loan borrowers in the face of economic and public health reality,” said Mike Pierce, the executive director of the Student Borrower Protection Center. “This was a necessary action for borrowers to be able to stay afloat.

People who are struggling to repay student loan debt said the extension was helpful, if only temporary.

Article source: https://www.nytimes.com/2021/12/22/your-money/student-loan-pause.html

Tell me more about income-driven plans.

The rules are complicated, but the gist is simple: Payments are calculated based on your earnings and readjusted each year.

After making monthly payments for a set number of years — usually 20, sometimes 25 — any remaining balance is forgiven. (The balance is taxable as income, though a temporary tax rule exempts balances forgiven through 2025 from federal income taxes.)

There’s a confusing assortment of plans available, and there may even be a new one coming, though probably not for a while. For now, the alphabet soup includes PAYE, REPAYE, I.C.R., and I.B.R. (which comes in two flavors, with the latest version updated to have slightly better terms for newer borrowers).

Monthly payments are often calculated as 10 or 15 percent of discretionary income, but one plan is 20 percent. Discretionary income is usually defined as the amount earned above 150 percent of the poverty level, which is adjusted for household size. “PAYE usually has the lowest payment, followed by either I.B.R. or REPAYE, depending on the specific circumstances of the borrower,” said Mark Kantrowitz, a student aid expert.

There’s a dizzying variety of rules. Consider spousal income.

“REPAYE has a marriage penalty, while I.B.R. and PAYE will use just the borrower’s income if they file a separate return, joint income if they file a joint return,” he said. REPAYE, he said, uses joint income regardless of tax filing status.

Got all that?

These plans aren’t a cure-all. Even though some borrowers may be eligible for a $0 payment, the plans aren’t always affordable for everyone. The formulas aren’t adjusted for local cost of living, private student loans or medical bills, among other things. And people who are eligible for small (or $0) payments will see their balances grow, sometimes dramatically. That can take a mental toll, even if the debt is forgiven years later.

But they remain a more manageable solution for many borrowers.

“Enrolling in I.D.R. now is a great next step, particularly if you lost your job during Covid, or your spouse lost their job and you are experiencing a drop in income,” said Mike Pierce, executive director of the Student Borrower Protection Center.

Article source: https://www.nytimes.com/article/student-loan-payment-restart.html

The pause has frozen interest accruals on tens of millions of loans. And about 7.2 million borrowers who were in default got a reprieve from collections.

The so-called administrative forbearance was initially put in place as part of the CARES Act in March 2020, and was later extended by then-President Donald J. Trump. When Mr. Biden took office in January, he pushed the date back to Sept. 30 and then in August, he pushed it back ““one final time” to Jan. 31.

Even so, the kind of sweeping forgiveness that many progressives and activists sought has remained elusive. In recent months, their pleas have gone unanswered by Mr. Biden, who has said he has been reluctant to explore executive action to forgive large amounts of student loan debt, lest that relief go to people attending elite colleges. But this week, Kamala Harris, the vice president, spoke publicly about the need to provide relief to borrowers.

“I had student loans,” Ms. Harris said during an interview with the radio host Charlamagne tha God. “I mean, look, right now, we have so many people, tens of millions of people in the United States who are dealing with student loan debt and responsibilities, and it’s standing in the way of them being able to start a family or buy a home, and it is real, and we need to deal with it.”

On Wednesday, Jen Psaki, the White House press secretary, said that conversations with advisers, including Ms. Harris, had led to Mr. Biden’s decision to extend the moratorium. Ms. Psaki said that the president’s endangered social spending plan was not the main reason for the student loan extension.

Article source: https://www.nytimes.com/2021/12/22/your-money/student-loan-pause.html

Why doesn’t the Common App just say that?

“We’ve reviewed as a team and agree with your point that it could be worded more clearly, so we’ll be discussing internally about how to make edits for future application cycles,” Ms. Steele said in an email. (My request to talk this out over the phone was not successful.)

So how best to proceed, given that early decision isn’t going away?

