The College Investor

My Student Loans Are Finally Being Forgiven. Could I Owe Taxes On Them?

Robert Farrington — Sat, 19 Sep 2026 15:45:10 +0000

The Question

I’m expecting to get my student loans forgiven soon. I’m at about $148,000. I borrowed $65,000 for a social work degree back in 2001 and I’ve paid something every single month since.

A coworker mentioned you pay taxes on this and now I don’t know what to think. I make $58,000 a year. I’ve got about $14,000 in a retirement plan, $3,000 in savings, and other debt. I can’t afford to pay more taxes.

Does this even apply to me? And is there something I should be doing before the end of the year?

— Sam

Welcome to the Friday mailbag, where we take one reader question and answer it. Have one? Send it to us — details at the bottom.

The Short Answer

It depends entirely on which program you’re getting student loan forgiveness from, and you may be in the tax-free one without knowing it. A social work degree generally also has a career that often qualifies for Public Service Loan Forgiveness, which isn’t taxable at all. Check that before you plan around a tax bill.

If this turns out to be income-driven repayment forgiveness, the potential maximum tax based on what you described above would be $3,740, but the “other debt” and any variables you left off could change that.

Start Here: Are You Sure It’s Not PSLF?

Public Service Loan Forgiveness (PSLF) is NOT taxable. Neither is teacher loan forgiveness, death and disability discharge, or closed school discharge. Forgiveness at the end of an income-driven plan is taxable, and that’s the key to focus on.

The reason to check rather than assume: social work is concentrated in employers that qualify for PSLF. Government agencies at every level, 501(c)(3) nonprofits, public hospitals, public schools, and community mental health organizations are all qualifying employers under PSLF. Someone who earned a social work degree in 2001 and has been working in the field since has a real chance of having spent 120 qualifying months at eligible employers without ever certifying any of them.

Pull your employment history and compare it against the qualifying employer rules before you do anything else. Our PSLF checklist covers what to gather, and the 2026 strategy rundown covers the newer employer rule that changed which organizations count. If the answer comes back yes, your forgiveness is tax-free and it may also arrive sooner than the income-driven timeline you’re currently on.

There is a risk here, that because your loans were from before 2009, if you never consolidated them, you could have old FFEL loans. FFEL loans do NOT qualify for PSLF. In that case, it’s likely you may be going for IDR-based loan forgiveness.

If It Is IDR Forgiveness, Here’s What Changed

The American Rescue Plan Act made all student loan forgiveness federally tax-free from 2021 through the end of 2025. It expired on December 31, 2025, and Congress did not extend it. Now, loan forgiveness through IDR on or after January 1, 2026 fall back under the old rules, where canceled debt counts as ordinary income.

We flagged the approaching deadline before it arrived and covered the return of the tax bomb as it landed.

State treatment is a separate question. Several states tax forgiven student debt in years when the federal government doesn’t, and others conform automatically to whatever the federal rule is. Our state-by-state breakdown can you show you what. you may face in your state.

What The Worst Case Looks Like

Your $148,000 discharge would get added to your $58,000 salary, putting $206,000 of gross income on that year’s return. After the $16,100 standard deduction for single filers, that leaves $189,900 in taxable income, which reaches into the 24% bracket according to the Federal 2026 tax bracket tables.

However, because of your high loan balance and low assets, you are also likely going to be insolvent. Using the numbers you provided, only $17,000 of the forgiven amount is taxable. That makes your total tax due about $3,740.

Run your own numbers through our tax bomb calculator rather than borrowing this example, since it’s important to use all your assets and liabilities.

The Most Important Line In Your Letter

You wrote “and other debt” almost as an aside. That phrase is what determines whether you owe $33,400, something closer to $2,900, or nothing at all.

The tax code excludes canceled debt from income to the extent you were insolvent immediately before the discharge, meaning your liabilities exceeded your assets at that moment — and the forgiven loan itself counts as one of those liabilities. This is the insolvency exclusion, and it’s the reason the tax bomb has been more theoretical than real for most borrowers who’ve faced it.

When we went through IRS canceled-debt data, roughly 5.5 million Forms 1099-C were filed for 2012 while only about 770,000 returns reported canceled-debt income. Insolvency accounts for most of that gap.

Since It Hasn’t Happened Yet

This is where your timing works in your favor, and you may want to be aware of your choices as a result.

Insolvency is measured immediately before the discharge. Your personal balance sheet on that specific date sets the exclusion, which means paying off a credit card or building up savings in the months right before forgiveness lands can shrink the amount you’re allowed to exclude.

Nobody should stop paying their minimum payments on debts over this, and running up new debt to manufacture insolvency is not a good strategy. But knowing that the timing of a large payoff or a big deposit has tax consequences is enough, you can avoid making any big moves for a few months.

Waiting for the exclusion to come back isn’t a plan either. No replacement provision is scheduled for a vote, and delaying forgiveness costs you payments while providing no guarantee the rules improve. Our broader overview of taxes and forgiveness covers what has and hasn’t been proposed.

The year the discharge posts is the tax year it has to be reported in, which matters if your income is going to change.

What To Do Before December 31

Settle the PSLF question first. Everything else in this article is contingent on the answer, and it’s the only step that could take the tax bill to zero outright.

