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President Joe Biden vowed to keep fighting to deliver relief from federal student loan debt to millions of Americans hours after his plan was rejected by the highest court in the land.

The President said in a June 30 press conference he is changing the Department of Education’s income-driven repayment program “so no one with an undergraduate loan has to pay more than 5% of their discretionary income.”

Biden is also creating an “on ramp” program that will allow federal loan borrowers to not be considered delinquent if they miss a payment from Oct. 1, 2023 to Sept. 30, 2024. The president says the Education Department won’t refer borrowers who fail to pay their student loan bills to credit agencies for those 12 months, to give borrowers time to “get back up and running.”

The U.S. Supreme Court struck down Biden’s student-loan forgiveness plan in a 6-3 ruling released earlier on June 30, saying that the Biden Administration did not have the authority to forgive federal student loan debt for more than 43 million loan holders without Congressional approval.

Biden’s One-Time Forgiveness Plan That Was Rejected

Biden’s targeted debt forgiveness plan, announced in August 2022, would have erased up to $20,000 in federal student loans for individuals making less than $125,000 or households with less than $250,000 in income. Some 26 million U.S. borrowers applied for relief before the program was halted due to legal challenges.

At least 20 million people could have been approved and seen their federal loan debt erased entirely if the program had gone through, according to the administration. The plan could have wiped out more than $400 billion in federal student debt.

In a statement released June 30 after the Supreme Court ruling, President Biden said his plan would have been “life-changing for millions of Americans and their families.” He said, “Nearly 90 percent of the relief from our plan would have gone to borrowers making less than $75,000 a year, and none of it would have gone to people making more than $125,000.”

The Supreme Court’s Ruling

However, the court majority said that President Biden exceeded his constitutional authority in the debt forgiveness program. After hearing arguments in February, the court held that the administration needed Congressional authorization to take such action. The majority rejected arguments that a 2003 law dealing with student loans, known as the HEROES Act, gave Biden the power he claimed.

“Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Justice John Roberts wrote for the court.

Interest on all federal student loan debt, regardless of income, is set to resume accruing starting on Sept. 1, 2023, and payments will be due starting in October, per the debt ceiling bill.

Other Student Loan Relief Plans Draw Focus

In addition to the “on ramp” plan, Biden said he will strengthen a program that reduces federal loan holders’ debt based on their income. It is called the SAVE plan and is part of his effort to make student loan debt more manageable, especially for low-income borrowers.

Under SAVE, borrowers who are single and make less than $32,800 a year won’t have to make any payments at all. (If you are a family of four and make less than $67,500 annually, you also won’t have to make payments.)

For years, people who struggled to pay their federal student loans could enroll in the government’s Income-Driven Repayment Plans . Such a plan set your monthly federal student loan payment at an amount that was intended to be affordable based on your income and family size. It has taken into account different expenses in your budget.

The four existing income-based plans are: Revised Pay As You Earn (REPAYE), Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). The SAVE plan replaces the REPAYE program.

Supreme Court Ruling Draws Strong Response

Supporters of Biden’s federal debt forgiveness plan criticized the Supreme Court, saying student debt has become a national crisis. More than 45 million people collectively owe $1.6 trillion, according to U.S. government data.

The average federal student loan debt balance is $37,338, while the total average balance (including private loan debt) may be as high as $40,114, according to educationdata.org.

Some called for President Biden to continue his push to slash federal student loan debt.

“I see it as an unfortunate reality that in a country where we bail out Fortune 100 companies, where we bail out banks that have not been good actors, that this Supreme Court would allow that to happen, and yet,” says Derrick Johnson, the NAACP’s president and CEO, the court would choose to leave millions of borrowers “stuck in a vicious cycle of debt.”

The Takeaway

President Joe Biden vowed to continue trying to provide federal student loan debt relief after the U.S. Supreme Court struck down his debt-forgiveness plan, saying the president did not have the authority to take such action.