I consulted Angel B. Pérez, the chief executive of the admission counseling association, who previously oversaw the enrollment operation at Trinity College in Hartford, Conn. Together, we came up with some points students and parents should consider.

If you’re in the thick of it now, with acceptance letter in hand but a troubling financial aid offer, consider two things.

First, and most importantly, you must do what is right for you — and only for you. But there is a right way to ask for more money (or walk away): assume a demeanor of humble inquiry, not entitlement.

If things don’t improve, go with grace. Wish everyone well and explain, in detail, to your high school counselor what has happened and why and how seriously you took the matter before pushing the eject button. People in those roles have long-term relationships to preserve with colleges, for the benefit of future students.

What if you’re thinking about applying early decision in the future?

First, use schools’ net price calculators before applying to see what kind of aid they estimate that you will get if you get in. If the actual offer matches and your family circumstances haven’t changed since applying, it isn’t ethical to walk away because of the price. After all, you were warned.

With these estimates in mind, interrogate the feelings that emerge. Here, it’s worth considering a frustration that many admissions and financial aid professionals have shared with me over the years: Families may complain about their ability to pay when what is really at issue is their willingness to do so.

Article source: https://www.nytimes.com/2021/12/18/your-money/paying-for-college/early-decision-binding-nyu.html

Yet, said Leonard Green, a professor of psychological and brain sciences and economics at Washington University in St. Louis, once workers know that tipping is the norm, it may act as an incentive to provide excellent service to clients. “You want to make sure they continue to tip in the future.”

Workers eligible for holiday tips include those who help you in some way, whether at your home or elsewhere, Mr. Senning said. They can include a housekeeper, doorman, nanny, regular handyman (or woman), as well as your regular manicurist or (if you’re fortunate enough to have one) massage therapist.

Elaine Swann, an etiquette adviser in San Diego, advised thinking about someone who went beyond expectations — perhaps, a babysitter who repeatedly filled in on short notice or a meal delivery person who was always on time. “Put some thought into individuals who really helped make your life easier throughout the year,” she said.

Then, set a budget for tips that takes into account your own financial situation. If money is tight, you may need to rein in your generosity. “I encourage folks to not let it become a detriment to their own pocketbook,” Ms. Swann said.

That said, the pandemic made for difficult times for many service workers, so if your budget supports it, be generous. “If you are able, I’d recommend going above and beyond this year,” Ms. Swann said.

Vid Ponnapalli, a fee-only financial planner in Holmdel, N.J., said he had urged his clients to budget for tips and gifts as they would any other expense. “You have to determine your affordability and your budget,” he said.

If your finances don’t allow for extra cash this year, try and show gratitude another way, Mr. Senning said, perhaps with a thoughtful handwritten note. “Never underestimate the power of your words.”

Article source: https://www.nytimes.com/2021/12/17/your-money/holiday-tipping-guide.html

There’s a confusing assortment of plans available, and there may even be a new one coming, though probably not for a while. For now, the alphabet soup includes PAYE, REPAYE, I.C.R., and I.B.R. (which comes in two flavors, with the latest version updated to have slightly better terms for newer borrowers).

Monthly payments are often calculated as 10 or 15 percent of discretionary income, but one plan is 20 percent. Discretionary income is usually defined as the amount earned above 150 percent of the poverty level, which is adjusted for household size. “PAYE usually has the lowest payment, followed by either I.B.R. or REPAYE, depending on the specific circumstances of the borrower,” said Mark Kantrowitz, a student aid expert.

There’s a dizzying variety of rules. Consider spousal income.

“REPAYE has a marriage penalty, while I.B.R. and PAYE will use just the borrower’s income if they file a separate return, joint income if they file a joint return,” he said. REPAYE, he said, uses joint income regardless of tax filing status.

Got all that?

These plans aren’t a cure-all. Even though some borrowers may be eligible for a $0 payment, the plans aren’t always affordable for everyone. The formulas aren’t adjusted for local cost of living, private student loans or medical bills, among other things. And people who are eligible for small (or $0) payments will see their balances grow, sometimes dramatically. That can take a mental toll, even if the debt is forgiven years later.