Document your assets and liabilities as they stand now, and keep documenting them through the discharge. Account statements, the loan balance letter, and balances on every other debt are what support an insolvency claim later, and they can’t be reconstructed convincingly two years after the fact. The IRS insolvency worksheet in Publication 4681 lists what belongs on each side, and retirement accounts count as assets.

Watch for a Form 1099-C once the discharge processes. It reports the canceled amount to you and to the IRS, and its arrival doesn’t settle what you owe. The exclusion gets claimed on Form 982 with your return, and our explainer on 1099-C reporting covers how the two forms work together.

Get a tax professional involved before the discharge rather than after. Insolvency claims carry elevated audit exposure, and contemporaneous records are the defense.

Where People Get This Wrong

The first mistake is assuming forgiveness is still tax-free because it was for five straight years. That exclusion was temporary.

The second runs the other way: treating a 1099-C as a final bill. Borrowers have paid tax they never owed because an official-looking form arrived and nobody told them insolvency existed. The form reports a discharge. It does not determine taxability.

The third is skipping the PSLF question because the income-driven clock was already running. Borrowers spend years on one track without checking whether the tax-free track was open to them the whole time, and for anyone in social work, teaching, public health, or government, that’s the first thing to understand.

Send Us Your Question

Got a student loan, financial aid, or money question you can’t get a straight answer on? Send it to us and we may answer it in a future Friday mailbag.

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Have a question for us? Ask away. Questions submitted may appear articles on The College Investor. We may not answer every question. We reserve the right to edit and publish your questions. But don’t worry — your identity will remain anonymous.

Editor: Colin Graves

The post My Student Loans Are Finally Being Forgiven. Could I Owe Taxes On Them? appeared first on The College Investor.

Investing For Dividends: How It Works, What It Pays, And Where To Start

Robert Farrington — Sat, 19 Sep 2026 07:15:00 +0000

Key Points

A dividend is a cash payment a company sends to shareholders, quarterly for most U.S. stocks.
Reinvested dividends account for 85% of the S&P 500's cumulative return since 1960, according to Hartford Funds.
In 2026, qualified dividends are taxed at 0% up to $49,450 of taxable income (single) or $98,900 (married filing jointly).

The short answer: investing for dividends means owning companies (or funds that own companies) that pay you cash out of their profits, and either spending that cash or reinvesting it to buy more shares. It's one of the oldest ways to build wealth in the stock market, and it's also one of the most misunderstood, because the headline yield tells you almost nothing about whether the investment is any good.

Dividends matter for two reasons. First, they're real money: a company can fake earnings for a while, but it can't fake a cash payment to your brokerage account. Second, they compound. Reinvested dividends buy more shares, which pay more dividends, and over decades that loop does most of the work.

Here's how dividends work, how much they actually pay, how they're taxed in 2026, and where to open the account.

Table of Contents

What's a Dividend and Why Does It Matter?

How Dividends Get Paid: Dates, Frequency, And Yield

How Much Do You Need To Invest For Dividends?

Dividend Reinvestment (DRIP): How It Works

Finding Dividend Paying Stocks

The Problems With Investing For Dividends

Tax Implications

Best Places To Invest In Dividends

Who Dividend Investing Is For (And Who It Isn't)

Dividend Investing FAQ

Final Thoughts

What's a Dividend and Why Does It Matter?

A dividend is a share of a company's profit paid to its shareholders. The board of directors decides whether to pay one, how much, and on what schedule; most U.S. companies that pay dividends pay quarterly. If a company pays $1 per share per year and you own 500 shares, you receive $500 a year, whether the stock price went up or down. Companies that have paid and raised their dividends for decades, the Dividend Aristocrats, are the group most dividend investors start with.

The reason dividends matter more than most beginners assume is compounding. Hartford Funds calculates that 85% of the S&P 500's cumulative total return since 1960 came from reinvested dividends and the growth they compounded, and that dividend income averaged 33% of the index's annual return from 1940 through 2025. That second number moves around by decade: in the 1970s and 2000s, when prices went nowhere, dividends were most of the return; in the 2010s they were a small slice. If you're building a long-term portfolio, you want that cushion.

Dividends are also a signal. A company that has raised its payout for 25 straight years has survived at least three recessions without cutting it, which is why dividend growth investing is its own strategy rather than a subset of income investing.

How Dividends Get Paid: Dates, Frequency, And Yield

Four dates decide whether you get paid. The declaration date is when the board announces the dividend. The ex-dividend date is the cutoff: buy the stock before this date and you get the dividend; buy on or after it and the seller keeps it. The record date is when the company checks its shareholder list (one business day after the ex-date), and the payment date is when the cash lands in your brokerage account, typically two to four weeks after the ex-date.

Most U.S. stocks and ETFs pay quarterly. Some REITs and a handful of stocks and funds pay monthly; many foreign companies pay twice a year or once. Your broker's dividend calendar shows the schedule for every holding, and portfolio trackers will project your income across the year.

Dividend yield is the annual dividend per share divided by the share price. A $100 stock paying $3 a year yields 3%. Yield moves inversely with price, so a stock whose yield jumps from 3% to 8% got there because the price collapsed, not because the board got generous. The S&P 500 as a whole yields about 1.06% as of September 11, 2026, the lowest reading in the index's history against a long-run average of 4.2%, which tells you how much of today's market return is price gain rather than income. That's why a plain index fund is a growth holding, not an income holding, even though it pays dividends.