One step his Department of Education has already taken to help financially strapped borrowers: it is instituting an “on-ramp” to repayment so that late payments will not be considered delinquent during the 12-month period from Oct. 1, 2023 to Sept. 30, 2024. The DOE will also offer a new SAVE program that lowers the percentage of income that repayment amounts will be based on.

SoFi’s Student Loan Help Center may be able to help

FAQ

Can I get my federal student loan debt canceled through the President’s plan?

The U.S. Supreme Court ruled against President Joe Biden’s debt forgiveness program for those whose household income falls below a certain cutoff. That debt cancellation plan, which received more than 25 million applications in 2022, is now blocked.

Is the pause in paying my federal student loan coming to an end soon?

Yes. Due to the debt ceiling bill recently passed by Congress, the pause in repaying federal student loans is ending, regardless of the Supreme Court decision. Interest on federal student loans will resume accruing on Sept. 1, 2023, and payments will be due starting in October. According to Federal Student Aid (FSA) with the Department of Education, “Once the payment pause ends, you’ll receive your billing statement or other notice at least 21 days before your payment is due. This notice will include your payment amount and due date.”

I don’t know who my federal loan servicer is — and what does the servicer do?’

A loan servicer is a company that Federal Student Aid (FSA) assigns to handle the billing and other services on your federal student loan on its behalf. A loan servicer can work with you on repayment options (such as income-driven repayment plans and loan consolidation ) and assist you with other tasks related to your federal student loans.

If you’re not sure who your loan servicer is, visit your account dashboard and scroll down to the “My Loan Servicers” section, or call the Federal Student Aid Information Center (FSAIC) at 1-800-433-3243.

Photo credit: iStock/Perry Spring

SoFi Student Loan Refinance
NOTICE: The debt ceiling legislation passed on June 2, 2023, codifies into law that federal student loan borrowers will be reentering repayment. The US Department of Education or your student loan servicer, or lender if you have FFEL loans, will notify you directly when your payments will resume For more information, please go to https://docs.house.gov/billsthisweek/20230529/BILLS-118hrPIH-fiscalresponsibility.pdf https://studentaid.gov/announcements-events/covid-19

If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income based repayment plans or extended repayment plans.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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Source: sofi.com

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The Supreme Court’s recent decision to block affirmative action — preventing colleges from using race as one of many factors when evaluating applicants for admission — may also block scholarships and grants intended for minority students, even though the ruling did not extend to financial aid.

Though some institutional scholarships that take race into account may soon disappear, minority students with financial need still have access to a variety of funding sources for their education — including grants, external scholarships, aid related to family income and federal loans.

Fewer minority scholarships could decrease college enrollment

A few states have already begun threatening scholarships meant for students of color in the wake of the Supreme Court’s affirmative action ruling. On June 29 — the day of the Supreme Court decision — Missouri’s Republican attorney general sent a letter to state universities directing them to end race-based scholarships. The Republican speaker of Wisconsin’s state assembly and the president of the University of Kentucky have also released statements indicating that race-based scholarships could fade.

More institutions could follow suit, and not just because of political leanings. “If states and schools are looking at their legal budgets, and they’re saying, ‘look, we don’t want to be sued,’ the safer thing to do would be what Missouri is doing,” says Dwayne Kwaysee Wright, an assistant professor of higher education administration and director of diversity, equity and inclusion initiatives at George Washington University.

As a result, enrollment could suffer and education could become less attainable for some minority students.

“We know that there’s a racial wealth gap in this country,” says Wil Del Pilar, senior vice president of The Education Trust, an organization that works to dismantle racial and economic barriers in the American education system. “So if we’re going to limit access to resources that help people make college affordable, then we can expect to see decreases in enrollment.”

In 2019, the median white family in the U.S. had accumulated $184,000 in wealth compared to $38,000 for the median Hispanic family and $23,000 for the median Black family, according to a 2021 analysis by the Federal Reserve Bank of St. Louis.

Other financial aid pathways remain open

While the affirmative action news may be discouraging to current and prospective students of color, both Wright and Del Pilar emphasize that college is still worth it.

