Connect with us


How Monthly Child Tax Credit Payments Are Impacting Americans’ Finances – Forbes Advisor



Editorial Note: Forbes Advisor may earn a commission on sales made from partner links on this page, but that doesn’t affect our editors’ opinions or evaluations.

The new monthly child tax credit payments have made a significant impact on millions of families. According to the Census Bureau Household Pulse Survey, compared to the prior period before the disbursement of the first child tax credit payments, the number of families with kids earning $50,000 or less who didn’t have enough to eat declined by more than seven percentage points.

The payments are part of the American Rescue Plan, a $1.9 trillion package that expanded the child tax credit temporarily for 2021, which President Joe Biden signed into law in March.

The new legislation expanded the tax credit from up to $2,000 to $3,600 per child under age 6 ($3,000 per child ages 6 to 17).

For the first time, families do not have to wait until they file their federal income tax return to receive the child tax credit. Families who qualify now have the option to receive 50% of the credit in the form of monthly payments from July 15 to Dec. 15. Qualifying families can receive a monthly payment of up to $300 per child under age 6 ($250 per child ages 6 to 17).

Here is how families utilize the new monthly child tax credit—and an overview of its notable impact.

How Families Are Using Monthly Child Tax Credit Payments

Families who received the new monthly child tax credit payments are using it for basic needs. Natalie Foster, the co-chair of the Economic Security Project, says the new child tax credit is making a difference and reducing poverty for families.

Foster says families use the payments to pay bills, buy groceries and get kids ready for school. “Across the board, it is a lifeline for families struggling during the pandemic and crucial to the efforts to rebuild,” says Foster.

The chart below shows how families used the first and second round of the child tax credit payments, according to a U.S. Census survey:

The Child Tax Credit Payments Drastically Reduced Poverty

A study conducted by the Center on Budget and Policy Priorities estimates that the new temporary expansion of the child tax credit will cut the poverty rate nearly by 50% and lift 4.1 million children out of poverty this year. In 2020, about 11 million children were living in poverty, according to data from the Organisation for Economic Co-operation and Development (OECD). 

According to the Economic Security Project, the first round of child tax credit payments has decreased food scarcity among all families, but the numbers are more significant for Latinx families with children. Food scarcity decreased from 15.7% to 9.9% compared to the period immediately before receiving the monthly child tax credit payments.

Foster says the child tax credit is one of the most effective anti-poverty programs ever. A new Columbia University study shows that the child tax credit payments have already lifted 3 million children out of poverty this year.

“This reminds us that poverty is a policy choice. We can choose to end poverty if we want to, and it is great to see the child tax credit taking such an important step ending childhood poverty,” says Foster.

But there is work to be done.

For now, the child tax credit expansion is only temporary for the year 2021. 

Biden and Democratic leaders are advocating to make the child tax credit permanent. Biden has proposed extending the increased Child Tax Credit to 2025 and making it a fully refundable child tax credit through the American Families Plan.

In addition, the IRS needs to reach out to more families who qualify for the child tax credit, but have yet to register. The IRS estimated that roughly about 4 million children in low-income families are missing out on the payments. Unless these families provide missing data, such as identification and payment information, they will not receive the child tax credit payments.

Families are urged to register via the child tax credit update portal or use the non-filer tool on the IRS website.

Estimate your child tax credit payment

Source link

Continue Reading


Are Sallie Mae Student Loans Federal or Private?



When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

Learn more:

Source link

Continue Reading


Tips to do some fall cleaning on your finances



Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

Source link

Continue Reading


How to Get a Loan Even with Bad Credit



Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.



Source link

Continue Reading