How Much Do You Need To Invest For Dividends?

Any amount. Every major broker sells fractional shares now, so $50 buys a slice of a $500 stock and the dividend arrives pro rata. The question people actually mean is how much it takes to produce meaningful income, and that's yield math.

Divide the annual income you want by the yield. For $12,000 a year ($1,000 a month):

Portfolio yield	Portfolio needed for $1,000/month
1.06% (S&P 500 today)	$1,132,000
2%	$600,000
3% (typical dividend ETF)	$400,000
4% (high-yield, higher risk)	$300,000

Two things follow from that table. The first is that living off dividends alone is a late-career goal, not a starting point; a 25-year-old with $5,000 should be reinvesting, not collecting. The second is that reaching for a 6% or 8% yield to shrink the number you need is how people end up owning the companies about to cut. If you want the full argument, our piece on building a compounding dividend portfolio walks through a realistic 30-year path.

Dividend Reinvestment (DRIP): How It Works

A dividend reinvestment plan, or DRIP, tells your broker to use each dividend to buy more shares of the same stock or fund automatically. At Fidelity, Schwab, Vanguard, and the other major brokers it's a per-holding setting (at Fidelity: Positions, then "Manage Dividends"), there's no commission, and fractional shares mean the whole dividend gets invested, not just the part that buys a whole share. Here's why reinvesting is the engine of the strategy: $1,000 in the S&P 500 in 1982 grew to about $97,900 by 2022 with dividends reinvested, versus about $36,900 without.

Two things beginners miss. Reinvested dividends are still taxable income in a taxable brokerage account in the year they're paid, because the IRS treats the reinvestment as a cash payment followed by a purchase; you'll owe tax on money you never saw. And each reinvestment creates a new tax lot with its own cost basis, which is why a portfolio tracker that logs dividends earns its keep when you eventually sell. Inside an IRA or Roth IRA, neither problem exists.

Finding Dividend Paying Stocks

There are three ways to find dividend stocks, and most investors end up using two of them.

Start with a list. The Dividend Aristocrats are the 69 S&P 500 companies that have raised their dividend for 25 or more consecutive years; Dividend Kings have done it for 50. That's a pre-screened set of companies whose boards treat the dividend as a promise, and it's where the reader who left our oldest comment on this page ("I start with the dividend champions and achievers") begins too. Many of the investing blogs we follow publish their own screens of this group.

Run a screener. Every major broker has a stock screener. The filters that matter for dividends are yield (2% to 5% is the sane range), payout ratio (dividends as a share of earnings; under 60% for most industries, higher for utilities and REITs), consecutive years of increases, and dividend growth rate. A dividend growth investor weights the last two; an income investor weights the first.

Buy a fund. For most people this is the right answer, because a single ETF gives you 100 or more dividend payers and the diversification that protects you from any one cut. The three funds beginners compare most in 2026:

ETF	What it holds	Expense ratio	Yield
Schwab U.S. Dividend Equity (SCHD)	~100 U.S. stocks screened for yield and dividend quality	0.06%	~3%
Vanguard Dividend Appreciation (VIG)	U.S. companies with 10+ years of dividend growth	0.04%	~1.5%
iShares Select Dividend (DVY)	99 high-yield U.S. stocks (Dow Jones U.S. Select Dividend Index)	0.38%	3.56% (30-day SEC)

VIG is the growth-tilted choice, SCHD the balance, DVY the yield-first pick with a fee nearly ten times VIG's. All three drop into the asset allocation of a young investor as the U.S. equity sleeve, or part of it.

The Problems With Investing For Dividends

Chasing the highest yield is the mistake that defines this strategy. A 9% yield on a stock is the market telling you it expects the dividend to be cut, and when it is, you lose the income and the price at the same time. Companies also sometimes pay out unusually large dividends ahead of bad news to give insiders a payday before the decline; if a yield looks too good relative to the company's earnings, dividends don't matter as much as the balance sheet does.

A dividend also isn't free money. When a company pays $1 a share, its stock drops by about $1 on the ex-dividend date, because the cash left the company. Over time, a company that reinvests its profits well can grow faster than one that pays them out, which is why most of the biggest stocks of the last 15 years paid little or nothing. Dividends are one part of total return, not a substitute for it.

Ask why the company is paying. The good reason is that it earns more than it can reinvest at a decent return. The bad reason is that management has run out of ideas, or is paying to keep the stock price up. A rising payout ratio with flat earnings is the tell, and it's the reason to read the quarterly report rather than the yield.

Tax Implications

How dividends are taxed depends on which account holds them and whether the dividend is "qualified."

In a retirement account or HSA, there's no tax on the dividend when it's paid. Inside a traditional IRA or 401(k), dividends compound untaxed and you pay ordinary income tax when you withdraw. Inside a Roth IRA or an HSA used for medical expenses, they're never taxed at all. The 2026 IRA contribution limit is $7,500, which is enough to hold a meaningful dividend position.

In a taxable brokerage account, you owe tax every year, even if you reinvest. Your broker sends a Form 1099-DIV for any payer that sent you $10 or more, and it splits your dividends into two boxes.

