U.S. auto retail sales are expected to rise in October as supply chain snags ease, making more vehicles available at dealerships amid higher demand, an industry report from consultants J.D. Power and LMC Automotive showed yesterday, Reuters reported. An improvement in new vehicle inventories bumped up the sales activity in the United States at a time when consumers are ready to spend more to own a personal vehicle. Customers have been unaffected by higher vehicle prices and a lack of incentives or discounts from automakers, who have been taking advantage of strong demand and tight inventory. "Even with a modest increase in inventory, strong demand continues to allow manufacturers to maintain a low level of discounting," the report said, adding that average transaction price for new vehicles is expected to reach record levels in October. Retail sales of new vehicles are expected to rise 12.1% to 1,008,200 units in October, compared with a year earlier, the report showed.
Days before the deadline for applicants to take advantage of a set of temporary rule exceptions to the government’s student loan forgiveness program for borrowers who work in public service, the Education Department moved to make some of the changes permanent — but not until next year, the New York Times reported. That staggered timetable is likely to create months of messiness. Last year, the Biden administration made sweeping but temporary fixes to Public Service Loan Forgiveness, the long-troubled relief program that allows government and nonprofit workers to have their remaining federal student loan debt eliminated after they’ve made a decade of payments. The government gave borrowers one year to apply for the rule waiver. That period ends on Monday. Borrowers calling to seek help from their loan servicer have recently run into hold times that can exceed nine hours. More than 100 Democratic lawmakers in Congress urged the Biden administration this month to extend the waiver deadline until next year. Instead, the Education Department said on Tuesday that it was sticking with Monday’s deadline but would make some elements of the waiver’s rule changes permanent. Those adjustments, however, will not take effect until July 2023, because federal rule-making policies prohibit the department from putting them into effect sooner. Read more.
In related news, a temporary pause on federal student loan repayments is set to expire on Jan. 1 — meaning millions of borrowers are bracing to repay loans after a nearly three-year reprieve. While the Biden administration called the latest extension the "final" one, some experts predict that the pause could be extended if the legal uncertainty over a new student loan forgiveness plan continues, YahooFinance.com reported. On Friday, hours after President Joe Biden announced that 22 million people had applied for forgiveness, a federal court of appeals issued an administrative stay that bars the administration from dispensing with the loans while it considers a challenge to the program. White House Press Secretary Karine Jean-Pierre declined to discuss the possibility of extending the repayment pause, but she also didn't rule it out when reporters raised questions on Monday. If the legal logjam continues, experts note the administration would have a right to further extend the pause on repayments. “While the Biden administration said that this final extension is a final, final extension, that isn't the first time they said that something was final," student financial aid expert Mark Kantrowitz told Yahoo Finance. The Biden administration might issue a temporary extension if the legal questions remain unsettled by January, he said. The pause could continue if a judge ultimately rules against Biden. “If they lose in court and the president's loan forgiveness plan is blocked," he says, "well nothing stops them really from extending the student loan payment pause and interest waiver further, maybe for the duration of his tenure as president.” Read more.
The political and legal battles over President Biden’s student loan forgiveness plan have hit their biggest roadblock yet with a temporary legal hold on the program, leaving borrowers in further limbo, The Hill reported. It has also opened up the potential for more opposition by Republicans, but the White House is vowing to fight back after a federal appeals court ruled on Friday that the program should be halted. Friday’s order from the U.S. Court of Appeals for the Eighth Circuit stops the administration from disbursing relief while the court considers a challenge from six Republican-led states. A federal district judge had dismissed the case a day before, ruling that the six attorneys general representing the states did not have standing to sue because they did not demonstrate that the policy directly harms their states. Biden on Monday also bashed Republican backlash against the plan, calling it extreme and touting the policy as a way to help working Americans bounce back after the COVID-19 pandemic. The order marks a temporary victory for Republicans until a larger panel can weigh in, but it could lead to more actions against student loan forgiveness, said Robert Moran, a former senior policy adviser in the Education Department under former President George W. Bush.
A federal appeals court on Friday temporarily halted President Biden’s student debt relief plan, preventing the government from moving forward with the debt cancellation it had said could start as early as next week, the New York Times reported. The U.S. Court of Appeals for the Eighth Circuit granted a stay in response to an appeal filed by six Republican-led states after a district court judge dismissed their case on Thursday for lack of standing. The action puts any debt cancellation on hold until the court can rule on the states’ request for an injunction preventing the government from discharging debts. The court set a Monday deadline for the government to submit its response to the states’ filing, and a Tuesday deadline for the states to respond. “The order does not reverse the trial court’s dismissal of the case, or suggest that the case has merit,” Karine Jean-Pierre, the White House press secretary, said late Friday. “It merely prevents debt from being discharged until the court makes a decision.” She encouraged borrowers to continue applying at studentaid.gov. Nearly 22 million people — more than half of all those expected to be eligible — have applied since the system opened late last week. The pause comes one day after Judge Henry E. Autrey of the Federal District Court in St. Louis rejected the states’ claim for lack of standing. “While plaintiffs present important and significant challenges to the debt relief plan,” Judge Autrey wrote, “the current plaintiffs are unable to proceed to the resolution of these challenges.” Read more.