But they remain a more manageable solution for many borrowers.

“Enrolling in I.D.R. now is a great next step, particularly if you lost your job during Covid, or your spouse lost their job and you are experiencing a drop in income,” said Mike Pierce, executive director of the Student Borrower Protection Center.

That’s a lot to consider. How do I choose the best plan?

Analyzing the plans is an agonizing exercise, which is why you should visit the loan simulator tool at StudentAid.gov. It will guide you through the options and help you decide which plan best fits your goals — finding the lowest-payment plan, for example, versus paying loans off as soon as possible.

It is, fortunately, easy to use: When you sign in, it should automatically use your loans in its calculations. (You can manually add other federal loans if any are missing.) You can also compare plans side by side — how much they’ll cost over time, both monthly and in total, and if any debt would be forgiven.

Article source: https://www.nytimes.com/article/student-loan-payment-restart.html

The primary person in on the decision should be your spouse, if you have one. After all, if you need that person in order to maintain health insurance and a regular stream of income, it puts pressure on them. This is not the type of situation where asking forgiveness is preferable to asking permission.

Then, consider what your life would look like. Your spouse and children, if you have either, may not want you around so much. And if you’re single, silence may be rejuvenating for only so long.

Michael Kay, 67, is selling his shares of Financial Life Focus, a planning firm in Livingston, N.J. He doesn’t intend to stop working anytime soon, but many of his clients already have.

Some of them fail to reckon with how they will spend their time in a way that is still connected to something — and whom they will be connected to when they inevitably want some of that again. “If all my besties are still working, where do I find social interaction with peer groups when they are still working 9 to 5?” he said.

Only after the self-examination come the financial practicalities.

In an ideal world, you have savings that you can use without any restrictions or tax implications — or some kind of passive income, such as from a rental property. Perhaps there is equity in your home that you can extract, or an inheritance.

But if you don’t reside in a world of such privilege, there are workarounds. For instance, some people can draw on their 401(k) or 403(b) money without penalty as early as the year they turn 55. Public safety employees can do so starting at 50.

Did you start a Roth I.R.A. when it first came into being a couple of decades ago, and do you lack other savings to draw on? You can pull contributions (but not earnings) out tax- and penalty-free.

Article source: https://www.nytimes.com/2021/12/11/your-money/work-time-out-career-longevity.html

Charitable giving in the United States was up overall last year, by about 5 percent over 2019, according to an analysis from the data arm of GivingTuesday, a nonprofit organization that promotes philanthropy. The group’s namesake event is the Tuesday after Thanksgiving, which began in 2012 as a day of charity and public service.

An early analysis of this year’s GivingTuesday, on Nov. 30, estimated that donations in the United States increased by 9 percent over last year.

“Americans continue to be highly generous,” Woodrow Rosenbaum, the chief data officer at GivingTuesday, said.

It’s unclear how large an impact the special charitable deduction has had, he said, although the group’s 2020 analysis noted a “small spike” in donations of $300 on Dec. 31. “It’s not that the effect is zero,” Mr. Rosenbaum said of the $300 deduction. Rather, “it was small and difficult to measure.”

In contrast, the group’s analysis showed a clear increase in donations in amounts of $1,200 and $2,400 — amounts that correlate with the size of the federal government’s stimulus payments — in 2020, suggesting the payments played a larger role in charitable giving.

Still, it’s possible that people were unaware of the special deduction when it was first made available last year, but may be prepared to make a gift and take advantage of it this season, Mr. Rosenbaum said. The group’s full analysis of overall giving in 2021 will be available next year.

Here are some questions and answers about charitable deductions:

Will the special tax deduction be available after 2021?

The deduction is temporary and is scheduled to end at the end of 2021 — unless Congress extends it again.

Article source: https://www.nytimes.com/2021/12/10/your-money/tax-break-donations.html