Ordinary (non-qualified) dividends are taxed at your regular federal income tax bracket, 10% to 37%. REIT distributions, money market fund dividends, and most bond fund income fall here.

Qualified dividends get the lower long-term capital gains rates. To qualify, the dividend has to come from a U.S. corporation or a qualified foreign one, and you have to have held the stock for more than 60 days during the 121-day window that starts 60 days before the ex-dividend date (more than 90 days in a 181-day window for preferred stock). That's about two months, not six. Your 1099-DIV does the classification for you.

For tax year 2026, per IRS Revenue Procedure 2025-32, the qualified dividend rate depends on your taxable income:

Individual Income Tax Bracket	Qualified Dividend Tax Rate
$0 - $49,450	0%
$49,451 - $545,500	15%
$545,501+	20%

If you are married filing jointly, check this out:

Joint Income Tax Bracket	Qualified Dividend Tax Rate
$0 - $98,900	0%
$98,901 - $613,700	15%
$613,701+	20%

Those are taxable-income thresholds, after the standard deduction ($16,100 single, $32,200 joint in 2026). A married couple with $60,000 of wages and $30,000 of qualified dividends has $57,800 of taxable income and pays 0% on every dollar of the dividends. Qualified dividends stack on top of ordinary income, so if wages alone push you past $98,900, the dividends are taxed at 15%.

One more layer above $200,000. The 3.8% net investment income tax (NIIT) applies to dividends, interest, and capital gains once modified adjusted gross income passes $200,000 (single or head of household), $250,000 (married filing jointly), or $125,000 (married filing separately). Those thresholds are set in law and don't adjust for inflation, so a couple at $260,000 pays 15% plus 3.8% on qualified dividends. High earners holding big dividend positions in taxable accounts sometimes offset the bill with tax-loss harvesting elsewhere in the portfolio.

The practical rule: put your highest-yield holdings (REITs, high-yield ETFs, bond funds) in the IRA and your qualified-dividend stocks and low-yield growth funds in the taxable account, if you have both.

Best Places To Invest In Dividends

The account matters more than the broker, so pick the account first. All of the brokers below are on our list of the Best Online Stock Brokers, and every one of them offers commission-free trades, fractional shares, and free automatic dividend reinvestment.

If you're investing through low-cost index funds and ETFs, Vanguard and Fidelity are the two we point most readers to. Vanguard runs VIG and the cheapest dividend index funds on the market; Fidelity is our top-ranked broker overall, holds any ETF including SCHD and DVY, and lets you set reinvestment per holding in two clicks. Either works as an IRA provider, which is where a dividend portfolio belongs if you have room.

If you want to own a basket of individual dividend stocks, M1 Finance is the broker built for it. You set up a "pie" of stocks with target weights, M1 buys fractional shares of each, and reinvested dividends go toward whichever holdings are under their target, so the portfolio rebalances itself. It's the closest thing to a self-managed dividend fund, and it's also on our best investing apps list.

Get started with M1 Finance here >>>

If you'd rather not pick anything, a robo-advisor will hold dividend-paying index funds inside a diversified portfolio and reinvest for you, at 0.25% or so a year.

Who Dividend Investing Is For (And Who It Isn't)

Dividend investing fits an investor with a long horizon who wants a portfolio that pays something in every market, a retiree or near-retiree who needs income without selling shares, and anyone holding stocks in a Roth IRA where the tax drag disappears. It also fits people who need the psychological help: a quarterly deposit makes it easier to hold through a 30% drawdown than a screen full of red does.

It's a poor fit for a 22-year-old with $3,000 who expects the dividends to pay rent (at 3%, that's $90 a year), for a high earner holding high-yield funds in a taxable account (15% plus 3.8% on income you're reinvesting anyway), and for anyone who picks stocks by sorting on yield. If your goal is passive income in the next five years, the math above says dividends are the slow road; if your goal is a bigger portfolio in 30 years, they're most of the road.

Dividend Investing FAQ

How often do you get dividend payments?

Quarterly for most U.S. stocks and ETFs. Some REITs and income funds pay monthly; many foreign stocks pay semiannually or annually. You must own the shares before the ex-dividend date to receive that quarter's payment.

How much money do you need to start investing in dividends?

With fractional shares, $5. To generate $1,000 a month, about $400,000 at a 3% yield.

Can you live off dividends?

At today's yields it takes a seven-figure portfolio to replace a median income, and the S&P 500's 1.06% yield means an index-only portfolio pays about $10,600 a year per $1 million. Most retirees who "live off dividends" own a mix of dividend ETFs, bonds, and individual stocks yielding 3% to 4% combined, and supplement with withdrawals.

Are reinvested dividends taxed?

Yes, in a taxable account, in the year paid, at the same rate as if you'd taken the cash. In an IRA, Roth IRA, 401(k), or HSA, no.

What's the difference between qualified and ordinary dividends?

Qualified dividends come from U.S. (or qualified foreign) corporations on shares you've held more than 60 days around the ex-date, and are taxed at 0%, 15%, or 20% in 2026. Ordinary dividends, including REIT and money market fund payouts, are taxed at your regular bracket.

Is a high dividend yield good?

Above about 5%, treat it as a warning. Yield rises when the price falls, and the market prices in expected cuts. Compare payout ratio and dividend growth history before yield; the Dividend Aristocrats list is a safer starting screen than a yield sort.

