US lifts pause on collections for student loans in default
The U.S. Department of Education began collecting on student loans in default Monday after a five-year pause. As a result, millions of borrowers could see wage garnishment and decreased credit scores.
More than 5 million borrowers are in default, while another 4 million teeter on the line in late-stage delinquency, the last stage before default, according to the Department of Education. If those 4 million borrowers default, nearly 25% of the federal student loan portfolio will be in default, the department said.
Former President Joe Biden paused collections on defaulted loans in the wake of the COVID-19 outbreak that was declared a pandemic in March 2020.
Those with payments in default could also see credit score drops between 87 and 171 points, depending on their current credit score, according to the Federal Reserve Bank of New York. A lower credit score means a higher borrowing rate. For borrowers hoping to reach homeownership status, a lower credit score could mean higher monthly mortgage costs.
Student loan debt is also known as a barrier to homeownership, with 51% of renters saying student loans keep them from buying a home, according to data from the research organization Education Data Initiative.
The federal government also plans to withhold income from borrowers in default. This summer, it will send notices to begin the administrative wage garnishment process, which collects up to 15% of disposable income to pay a delinquent debt owed to a federal agency.
Texas welcomes a new city for Elon Musk’s SpaceX: Starbase
There’s a new town in town, and it’s made up primarily of Elon Musk’s employees.
About 218 residents of Cameron County, located in the southernmost part of Texas, voted Saturday to accept the area around Musk’s SpaceX headquarters and rocket launch site as an official city called Starbase. According to the county, 212 residents voted in favor while six opposed.
Being an independent town means SpaceX can run its own government, essentially. The unincorporated area previously belonged to the town of Boca Chica Village. The company opened its headquarters in the area 10 years ago. New homes have cropped up outside the headquarters, while other employees live temporarily in Airstream trailers.
The town takes up 1.5 square miles. Residents of the county also voted for a mayor of Starbase. It chose SpaceX employee Bobby Peden with 100% of the votes and two other employees to serve as commissioners.
Americans still think real estate is best investment
Americans still believe real estate is the best monetary investment, according to a Gallup poll published Monday.
It’s the 12th consecutive year that Americans have voted real estate as their top choice for long-term investments. Gold came in second, followed by stocks.
Gallup noted the decline in preference for stocks was on par with the turbulent market, resulting from recent tariff news.
About 30% to 45% of voters have selected real estate as their top investment pick since 2014, with 37% choosing it this year during the week of April 1-14. Gold received 23% of the vote, and stocks got a 16% share, a decline of 6 percentage points.