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Path to student loan forgiveness is now clearer, senators say: Here’s how the headlines can affect your money

The latest Covid relief makes student loan forgiveness on qualifying federal loans tax-free.

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Markets start the week on record highs. Retail sales drop in February. Plus, the path to student loan forgiveness may have gotten easier. Here's how the headlines could affect your money.

Markets break records

The Dow and S&P 500 both hit record highs Monday. The Dow rose 0.5% and the S&P 500 gained 0.65%. The Nasdaq rose 1.1%. 

Markets were mixed Tuesday morning ahead of the Federal Reserve's two-day meeting. The central bank could move markets this week, experts say, as traders wait to hear Fed Chairman Jerome Powell's stance on interest rates and other topics.

Retail sales fall in February 

Retail sales dropped by 3% in February, according to the Commerce Department. That's worse than expected. Behind the decline: Americans in the South faced harsh winter weather, and the boost from $600 stimulus checks in December began to fade. 

Economists expect retail sales to pick up again in coming months now that a third round of stimulus checks are going out. The $1.9 trillion aid bill that President Joe Biden signed last week included both $1,400 checks and $300 per week in enhanced unemployment benefits. 

VIDEO2:3902:39
Paying off your student loans with Michael Torpey

Video by Ian Wolsten

Easing the way for student loan forgiveness 

A provision in Biden's American Rescue Plan, which makes student loan forgiveness on qualifying federal loans tax-free through 2025, should make it easier for the president to cancel student loan debt, according to several leading Democratic senators. 

Before, most federal student loan debt canceled by the government could be considered taxable income, which left borrowers with a bigger tax bill. Critics of debt forgiveness had pointed out that it was unfair to forgive loans only to leave borrowers with a big tax bill. With that hurdle cleared, it's easier to move forward with forgiveness.

Words you've heard: easy money

When the Federal Reserve implements monetary policy that allows cash to build up in the banking system, it's called easy money. The Fed has applied such policies throughout the coronavirus pandemic to keep interest rates low and stimulate the economy. 

Although the daily news can have an impact on your wallet, remember to take a long-term outlook when it comes to decisions on spending, saving, and investing.

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