Final Thoughts

Investing for dividends works because of compounding, not because of the yield. Own companies or funds that can keep raising the payout, reinvest every dividend you don't need to spend, hold the highest-yield pieces in a tax-advantaged account, and check the 2026 tax thresholds before you assume the income is free. Then give it 20 years.

Do you prefer to invest in dividend paying stocks?

Editor: Clint Proctor Reviewed by: Chris Muller

The post Investing For Dividends: How It Works, What It Pays, And Where To Start appeared first on The College Investor.

New Bill Would Limit International Student Athletes To 20% Per College Team, Starting In 2029

Robert Farrington — Fri, 18 Sep 2026 14:56:14 +0000

House Education Committee Chairman Tim Walberg (R-Mich.) and Sen. Jon Husted (R-Ohio) introduced the TEAM USA Act (PDF File) on September 14, 2026. The bill would ban any college that takes federal student aid from putting more than 20% international athletes on the official roster of any varsity team. Teams with fewer than 10 athletes would be limited to a single international player. Every school would also have to report each team’s international share annually to the Education Department and its athletic association, on top of the existing Title IV reporting rules.

The enforcement mechanism is what’s important here. A school that goes above the cap on even one team would potentially lose access to Pell Grants and Federal student loans.

The cap would take effect July 1, 2029, starting with the 2029-2030 academic year.

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Why It Matters

Athletic scholarships are one of the few forms of financial aid that can cover full tuition. According to the committee’s press release, Division I and II schools award more than $4 billion in athletic aid each year to over 197,000 athletes, meanwhile only about 2% of American high school athletes ever receive one.

The bill’s sponsors say international athletes on scholarship have nearly tripled since 2001, from about 8,945 to roughly 25,000, and they frame that growth as a direct trade-off against athletic scholarships for U.S. students.

The numbers vary widely by sport. Testimony at a House subcommittee hearing on September 16 put the international share of college tennis above 60%, hockey around 40%, and men’s soccer above one-third. In Division I women’s hockey, 469 of 1,134 players in 2025-26 were international, and 37 of 45 programs would have exceeded the 20% cap.

Across all of NCAA sports, though, Inside Higher Ed reports international athletes are about 4% of participants, and 7% in Division I. For families weighing niche sports as an admissions path, the bill would reshape recruiting in exactly the sports where that strategy works best.

The Details

The bill’s definition of “international student athlete” is broader than a visa check. International students already cannot receive federal student aid, so the penalty falls on the school’s Title IV access, not on the athlete’s own aid package. The definition covers anyone who is:

Not a U.S. national or lawful permanent resident, or
Receiving, or has ever received, a salary, scholarship, or other athletic financial assistance from a foreign Olympic or Paralympic committee.

That second part means a U.S. citizen with dual nationality who took a training stipend from another country’s Olympic committee would count against the cap, even if they hold an athletic scholarship like any domestic recruit.

The Olympic framing runs through the whole bill: the findings note that 65% of Team USA at the 2024 Paris Games had NCAA ties, but of 1,036 NCAA-affiliated athletes in Paris, only 385 competed for the United States.

Other provisions worth knowing, from the bill text:

The cap applies per team, not per athletic department, so a school cannot offset a heavily international tennis roster with an all-American football team.
“Varsity sports team” is defined as any group a school organizes for intercollegiate competition, which sweeps in NAIA and junior college programs as long as the school takes Title IV aid.
“Athletic association” is defined broadly enough to cover the NCAA, NAIA, and conferences, but excludes professional leagues.
There is no waiver, phase-in, or grandfather clause for athletes already enrolled when the rule takes effect.

The bill has no cosponsors listed yet and has not been scheduled for committee markup. Similar state-level proposals in Ohio, Idaho, and Oklahoma have not passed. This is the first federal attempt, and the first to use Title IV eligibility as the enforcement tool rather than NCAA rules.

How This Connects

This comes during a year of major changes for international students. The Department of Homeland Security’s rule capping student visas at four years already leaves a one-year gap against the NCAA’s five-year eligibility clock, and colleges are suing to block it. It’s currently paused but the court case is ongoing.

International applications fell 10% this year, and some universities have cut programs as international graduate enrollment dropped. Athletics was one of the last areas where international recruiting was still growing.

It also intersects with the money now flowing to athletes. Husted tied the bill directly to NIL, arguing that revenue sharing gives foreign athletes more incentive to “cash in on the American system.” With revenue sharing at $21.3 million per school and public universities like UCLA and Berkeley paying athletes $41 million in a single year, the question of who gets those roster spots carries real dollars.

Note that international athletes on F-1 visas already face limits on earning NIL income in the U.S., which the bill does not address.

The Title IV lever is the pattern to watch. Congress and the Education Department have spent the past year attaching new conditions to federal aid eligibility, from earnings tests for degree programs to the broader financial aid overhaul that took effect July 1. A roster-composition rule enforced through financial aid access for the college would extend that approach into athletics for the first time.

What’s Next

The bill needs a committee vote in both chambers, and the July 1, 2029 effective date gives Congress two full sessions to act. Watch for whether it gets folded into broader college sports legislation, which Husted signaled by linking it to the NIL debate, and for whether the NCAA, which has not commented publicly, pushes for a per-department cap or a grandfather clause instead.

