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President Biden is reported to be closing in on a plan to cancel $10,000 in federal student debt per borrower, but some advocates are concerned about the impact it will have on Black borrowers, who data shows are likely to owe more to cover the costs of education, The Hill reported. Many Democrats at the helm of student loan forgiveness efforts have promoted broad-based cancellation as a way to advance racial equity, often citing data showing the disproportionate burden faced by Black borrowers, especially women. But, as more reports surface of Biden’s plans narrowing in on a decision on some student debt forgiveness, advocates are dialing up the pressure. “The impact that $10,000 would have would be so minor, that it wouldn’t really address the real issue for Black borrowers,” said Wisdom Cole, national director of the NAACP Youth & College Division. Data from The Institute for College Access and Success (TICAS) found that Black graduates, who advocates acknowledge often have less access to intergenerational wealth due to historical racial discrimination, were more likely than other racial groups in 2016 to take on student debt, and more of it. In the report, which cites figures from the Department of Education, 80 percent of Black bachelor’s degree recipients also were found to have graduated with an average debt of $34,000 at the time, more than their white, Hispanic, Latino, and Asian peers.

A majority of borrowers who together hold about $400 billion in federal student debt made no payment on their loans in the pandemic era, taking full advantage of a freeze put in place at the onset of the COVID-19 crisis, Bloomberg News reported. Data from the Federal Reserve show that 60% of borrowers who qualified for forbearance didn’t make a single payment from August 2020 through December 2021. The U.S. central bank, in a paper published Friday, suggested that some of these 11.5 million borrowers may not be able to resume paying once the freeze is lifted. The forbearance on payments and interest is set to end on Aug. 31 after being extended multiple times by the Trump and Biden administrations. “Once the provision expires, there could be a deterioration of credit-risk profiles, which could infringe on this group’s general access to credit,” the Fed wrote in its report. More than 40 million Americans carry student debt, but only about 20 million of them were required to make payments before the pandemic, averaging about $260 a month. The rest included more than 6 million borrowers who were in school and exempt from making payments, in addition to people who were in their grace period, who benefited from deferment or were in default. Since the second half of 2021, credit card balances increased at a faster pace for the group of student debt holders who made no payment during the pandemic. Their debt balances at the end of last year were slightly higher than two years earlier, according to the Fed data. Delinquency rates on their credit cards, as well as auto and mortgage debts, also rose in the second part of the year.

“Buy now, pay later” companies promised a credit revolution that would change the way people pay for things, but rising delinquencies and a slowing economy are clouding that outlook, the Wall Street Journal reported. Payment plans that allow shoppers to split up the cost of things such as clothing, makeup and home appliances were all the rage last year. The companies behind the plans saw their valuations surge. Scores of retailers rushed to add them at checkout. Block Inc. (formerly Square Inc.) in August announced a roughly $29 billion all-stock deal for Afterpay, one of the biggest companies in the business, but late payments or related losses are piling up for the industry’s biggest players: Affirm Holdings Inc., Afterpay and Zip Co. Their borrowing costs, meanwhile, are rising. Buy-now-pay-later companies sometimes rely on credit lines whose rates rise and fall along with the Federal Reserve’s benchmark rate, which has risen 0.75 percentage point so far this year and is poised to go up even more. Investors, once enamored with the business, are backing away. Affirm went public in January 2021 at $49 a share and rose to more than $170 by November. The stock closed at $28.50 Tuesday. SoftBank-backed Klarna Bank AB is looking to raise as much as $1 billion in a deal that could value it in the low $30 billion range, far below the roughly $46 billion valuation it achieved last year.

U.S. inflation-adjusted consumer spending rose in April by the most in three months, indicating households were holding up in the face of persistent price pressures by dipping into savings, Bloomberg News reported. Purchases of goods and services, adjusted for changes in prices, increased 0.7% from March, Commerce Department data showed Friday. Both goods and services spending advanced in April. The personal consumption expenditures price index, which the Federal Reserve uses for its inflation target, rose 0.2% from a month earlier and was up 6.3% from April 2021. The core PCE price index climbed 0.3% for a third month. Unadjusted for inflation, spending rose 0.9% from the prior month, while personal income climbed 0.4%.