In related news, President Biden said on Friday that 22 million Americans had applied for federal student loan relief since his administration opened the program this week, and he accused Republicans of hypocrisy for trying to block the initiative, the New York Times reported. The plan cancels $10,000 in debt for those earning less than $125,000 per year, or $250,000 per household, and $20,000 for those who received Pell grants for low-income families. For tens of millions of people, that level of relief would wipe out their federal student loan debt. The government plans to accept applications until Dec. 31, 2023. “In less than a week, just close to 22 million people have already given us the information to be considered for this life-changing relief,” Mr. Biden told a crowd at the university, where more than 75 percent of the students receive Pell grants. Read more.
The largest U.S. banks are warning of trouble ahead in auto loans as dropping prices for used cars risk leaving borrowers underwater, Bloomberg News reported. Wells Fargo & Co. said that higher loss rates for loans it originated late last year contributed to an increase in write-offs for the period. Ally Financial Inc., the country’s second-largest auto lender, saw charge-offs for retail auto loans quadruple in the third quarter. And Fifth Third Bancorp said it’s pulling back on originations. Used-car prices slumped 7% in the third quarter, the worst decline since the depths of the global financial crisis, according to data compiled by vehicle-auction company Manheim. The risk, investors fear, is that if consumers end up owing more than their cars are worth, they might stop making payments and let the vehicles be repossessed.
Attempts to block President Biden’s student debt relief programs were dealt dual setbacks yesterday, as a federal judge in Missouri and Justice Amy Coney Barrett rejected challenges to the sweeping measure, one that could cost the government hundreds of billions of dollars, the New York Times reported. Judge Henry E. Autrey of the Federal District Court in St. Louis dismissed the more prominent of the two lawsuits, one brought by six Republican-led states. The suit accused Mr. Biden of overstepping his authority under a 2003 federal law that allows the education secretary to modify financial assistance programs for students “in connection with a war or other military operation or national emergency.” The plan cancels $10,000 in debt for those earning less than $125,000 per year, or $250,000 per household, and $20,000 for those who received Pell grants for low-income families. The nonpartisan Congressional Budget Office said last month that it estimated the plan’s price tag at $400 billion, and the Education Department followed a few days later with a similar estimate of $379 billion over the life of the program. Judge Autrey, who was appointed by President George W. Bush, did not rule on the larger issue in the lawsuit, which was brought by Nebraska, Missouri, Arkansas, Iowa, Kansas and South Carolina. Instead, he said the states had not suffered injuries of the sort that gave them standing to sue. “While plaintiffs present important and significant challenges to the debt relief plan,” the judge wrote, “the current plaintiffs are unable to proceed to the resolution of these challenges.” The states’ case was viewed as the most significant threat to Mr. Biden’s plan, and Judge Autrey’s ruling allowed the government to start discharging loans as soon as Sunday. More than 12 million people have applied for debt cancellation since the application portal opened late last week.
The Biden administration launched an online portal that will allow individuals with federal student loans to apply for up to $20,000 in debt forgiveness, formally kicking off a program threatened by an array of legal challenges, the Wall Street Journal reported. More than eight million people applied for relief over the weekend following the Education Department’s launch of a beta test version of the application, the administration said. Mr. Biden said the testing period was deemed a success by the Education Department’s leadership, allowing the administration to officially launch the application on Monday. The online application is available in English and Spanish and can be accessed via a computer or mobile phone. The application requires only basic information from borrowers, including their legal names, Social Security numbers, phone numbers and email addresses. Most people can complete the application in just a few minutes, White House officials said. The program will forgive up to $10,000 in debt for federal student-loan borrowers, or up to $20,000 for borrowers who received Pell Grants when they were in college. Borrowers who make less than $125,000 a year, or less than $250,000 a year for a household, are eligible for the program. A borrower’s income will be based on adjusted gross income from 2020 or 2021. GOP leaders in Missouri, Nebraska, Arkansas, South Carolina, Kansas and Iowa are seeking to stop the administration’s effort to write off hundreds of billions of dollars in student debt. Attorneys for the Biden administration and the states challenging the plan squared off at a federal court hearing last week that left the fate of the loan forgiveness in limbo. Other lawsuits have been filed by an array of conservative groups, as well as Arizona’s attorney general.
After a coronavirus-era reprieve, Americans are borrowing heavily again to keep up with decades-high inflation on essentials such as food, gas and housing. Credit card debt is rising at its fastest clip in more than 20 years, according to the Federal Reserve Bank of New York. Overall, Americans owe $887 billion on their credit cards, a 13 percent increase from a year ago, the Washington Post reported. Now, with the Fed rapidly raising interest rates to contain inflation, families are feeling the pinch of higher borrowing costs, too. Average credit card rates, at 18.7 percent, are at their highest level in 30 years and will probably continue rising, according to Bankrate. The result, for many, is a sense of snowballing despair as debt loads and interest rates spike at the same time. Economists say there is little risk that a pileup of unpaid credit card balances could threaten the U.S. financial system. But the squeeze on families — particularly those who had paid down debt using stimulus checks and pandemic-era savings — will likely be acute.
