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As millions of student-loan borrowers make payments this year for the first time since 2020, many are grappling with maddening bureaucratic problems, the Wall Street Journal reported. Borrowers described waiting on hold for hours, trying and failing to get answers from their loan servicers. Some received inaccurate or conflicting information about amounts owed and the status of their loans. Others heard barely anything at all — only to be hit with surprise bills. The logistical morass, which comes less than a year before the 2024 election, has complicated President Biden’s efforts to ensure that voters credit him for slashing student debt. Biden’s initial plan to cancel up to $20,000 in federal student-loan debt for people making less than $125,000 a year was struck down by the Supreme Court in June. Since then, the administration advanced narrower loan relief, wiping away $132 billion in debt for 3.6 million borrowers. Meanwhile, the federal government is investigating allegations of botched customer service by the main loan servicers. Infractions could lead to civil fines. More investigations, including of the government’s handling of the payment restart, are expected in the coming year. The Education Department’s internal watchdog listed the resumption of payments and the transition to new loan-servicing contracts as two target areas for probes in 2024.

With U.S. credit card balances at record levels and defaults rising, more shoppers than ever are tapping buy now, pay later services on key shopping days to stretch their budgets, Reuters reported. While they can be a tool for shoppers, consumer advocates are raising red flags about cash-strapped shoppers who are adding months-long loans with rates that can top out at 36% — the maximum lenders can charge in many states. Demand for debt counseling services is up significantly from last year, defying the seasonal slowdown experienced during the holidays, said Bruce McClary, spokesman for the ​​​​​​​National Foundation for Credit Counseling. The increased use of buy now, pay later loans from providers like Klarna, Affirm, PayPal and Afterpay "signal an increase of short-term debt on top of the more than $1 trillion in outstanding credit card balances," McClary said. Shoppers can purchase anything from a $3,253 Jil Sander leather tote bag marked 30% off from luxury retailer Farfetch , to groceries from Walmart and Burger King gift cards valued at up to $500 — getting the merchandise before it's fully paid for.

The "National Guard and Reservists Debt Relief Extension Act of 2023" (H.R. 3315) was signed into law yesterday by President Biden after passing the Senate on Monday and the House of Representatives on Dec. 11. The bipartisan measure was reintroduced on May 15 by Rep. Steve Cohen (D-Tenn.) to provide the same means-test treatment under chapter 7 of the Bankruptcy Code for guard members and reservists who were recently federally deployed as that of active duty servicemembers. The legislation exempts for an additional four-year period, from the application of the means-test presumption of abuse under chapter 7, qualifying members of reserve components of the Armed Forces and members of the National Guard who, after September 11, 2001, are called to active duty or to perform a homeland defense activity for not less than 90 days.

The Consumer Financial Protection Bureau (CFPB) issued a report yesterday highlighting that many college-sponsored financial products have higher fees and worse terms and conditions compared to typical market products, according to a CFPB press release. The CFPB report identifies college-sponsored deposit accounts with fees above prevailing market rates, which institutions are required to consider under Department of Education rules designed to protect students’ interests. Many colleges offer sponsored and co-branded financial products to students and alumni, such as deposit accounts, credit cards, and prepaid cards. Students may be likely to accept their school’s recommendation of a bank account or credit card when they arrive on campus, meaning that colleges and their financial institution partners may not face competitive pressure to lower fees or provide low-cost products. These arrangements can be lucrative for schools, as financial institutions pay tens of millions of dollars every year to colleges and universities, including flat-fee marketing deals and per-signup kickbacks.

Just over half of the millions of borrowers who received their first federal student loan bills in years in October — after the pandemic freeze ended — have paid the bills, the Education Department said on Friday, the New York Times reported. Forty-three million borrowers collectively owe the government $1.6 trillion in student loan debt. In March 2020, as the coronavirus pandemic roiled the nation’s economy, President Donald J. Trump’s administration imposed a freeze on collections as an emergency relief measure. The moratorium was extended nine times by Congress, Mr. Trump and his successor, President Biden — until this fall, when it finally ended. Officials had long warned that getting borrowers accustomed to paying again after such a long break would be a rocky process, especially after the Supreme Court in June overturned Mr. Biden’s $400 billion plan to forgive up to $20,000 in debt per borrower. Tens of millions of people would have benefited from that relief. Instead, 22 million people had to make their first payment in years in October as the government restarted its collection machinery. Sixty percent of them paid the bill by mid-November, according to James Kvaal, the Education Department’s under secretary. (Borrowers who are still in school or recently left do not yet owe on their debts. Also, some borrowers’ payment deadlines were extended because of loan servicing errors.) That leaves nearly nine million borrowers who had payments due but have not yet made them. Many people “will need more time,” Mr. Kvaal said Friday in a written statement. “Some are confused or overwhelmed about their options.”