“I do think that education is still a great way to try to change one’s life,” Wright says. “We know that over the course of a lifetime, a college degree brings millions if not more in additional earnings.”

Here’s how to get the financial aid you need to afford a college education, even in the face of dwindling minority scholarships.

Submit the FAFSA

The Free Application for Federal Student Aid (FAFSA) is the key to unlocking financial aid, including federal student loans, grants, work-study programs and some scholarships. Be sure to submit the FAFSA each year you’re in school, even if you don’t think you’ll qualify for any financial aid.

The FAFSA will also put you in the running for the need-based Pell Grant — an award of up to $7,395 per year. Eligibility isn’t tied to income alone, so you could qualify even if you don’t think you will.

Start planning early

Time can be a valuable tool. Start having conversations with your guidance counselor or college advisor as early as the second semester of your freshman year of high school about higher education options and costs, says Wright.

“I think the sooner families start to plan for college, and the sooner families start to have that conversation with their students, the better the outcome will be,” Wright adds.

Apply for lesser-known scholarships

To find a scholarship, start by casting a wide net. The Labor Department’s Scholarship Finder is a helpful resource because it allows you to sort through nearly 9,000 scholarships, fellowships, grants and other financial aid award opportunities. Reach out to your target schools; colleges and universities often have big lists of scholarships available to students. And take a look at scholarships offered in your community, in addition to the bigger, well-known scholarships.

“Everyone’s trying out for the Coca-Cola scholarship, it’s national, but there are probably less folks who are applying for your local Boys & Girls Club scholarship,” says Del Pilar, who once worked as a financial aid counselor.

Private external scholarships meant for minority students are not yet facing the same legal challenges as institutional or state scholarships, says Del Pilar. For example, the NAACP offers a variety of merit- and need-based scholarships to Black students and students of color.

Think outside the box when it comes time for college applications, too.

“I really hope that students will take advantage of some of the great historically Black colleges, minority-serving institutions, Hispanic-serving institutions and regional colleges we have around the country,” says Wright. “Going to community college for your first two years and then transferring is always a good cost-saving option.”

Ask how your college handles external scholarship money

It’s not enough to apply for and win an external scholarship — you also need to check your target school’s “packaging policy,” which outlines how the scholarship money will impact other financial aid you may receive, explains Del Pilar. In some cases, this policy may mean that it’s not worth it to apply for external scholarships.

For example, a school’s packaging policy may be to replace every dollar you bring in with the dollars that it has given you. So if your school awards you a $5,000 scholarship, and then you bring in a $1,000 external scholarship, then your school may decrease the scholarship they gave you to $4,000. At the end of the day, you’ll still have the same $5,000 worth of scholarship money.

“It could be disheartening for a student to do all this work to bring in extra dollars that they thought they were going to get, for the institution just to take away money that they had awarded you through their own institutional financial aid,” Del Pilar says.

Watch for new financial aid options

Lastly, keep an eye on new scholarship framing. “What might be left open is sort of an intersectional way to apply financial aid,” says Wright. “So you might not say ‘this scholarship is exclusive to Black students.’ What you may say is ‘this scholarship is exclusive to any students who come from the [historically Black] seventh or eighth wards in D.C. and whose family makes below $80,000 a year.’”

The University of North Carolina, one of the schools singled out in the Supreme Court cases for its affirmative action policies, announced on July 7 that it would provide free tuition and waive fees for all in-state students whose families earn less than $80,000 per year. The policy begins with the incoming class in 2024.

Duke University, a private North Carolina-based institution, unveiled a similar policy in June for students hailing from North Carolina or South Carolina whose families make $150,000 or less per year.

Source: nerdwallet.com

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In response to increased anti-LGBTQ+ legislation efforts in the U.S. in 2023, the Human Rights Campaign has declared what it calls a state of emergency for members of the LGBTQ+ community. It also released new state-by-state guidance on issues for the community in various states.

On June 6, the LGBTQ+ lobbying group released a guidebook aimed at the 75-plus bills that have been implemented in 2023 to restrict LGBTQ+ persons. They include more than 200 proposed bills targeting transgender youth.