White House officials are currently planning to cancel $10,000 in student debt per borrower, after months of internal deliberations over how to structure loan forgiveness for tens of millions of Americans, the Washington Post reported. President Biden had hoped to make the announcement as soon as this weekend at the University of Delaware commencement, the people said, but that timing has changed after the massacre Tuesday in Texas. The White House’s latest plans called for limiting debt forgiveness to Americans who earned less than $150,000 in the previous year, or less than $300,000 for married couples filing jointly. It was unclear whether the administration will simultaneously require interest and payments to resume at the end of August, when the current pause is scheduled to lapse. The White House said no final determination has been made about the matter. Wiping out $10,000 of debt per borrower could cost roughly $230 billion, according to estimates by the Committee for a Responsible Federal Budget, a nonpartisan think tank. However, restarting payments for borrowers, which have been on hold since March 2020, would bring additional money into federal coffers. The think tank said in March that pausing payments had cost the federal government $100 billion and would run around $50 billion per year to maintain. The Washington Post had previously reported that the administration was considering making only undergraduate debt eligible for forgiveness.

With 45 million borrowers owing it a total of $1.6 trillion, the federal Education Department is effectively America’s largest consumer bank. And like any bank, it sees some of its loans go bad when borrowers can’t pay, the New York Times reported. But unlike any other lender, the federal government keeps those bad debts around in perpetuity. There is no simple way for the department to write off those loans, and student debt is nearly impossible to shed in bankruptcy. Over the years, it has piled up into an enormous problem: More than seven million people, one of every five borrowers with payments due, have defaulted and failed to pay, sometimes for decades. Those borrowers live under the shadow of punitive collections tactics, while the government throws good money after bad. Now the freeze on student loans that started early in the pandemic is giving the government its best shot in a generation to address the problem. Before the pause ends, the Biden administration plans to offer defaulted borrowers the chance to restore their loans to good standing. That will allow those borrowers to get into payment plans they may actually be able to afford. Advocates view the novel move as a way to deal with very stale debts — especially if it’s paired with the kind of large-scale loan forgiveness that President Biden says he is considering. Should Mr. Biden use an executive action to forgive $10,000 per borrower in student debt, he would wipe out the balances of more than 4.6 million people who were behind on their payments before the pandemic, according to Education Department data sent to Congress last year.

Younger Americans are starting to wonder if their expensive college degrees were worth it. Just 56% of adults under the age of 30 who went to college said the benefits of their education exceeded the costs, according to the latest Federal Reserve study of household finances, Bloomberg News reported. That compares with 82% of those age 60 or over. The skepticism is likely tied to the ballooning amount of debt that younger Americans had to take on to pay for degrees — largely the result of the long climb in tuition fees. The survey found that many Americans who go to college are relying on other forms of debt as well as student loans to pay for it. About 19% said they put some of their higher-education costs on their credit cards, while 4% tapped a home equity line of credit. “Collectively, 24% of borrowers had one or more forms of education debt besides student loans for their own education,” the Fed report said. The same was true of Americans who borrowed money to help their children or grandchildren get through college. Among that group, 88% used the special student-loan programs targeted for parents, while 12% added credit-card debt and 9% home equity lines.

Rising interest rates are making adjustable-rate mortgages an increasingly attractive alternative to common 30-year, fixed-rate home loans, the Associated Press reported. ARMs made up 13% of all home loans by dollar volume in March, their highest share since January 2020, according to CoreLogic. The increase coincides with a sharp rise in mortgage rates. The average weekly rate on a 30-year mortgage slipped this week to 5.25% from 5.3% last week, which was the highest level since 2009, according to mortgage buyer Freddie Mac. The average rate was 3% a year ago. Rising mortgage rates, in conjunction with sharply higher home prices, make homeownership less affordable. “It’s natural for homebuyers to be looking at ways to reduce that mortgage payment, and one of the ways is to use an adjustable-rate mortgage,” said Selma Hepp, deputy chief economist at CoreLogic. Such loans became less attractive the last couple of years as average long-term mortgage rates fell to an all-time low. ARMs’ share of all loans by dollar value sank to just 4% in January 2021 from 13% a year earlier, according to CoreLogic. ARMs have made up between 10% and 19% of all loans by dollar value over the last 12 years. At the height of the last housing boom in 2005 ARMs represented just under 45%, CoreLogic said.