The Consumer Financial Protection Bureau (CFPB) on Friday took action against a medical debt collector, Commonwealth Financial Systems, for illegally trying to collect unverified medical debts after consumers disputed the validity of the debts, according to a CFPB press release. Under the order issued on Friday, the company will cease operations and pay a $95,000 penalty to the CFPB’s victims relief fund. Commonwealth Financial Systems is a nonbank corporation with its principal place of business in Dickson City, Pennsylvania. Commonwealth is a third-party debt collector that specializes in the collection of past-due medical debts and furnishes information about consumer collection accounts to consumer reporting companies. Commonwealth’s actions violated the Fair Credit Reporting Act because the company failed to conduct reasonable investigations of disputed debts and failed to inform consumer reporting companies that certain information was being disputed. Commonwealth also violated the Fair Debt Collection Practices Act because it continued to attempt to collect disputed debts without substantiating documentation.

Unpaid medical debt will no longer appear in New York residents’ credit reports under a bill signed into law by Gov. Kathy Hochul (D) yesterday, the Associated Press reported. The law prohibits credit agencies from collecting information about or reporting medical debt. The law also bans hospitals and health care providers in the state from reporting such debt to the agencies. New York is the second state after Colorado to enact such a law. A similar nationwide measure is being considered by the federal Consumer Financial Protection Bureau. The new law will take effect immediately. “No one should ever have to make a horrible choice between their physical health and their financial health,” Hochul said. The new law won't necessarily stop all medical debt from affecting New Yorkers' credit scores. It won’t apply to debt that is charged to a credit card, unless the card was issued specifically for health services, and it doesn't apply to out-of-state health care providers.

U.S. consumer prices unexpectedly rose in November as a decline in the cost of gasoline was more than offset by increases in rents, further evidence that the Federal Reserve was unlikely to pivot to interest rate cuts early next year, Reuters reported. The report from the Labor Department on Tuesday also showed prices for used cars and trucks rebounded last month after five straight monthly decreases, helping to boost underlying inflation. U.S. consumers also paid more for healthcare and motor vehicle insurance. The slightly firmer inflation readings followed data last Friday showing job gains accelerated in November and the unemployment rate fell to 3.7% from nearly a two-year high of 3.9% in October. Officials from the U.S. central bank began a two-day policy meeting on Tuesday. "Ongoing housing price pressures and their outsized influence on inflation overall tell a large part of the story of why calls for early and rapid Fed monetary policy easing should be viewed with significant scrutiny," said Kurt Rankin, senior economist at PNC Financial in Pittsburgh, Pennsylvania. "The Fed will not cut rates until inflation's drivers are well and truly tamed." The consumer price index (CPI) edged up 0.1% last month after being unchanged in October, the Labor Department's Bureau of Labor Statistics said. Gasoline prices decreased 6.0% after dropping 5.0% in the prior month. But natural gas cost more as did electricity.

Big companies that had previously pushed through one standard price increase per year are now raising prices more frequently, the New York Times reported. Retailers increasingly use digital price displays, which they can change with the touch of a button. Across the economy, executives trying to maximize profits are effectively running tests to see what prices consumers will bear before they stop buying. Alexander MacKay coleads the Pricing Lab at Harvard Business School, a research center devoted to studying how companies set prices. Since the pandemic, he has watched how businesses have become more willing to experiment with what they charge their customers. Huge disruptions to supply chains pushed up corporate costs during the pandemic and forced many companies to think more creatively about their pricing strategies, Mr. MacKay said. That supercharged a trend toward more rigorous pricing, and showed many companies that they could more boldly play with prices without chasing shoppers away. The experimentation continues even as costs ease. “We may have prices changing more quickly than they have before,” he said. That could mean up or down, though companies are generally more eager to raise prices than cut them. Firms are trying to figure out how to protect the profits they have built since the pandemic. For big companies in the S&P 500 index, the average profit margin — the percentage of profit relative to revenue — soared in late 2020 and into 2021, as government stimulus and the Federal Reserve’s emergency interventions stoked consumer demand. At the same time, companies raised their prices so much that they more than covered higher costs for energy, transportation, labor and other inputs, which have recently started to come down.

A crucial deadline is coming up for borrowers with commercially held federal loans and those who were in delinquent status before the pandemic payment pause. Borrowers with commercially held federal loans have until Dec. 31 to consolidate their loans to qualify for the one-time payment adjustment, which can help them get closer to or achieve a discharge through their income-driven repayment (IDR) plan, YahooFinance.com reported. For borrowers in default, Dec. 31 is also the deadline to enroll in the Fresh Start program to get in good standing to be eligible for the one-time payment adjustment and to qualify for an income-driven repayment plan that could lower their monthly payment. These borrowers must take the following steps by the end of the year. The majority of loans through the Federal Family Education Loan (FFEL) program are commercially held because the program and Education Department worked with private lenders to provide student loans guaranteed by the federal government.