Schools with heavy international rosters in tennis, hockey, soccer, and track would have three recruiting cycles to adjust if the bill moves.

Editor: Colin Graves

The post New Bill Would Limit International Student Athletes To 20% Per College Team, Starting In 2029 appeared first on The College Investor.

Nu Review: High-Yield Savings And More

Colin Graves — Fri, 18 Sep 2026 07:15:00 +0000

Quick Summary

No monthly fees or minimum balance requirements
3.50% Savings APY
No annual-fee cash-back credit card
1.5% cash back on all purchases with no spending cap
Fee-free international money transfers to select countries

GET STARTED

Pros

No monthly account fees
Competitive savings APY
Fee-free international transfers

Cons

Very new to the U.S. market
Highest rates not yet available
Limited product lineup

Nu is a global financial technology company that recently entered the U.S. market, offering a high-yield savings account and a cash back credit card. Nu is not a bank, so it's U.S. banking products are provided through its partnership with Lead Bank, which is an FDIC member.

Table of Contents

How Do I Open An Account?

Is It Safe And Secure?

How Do I Contact Nu?

Is It Worth It?

What Is Nu?

Nu, also known as Nubank, is a Brazilian fintech founded in 2013. Although the company's headquarters remain in São Paulo, Brazil, it has become one of the world's largest digital financial services platforms, with more than 130 million customers. Nu launched its U.S. business on September 10, 2026.

What Does It Offer?

As of September 2026, Nu's product lineup includes a high-yield savings account and a cash-back credit card. Here's a closer look at each one:

Nu Account

The Nu Account is similar to most online high-yield savings accounts. You can currently earn 3.50% APY, with no monthly fees or minimum balance requirements. In addition, Nu will automatically reimburse any U.S. ATM fees. Here's a full list of features:

Nu Account Features:

3.50% Savings APY
No monthly maintenance fees
No minimum deposit requirements
ATM fees reimbursed in the U.S.
Spend with a metal Mastercard debit card
Transfer money to Brazil, Mexico, and Colombia fee-free (no transfer fees, no markup on exchange rate)
Deposits are protected up to $250,000 per account via Lead Bank, an FDIC member
24/7 account access through the Nu app

Coming Soon!

Nu is advertising a savings APY boost of up to 4.50% on balances of up to $10,000; however, it is not yet available.

Nu Credit Card

Nu has launched a solid credit card offer: a no-annual-fee cash-back credit card with 1.5% cash back on all purchases and no spending caps. According to Nu, you can redeem your cash-back rewards instantly, and approval is solely based on your credit score.

Coming Soon!
According to Nu, you will soon be able to earn cash back boosts up to 2% by setting up direct deposits of at least $3,000 every 34 days into your savings account. However, this feature isn't available yet.

Even at the 1.5% cash back, with no limits or spending caps, it's a very strong offer for a no-fee credit card.

Are There Any Fees?

As mentioned, the Nu account has no monthly maintenance fees and reimburses ATM fees in the U.S. It also waives the transfer fee on international transfers to Brazil, Mexico, and Colombia, with more countries to be added in the future.

How Does Nu Compare?

Nu's 3.50% standard savings APY is competitive, but you can find higher rates with some other online savings accounts. For example, Tab Bank's high-yield savings account currently pays 3.95% APY, and Pibank offers 4.10%. Like Nu, these accounts have no monthly fees or minimum balance requirements.

Where Nu makes things interesting is by combining the savings account with a no-fee credit card that offers unlimited 1.5% cash back on all purchases.

Header
Rating
Monthly Fees	$0	$0	$0
APY On Savings	3.50%	3.95%	4.10%
Min. Deposit	$0	$0	$0
Fee-Free ATMs
Cell	OPEN AN ACCOUNT	READ THE REVIEW	READ THE REVIEW

How Do I Open An Account?

Right now, access to Nu is somewhat limited. Nu launched its U.S. products on September 10, 2026, but you can't just head to its website and open an account. Access is being rolled out to customers. From the homepage, select "Reserve My Spot" and enter your name and email address.

I tested it out and received an email letting me know that I was on the waiting list. However, Nu also gave me a referral link and said I could move up the list faster if I shared it with friends and family. Here's a screenshot of that email:

Once you receive access, you can open your account online, but be prepared to provide your personal information and complete Nu's ID verification requirements.

Is It Safe And Secure?

Nu is a fintech company, not a bank. As such, Lead Bank, an FDIC-member institution, provides its U.S. banking services and credit card. This gives customers up to $250,000 in deposit protection per account registration. Nu also uses biometric ID checks, fraud protection, and in-app card locking and unlocking features for added protection.

How Do I Contact Nu?

Nu offers 24/7 customer support through its mobile app. You can also access U.S. customer support by calling 1-888-880-0755 or sending an email to support@us.nu.co.

The company lists its U.S. address as follows:

Nu United States LLC
101 West Chapel Hill Street
Suite 300, Durham, NC
27701

Is It Worth It?

Once it's fully available, I think Nu will be an intriguing option for people in the U.S. looking for a competitive high-yield savings account and a solid no-annual-fee rewards credit card. The savings account on its own isn't much different than many others, but the combination with the credit card makes for a compelling offer. It becomes even more compelling if you have friends and family in one or more of the countries where Nu is supporting fee-free money transfers.

