The biggest credit news this week is all about Washington, D.C., as the student loan interest rate deadline looms and DOMA is overturned.
The student loan interest rate deadline is fast approaching, with Stafford loans set to double to 6.8% on July 1.
While there is a bipartisan proposal that would keep the rate from doubling, instead tying it to the 10-year Treasury note, debt expert Mitchell Weiss says the “fix” may be no solution at all.
The way the government is pricing student loans may not make much sense, Weiss says, explaining that the government is taking short-term loans in order to lend the money to students, and that this structure may be unsustainable as interest rates rise.
The Supreme Court’s decision on Wednesday to declare the Defense of Marriage Act (DOMA) unconstitutional is seen as a big victory for LGBT rights advocates, but the crux of the case before the court was a personal finance one.
Edie Windsor, the subject of the case before the U.S. Supreme Court, was arguing that she was not provided equal protection in her marriage to her partner due to the fact that her inheritance from her partner was taxed differently than if the couple had full legal marriage rights under federal law.
With the new ruling, tax and federal benefits will now be available to same-sex couples who are legally married. Specifically, couples should be sure to talk to a tax professional to make sure their wills, powers of attorney and financial documents like deeds and credit accounts are in order so that in the event of death, your spouse gets all the benefits a heterosexual married couple would.
The Federal Reserve recently announced that it will soon begin to wind-down the bond-buying program that was helping to keep credit available to more Americans, sparking some concern among consumers that interest rates on all loan products will soon rise.
However, credit cards and auto loans may not see the same direct impact that mortgages will.