The warning from the HRC comes at the beginning of Pride Month when hundreds of thousands of people will travel across the country to attend Pride parades.

West Hollywood Pride Parade in 2019. GRANDAVE/THE POINTS GUY

It also follows a slate of anti-gay laws signed into law in places like Florida, where some Pride events have been canceled due to fears over safety. The NAACP issued a travel warning for Florida, saying the state has become hostile ” … toward African Americans, people of color and LGBTQ+ individuals.”

We asked the HRC for a statement on potential travel warnings but did not receive a response in time for publication. However, the HRC report offers insights into the group’s decision to issue the warning and guidance.

“In 2023, we entered a new phase of legislative attacks, with bills passing in many states designed to erase entire communities of people under the law,” the HRC report says. “These new laws create dangerous situations and keep people from being able to participate in public life. More than 525 anti-LGBTQ+ bills have been introduced in 41 states in 2023 alone, with 220+ specifically targeting transgender youth.”

The report considers actions taken by states, such as banning drag shows, promoting conversion therapy and opposing gender-affirming care. It also includes states’ stance on bathrooms based on transgender identification and participation in school sports by transgender students. Additionally, the HRC outlines states with legislation like the LGBTQ+ Erasure Act, the “Don’t Say Gay” bill, pronoun refusal laws and forced student outing laws.

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HUMAN RIGHTS CAMPAIGN

The HRC says its guide is “designed to support all individuals and families regardless of their choices or options” and also provides resources for those in affected states.

For example, the HRC suggests visitors and locals review its State Equality Index, a comprehensive report of statewide laws and policies affecting members of the LGBTQ+ community and their families. The HRC also encourages people to examine its Municipality Equality Index for a more in-depth look at laws in specific cities. For more resources, the HRC provides an interactive State Maps feature outlining relevant laws and policies related to non-discrimination, healthcare and youth, among other issues that affect members of the LGBTQ+ community.

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This year so far, the HRC notes that 41 states have introduced more than 500 anti-LGBTQ+ bills, including 22 states that now restrict participation in school sports by transgender students and 10 states that restrict restroom access for transgender students. It also notes that 19 states have bans on gender-affirming healthcare for transgender and nonbinary minors, with one additional bill on a governor’s desk as of the report’s publication.

Nationally, much attention has focused on recent Florida legislation signed by Gov. Ron DeSantis impacting schools, including legislation restricting educational materials, such as books and teacher instruction related to gender and sexuality, along with legislation that prohibits transgender people from using restrooms in publicly owned spaces like airports.

“In 11 states, school personnel can either misgender transgender students, be forced to “out” them to their parents — even if that puts the student in danger at home — or be bound by ‘Don’t Say LGBTQ+’ laws that restrict their ability even to acknowledge the existence of LGBTQ+ people,” the HRC report says.

“Several states have combined administrative attacks on transgender youth and their families with legislative attacks, including Florida, Missouri and Texas,” the HRC report continues. “Several of these laws have been enjoined by federal courts, and dozens of additional lawsuits have been filed in recent months.”

Related reading:

Source: thepointsguy.com

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Florida Gov. Ron DeSantis might be best known these days for his “war on woke.” He’s generated daily headlines for his “Don’t Say Gay” bill in schools, his battles against Disney, and the travel advisories issued against the state by the NAACP and LGBTQ organizations.

However, his housing policies haven’t generated nearly as much attention.

After months of fueling rumors, DeSantis formally announced his bid for the U.S. presidency on Wednesday. What would that mean for the housing market if he wrests the Republican nomination from real estate mogul and former President Donald Trump and wins the general election in 2024? (Currently, Trump has a sizable advantage in the polls among likely GOP voters.) Realtor.com® looked at the No. 2 Republican contender’s housing-related priorities during his four-plus years as governor of the Sunshine State for clues.

“His experience as the governor of Florida has certainly exposed him to the housing market and its issues,” says Sean Snaith, director of the Institute for Economic Forecasting at the University of Central Florida in Orlando. “He’s intimately familiar with the shortage of housing that has plagued our state.”