On the other hand, if your main concern is the highest possible savings rate, you may want to explore other alternatives, including Tab Bank and Pibank. And if you're looking for an online bank with a broader product offering, consider checking out our list of the best online banks.

Check out Nu here>>

Reviewed by: Robert Farrington

The post Nu Review: High-Yield Savings And More appeared first on The College Investor.

What Is FICA Tax And Who Pays It? 2026 Rates And Limits

Robert Farrington — Fri, 18 Sep 2026 07:15:00 +0000

The short answer: FICA is the tax that comes out of every paycheck before income tax does, and almost everyone with a job pays it. For 2026 it's 7.65% of your wages, with the Social Security portion capped at $184,500 of earnings. If you're checking your first pay stub and wondering where the money went, this is the line item, and it's separate from the federal income tax withheld a few lines above it.

Your employer also pays 7.65% on your behalf, which is why many employers count FICA as part of your total compensation. If you work for yourself, you pay both halves.

Here's what you need to know about FICA taxes, and how they affect your bottom line.

What Is FICA?

Federal Insurance Contributions Act (FICA) taxes are payroll taxes. They include a Social Security tax and a Medicare tax, and the money funds the Social Security and Medicare programs. The Social Security Administration calls its portion OASDI (Old-Age, Survivors, and Disability Insurance); the Medicare tax is sometimes labeled "Med" or "HI" (hospital insurance) on a pay stub.

FICA taxes are paid on top of other taxes such as the federal income tax and your state income tax. Unlike income tax, FICA has no standard deduction, no brackets, and no refund for overpaying unless you had more than one employer (more on that below).

Who Pays FICA Tax?

By law, FICA is split between an employer and the employee. Each pays an equal share.

If you work a typical job (your employer gives you a W-2 at the end of the year), your employer deducts your share from each paycheck and sends it to the IRS, along with its own matching share. You never have to calculate it, and nothing on your W-4 changes it; the W-4 only controls income tax withholding.

Self-employed people (including side hustlers) pay both the employer side and the employee side. The IRS calls this self-employment tax, and it applies once your net earnings from self-employment reach $400 for the year.

What Is The Tax Rate In 2026?

The FICA rate is 6.2% for Social Security and 1.45% for Medicare, a combined 7.65% for the employee. The employer pays the same 6.2% and 1.45%. Neither rate changed for 2026; what changes each year is the Social Security wage base, the maximum amount of earnings the 6.2% applies to.

FICA Tax Rates And Limits For 2026

	Employee	Employer	Self-employed
Social Security (OASDI)	6.2%	6.2%	12.4%
Medicare (HI)	1.45%	1.45%	2.9%
Total FICA rate	7.65%	7.65%	15.3%

The Social Security portion applies to the first $184,500 of wages in 2026 (up from $176,100 in 2025). The Medicare portion has no cap, plus an extra 0.9% above $200,000 single / $250,000 joint with no employer match. Sources: SSA, IRS. The College Investor.

The Social Security cap. The 6.2% Social Security tax is paid only on the first $184,500 of wages in 2026, according to the Social Security Administration. If you earn $185,000, you don't pay the 6.2% on the last $500, and neither does your employer. The most an employee can pay in Social Security tax in 2026 is $11,439 (6.2% of $184,500). For 2025 returns (the ones due in 2026), the base was $176,100 and the maximum was $10,918.20. The Social Security Administration sets the base each October along with the cost-of-living adjustment, so the 2027 number arrives in mid-October 2026.

The Medicare tax has no cap, and it goes up for high earners. Under the Additional Medicare Tax, you pay an extra 0.9% on wages and self-employment income above:

$200,000 for single filers, head of household, and qualifying surviving spouses
$250,000 for married filing jointly
$125,000 for married filing separately

Those thresholds are set by statute and aren't adjusted for inflation, so more people cross them each year. There's no employer match on the extra 0.9%, and your employer starts withholding it once your wages at that job pass $200,000, regardless of your filing status. Married couples can end up over- or under-withheld and settle up on Form 8959 at tax time. (The Additional Medicare Tax is a different tax from the 3.8% Net Investment Income Tax, which applies to investment income above the same thresholds.)

How Much FICA Tax Do I Pay? (2026 Example)

FICA is a flat percentage, so the math is short. Take someone earning a $60,000 salary in 2026:

Social Security: $60,000 × 6.2% = $3,720
Medicare: $60,000 × 1.45% = $870
Employee FICA: $4,590 ($382.50 a month, before any income tax withholding)

The employer pays another $4,590, so $9,180 goes to Social Security and Medicare on that one salary. That employer match is why a $60,000 job costs an employer at least $64,590, and why the take-home math on a raise never matches the raise.

For a single filer earning $250,000 in wages in 2026:

Social Security: $184,500 × 6.2% = $11,439 (the cap; nothing on the last $65,500)
Medicare: $250,000 × 1.45% = $3,625
Additional Medicare Tax: $50,000 above $200,000 × 0.9% = $450
Employee FICA: $15,514, an effective rate of 6.2% on the full $250,000

That's the shape of FICA: it takes a bigger share of a $60,000 paycheck (7.65%) than a $250,000 one (6.2%), which is the opposite of how the federal income tax brackets work.