Florida experienced tremendous growth during the COVID-19 pandemic as companies expanded and legions of folks moved to the Sunshine State. It was the nation’s fastest-growing state last year, according to the U.S. Census Bureau. The median home list price in Florida shot up 42%, to about $468,000, from April 2020 to April 2023, according to Realtor.com data. Rental prices also surged throughout the state during the pandemic.

This year, DeSantis has passed bills geared toward creating more housing, providing assistance to first-time buyers, as well as restricting international buyers from certain countries from purchasing real estate in Florida. The government has also responded to the devastation wrought by hurricanes and flooding by making changes to Florida’s property insurance industry.

The legislature has also been forced to confront the state’s affordability challenges. For years, the state had typically been reallocating the money from its affordable housing trust fund to other projects. In 2021, the legislature agreed that a third of that money will be spent on housing, while the rest can go to other priorities.

Democrats have blasted diverting the money away from housing during such a severe real estate shortage.

DeSantis and Trump will have plenty of competition from other Republicans vying for the nation’s highest office. Former South Carolina Gov. Nikki Haley announced her candidacy in February. South Carolina Sen. Tim Scott threw his hat in the ring this week, and former New Jersey Gov. Chris Christie is expected to enter the fray. New Hampshire Gov. Chris Sununu and former Vice President Mike Pence are also likely to run.

Whoever wins the 46th presidency—from either side of the aisle—will have a major challenge in tackling the housing crisis.

“It would have to be concerted efforts from all levels of government,” says Snaith. “We need to help expedite the process for developers from going from paper to getting these housing units off the ground.”

DeSantis tries to create more affordable housing

In March, DeSantis signed an affordable housing plan that invested more than $700 million to provide low-interest loans to developers building workforce housing in Florida, down payment and closing costs assistance for first-time homebuyers, and the redevelopment of underused properties near military installations.

The Live Local Act is also expected to make it easier to convert commercial buildings into housing by bypassing local zoning boards, building height requirements, and local density regulations.

While superseding local authorities and zoning regulations can lead to a strain on local infrastructure—such as more traffic, crowding in schools, and other growing pains—the housing shortage “trumps” these concerns, says Ken Johnson, a real estate economist at Florida Atlantic University in Boca Raton.

“This will start to increase the supply of housing rather rapidly. We just need units built right now,” says Johnson. “We are still in a rental crisis here.”

He was less enthusiastic about the $100 million provided for down payment and closing costs assistance. The money will fund the Florida Hometown Heroes Housing Program, which the governor announced the creation of last year. It’s geared toward eligible first-time buyers who work in critical professions such as law enforcement, firefighting, education, health care, and child care, and active military or veterans, among others.

“There’s not enough money behind them to make a dent,” says Johnson.

The Live Local Act also prohibits towns and cities from enacting rent controls.

The state of Florida is short about 444,000 affordable and available rental homes for extremely low-income renters, according to the National Low Income Housing Coalition.

“It has been more pocket change than real substantial solutions to the problem,” says Jack McCabe, who runs an eponymous housing consultancy in Southern Florida. “Seven hundred eleven million dollars looks like a lot of money, but the truth is it could take billions and billions of dollars to correct the problem.”

Restrictions on who can buy homes in Florida

Last week, DeSantis signed a bill to prohibit many Chinese citizens who aren’t legal U.S. residents from purchasing real estate in the state of Florida. The bill also bans citizens from six other countries—Russia, Iran, North Korea, Cuba, Venezuela, and Syria—from buying farmland that is located within 10 miles of military sites and critical infrastructure.

In addition, as of July 1, the new law will require some Chinese nationals to register the real estate they already own and whatever they buy with Florida’s state government.

The law has been criticized by Democrats, Asian American leaders, and some real estate professionals.

“The law is very restrictive,” says Dan Lionetta, president of the Asian American Real Estate Association of America, Greater Jacksonville Chapter. He is also a mortgage lender at Movement Mortgage. “We are certainly not in favor of the law and anyone, from any country, being limited regarding purchasing real estate.”

Real estate economist Johnson believes a bill like this “distorts” the market by dictating who can and who cannot buy.

“It will negatively impact price, although I think it will be marginal,” says Johnson. “We’re simply cutting the demand for real estate.

Tackling Florida’s hurricane and flooding issues

Last year, DeSantis signed a Republican bill to prop up Florida’s property insurance system as many companies have gone out of business and others are struggling due to the extensive damage wrought by storms and flooding. The bill raises costs for some homeowners while providing tax rebates for residents affected by Hurricanes Ian and Nicole. It will also force some homeowners out of receiving coverage from the state-created insurer.

As a result, many Floridians expect their already high flood insurance premiums to double this year.

“Many people are being forced to sell their homes and move,” says housing consultant McCabe.

However, the governor has also signed bills into law to give homeowners a break. One prevents insurers from refusing to cover homeowners if their roof is less than 15 years old. And in the wake of the Surfside condo collapse, buildings that are three stories and higher must be inspected after 30 years and then receive additional inspections every 10 years. Buildings that are within 3 miles of the coast must start undergoing inspections after 25 years.

The governor also approved setting $150 million aside last year to be used for grants for homeowners who want to retrofit their homes to be more resistant to hurricanes.

“The overall impact [of a DeSantis presidency] is hard to say right now,” says Johnson. “It’s a toss-up.”

Source: realtor.com

Our Racially Divided Housing Market Is Changing, Thanks to Millennials

A look at how we got here and where we’re headed.

Double Your ESG Impact With Funds Tied to Charities

You might have noticed a flurry of new investment products that link sustainably themed funds with donations to nonprofit groups, from the NAACP to the National Wildlife Federation to the Susan G. Komen Foundation.

But before you invest in a mutual fund or exchange-traded fund (ETF) tied to your favorite charity, make sure that it fits within your portfolio, meets your investment goals and truly delivers a benefit to the nonprofit group with which it partners.

  • SEE MORE Grow With These Green ETFs and Mutual Funds

When comparing these funds with competitors, “consider the fund donation to be the cherry on top, not the main driver of the decision,” says Jon Hale, global head of sustainability for investment research firm Morningstar. “Don’t be seduced into a fund that doesn’t further your financial goals,” he says.

And look beyond a fund’s donation to measure impact. Start by taking a hard look at its management company. Does it actively partner with the nonprofit group it benefits to bring about change? Is it voting shareholder proxies and filing shareholder resolutions to further the nonprofit’s cause?

“ESG investing alone doesn’t create concrete, real-world impact,” says Leslie Samuelrich, president of Green Century Capital Management. “You need to pick funds that do shareholder advocacy.”

Green Century Balanced Fund

The concept of working hand-in-glove with nonprofits isn’t completely novel. Consider Green Century Balanced Fund (GCBLX), a member of the Kiplinger ESG 20, a list of our favorite stocks and funds with a focus on environmental, social and governance issues. Fund sponsor Green Century is owned by several nonprofit groups around the U.S., and its profits from fees support their environmental and public health goals.

Moreover, Green Century has for years engaged companies by filing shareholder resolutions, speaking with corporate executives and doing policy work. Apple, for example, Balanced Fund’s second-largest holding, announced in November that it would redesign its products to enable consumers and independent shops to repair devices and thereby reduce electronic waste, the fastest-growing global waste stream. Green Century was one of the main drivers of this “right to repair” decision.

All that engagement comes at a cost—the expense ratio for Green Century Balanced is 1.46%. But over the past 10 years, Balanced Fund’s 10.6% annualized return beat 83% of its peers, and it placed in the top 25% of similar funds over the past three-, five- and 10-year periods. (Returns and other data are through January 7.)

Simplify Health Care ETF

Simplify Health Care ETF (PINK, $26) is another fund that has a strong investment thesis and aims to provide a significant boost to a nonprofit group.

  • SEE MORE The 22 Best ETFs to Buy for a Prosperous 2022

The PINK ETF is actively managed by Michael Taylor, a trained virologist as well as a seasoned and highly regarded hedge fund manager. Simplify is donating all of its net profits from managing the fund, or a minimum of $100,000 per year, to the Susan G. Komen Foundation for breast cancer research.

Although the foundation’s reputation was tarnished in the past decade for high CEO pay and overhead, Komen has since improved its leadership, management and transparency, such that it has earned a four-star rating (out of five) from Charity Navigator and a Gold rating from Guidestar.

Simplify Health Care does not apply an ESG screen per se to its stock-selection process; even so, it earns a strong four out of five “globes” ESG rating from Morningstar. Top holdings include UnitedHealth Group and Pfizer. Launched in October 2021, the ETF has gained 4.5% since then, garnering over $30 million in assets. The fund’s 0.50% expense ratio is reasonable, given that it has such strong management.

Another plus for the fund is that healthcare stocks are often resilient in times of inflation. And the long-term demographics of aging societies are working in their favor. For those reasons, this fund could be a solid addition to a portfolio for investors looking to diversify into the healthcare sector.

Impact Shares NAACP Minority Empowerment ETF

Impact Shares, itself a nonprofit organization, manages a suite of sustainable funds in collaboration with leading nonprofits, including the NAACP, the YWCA and others. Impact has partnered with the groups to help design investment criteria and has pledged to donate 100% of net fee profits to them.

  • SEE MORE 9 Great Growth ETFs for 2022 and Beyond

In the case of Impact Shares NAACP Minority Empowerment ETF (NACP, $35), which tracks a Morningstar index designed to provide exposure to U.S. companies with strong racial and ethnic diversity policies in place, Impact has absorbed a portion of the management fee, lowering the expense ratio from 0.75% to 0.49%.  

According to Impact Shares CEO Ethan Powell, the fund is almost at breakeven, at which point donations to the NAACP will begin. Although the donations will be important, Powell believes that an even greater benefit to these groups is the opportunity to engage with corporations alongside an institutional investor. In fact, Impact Shares hired a former senior director of the NAACP as chief engagement officer for the fund in 2020, and corporate execs have been reaching out to learn how they can better their racial equity scores so that their companies can be included in the fund.

Unlike many other funds that donate to specific causes, the ETF is not sector-specific. But it recently held a hefty 29% weighting in tech. The portfolio of large-company shares, topped by Apple and Microsoft, is a blend of growth-focused and value-priced stocks. Since its launch in July of 2018, its 19.8% annualized return outpaced the S&P 500’s 17.9%.

Bottom Line

The funds above are far from the only ones partnering with causes you might hold dear.

The investment arm of New York Life Insurance launched a suite of ESG funds in 2021 that will donate the larger amount of 10% of net fees or $30,000 per year to specific causes. These include IQ Cleaner Transportation, which will donate to the National Wildlife Federation, as well as ETF index funds donating similarly to Girls Who Code, the American Heart Association and Oceana, an ocean conservation group.

Although the investment case for some of these funds is intriguing, the track records are still short, and investors who care about making an impact should note that the New York Life funds will not be engaging with companies beyond voting on shareholder proposals.

Expect to see more funds linking up with charities. The bottom line is that with any fund promising to donate fee income to a worthy cause, you will have to do some extra homework to make sure the pledge is more than just a marketing exercise.

Nonetheless, for investors who want to beef up donations to their favorite charities along with their portfolios, these new partnerships are worth watching.

  • SEE MORE 5 ‘Blue Economy’ Stocks and Funds

Why the Racial Homeownership Gap Exists and How to Combat It

Homeownership is one of the strongest tools American households use to build their wealth, so why is the gap in homeownership between white, Black, and other minorities so prominent? Homes.com analyzes why this gap exists and how to combat it.

The post Why the Racial Homeownership Gap Exists and How to Combat It appeared first on Homes.com.

7 Investments You Can Make to Help Fund Racial Justice

Racial inequality is an uncomfortable truth in our society. Learn how to use your investments to support and fund racial justice.