Is All Income Subject To FICA Taxes?

FICA applies to earned income: salary, hourly wages, bonuses, commissions, tips, overtime, and anything else your employer reports as wages. Income from rent, most royalties, capital gains, interest, and dividends is not subject to FICA. Neither are unemployment benefits, Social Security benefits, or retirement account withdrawals.

Pre-tax retirement contributions don't help here. Contributing to your 401(k) lowers your income tax, but FICA is calculated on your wages before the 401(k) deferral comes out. The same is true of a traditional IRA deduction and the standard deduction: both reduce taxable income for income tax, and neither touches FICA.

There are a few ways to lower FICA on wage income. Contributions to a Health Savings Account (HSA) made through your employer's cafeteria plan come out before FICA; for 2026, the HSA limit is $4,400 for self-only coverage and $8,750 for family coverage. Health Flexible Spending Account (FSA) contributions work the same way, up to $3,400 in 2026, as do dependent care FSA contributions and the employee share of employer health premiums. If you own a business, legitimate business expenses reduce the profit that self-employment tax is calculated on.

Best HSA Providers

Save Taxes Invest For The Future

An HSA funded through payroll is the one retirement-style account that skips FICA as well as income tax. If your employer's HSA has high fees, you can still open your own and transfer the balance. Here are the HSA providers we rate highest.

GET STARTED HERE

Who's exempt. A short list of workers don't pay FICA on specific income:

Students employed by their own school (research assistants, teaching assistants, work-study jobs) while enrolled and regularly attending classes, under the IRS student FICA exception.
Ministers who file Form 4361 and receive IRS approval are exempt from self-employment tax on ministerial earnings.
Certain nonresident students and scholars on F-1, J-1, M-1, or Q-1 visas, on wages connected to their visa purpose.
Some state and local government employees covered by their own public retirement system instead of Social Security.
U.S. citizens working abroad for a foreign employer generally don't pay FICA on that income (they may owe the host country's equivalent).

If you don't fit one of those, you can't opt out. There's no box on the W-4 or anywhere else that lets a regular employee decline Social Security and Medicare coverage.

No Tax On Tips And Overtime: What It Does And Doesn't Change

The One Big Beautiful Bill Act created two deductions that get described as "no tax on tips" and "no tax on overtime." Both are income tax deductions, and both leave FICA exactly where it was.

For tax years 2025 through 2028, workers in occupations the Treasury lists as customarily tipped can deduct up to $25,000 of qualified tips, and hourly workers can deduct the premium portion of overtime pay (the "half" in time-and-a-half) up to $12,500, or $25,000 on a joint return. Both deductions phase out once modified adjusted gross income passes $150,000 ($300,000 joint), and both are available whether or not you itemize. They're claimed on the new Schedule 1-A.

Payroll tax is a separate system. The IRS's 2026 Publication 15 (Circular E, the employer payroll tax instructions) says tips are "still generally subject to both the employer share and employee share of social security tax and Medicare tax," and uses the same language for overtime. Your employer keeps withholding 7.65% on every tipped dollar and every overtime hour, and keeps paying its 7.65% match.

Take a server with $30,000 in hourly wages and $20,000 in reported tips in 2026. The tips deduction removes $20,000 from income before income tax is calculated, which is worth $2,400 in the 12% bracket. FICA is still 7.65% of the full $50,000: $3,825, of which $1,530 is on the tips. The deduction is real money, but "no tax" overstates it, and the tips still need to be reported to the employer (anything over $20 a month) so they count toward your Social Security earnings record and the deduction itself.

How Do I Pay These If I'm Self-Employed?

If you're self-employed (including a business on the side), you pay your payroll taxes yourself as part of your quarterly estimated taxes, and the total is calculated on Schedule SE when you file. If you run an S corporation, the wages you pay yourself go through regular payroll withholding instead.

The rate is 15.3% (12.4% Social Security plus 2.9% Medicare), but it applies to 92.35% of your net profit, not the whole thing. That adjustment stands in for the employer half that a W-2 worker never sees in wages. You then deduct half of the self-employment tax on Schedule 1, line 15, which lowers your adjusted gross income for income tax purposes (but not the self-employment tax itself).

Here's the math on $60,000 of net profit in 2026:

Net earnings subject to SE tax: $60,000 × 92.35% = $55,410
Self-employment tax: $55,410 × 15.3% = $8,477.73
Deduction for half of SE tax: $4,238.87 (reduces AGI)

Compare that to the $4,590 the W-2 employee paid on the same $60,000, and the cost of not having an employer match is about $3,900 a year. The Social Security cap works across both kinds of income: if your W-2 wages already reach $184,500, you don't pay the 12.4% Social Security part on any self-employment income that year, only the 2.9% Medicare part. And the 0.9% Additional Medicare Tax counts wages and self-employment income together against the same $200,000 / $250,000 / $125,000 thresholds.

Two thresholds to know: you owe self-employment tax once net earnings hit $400 for the year, and church employees owe it at $108.28. Estimated payments are due four times a year; here are the 2026 tax due dates.

What FICA Buys You

Social Security tax isn't money that disappears. You earn credits toward retirement, disability, and survivor benefits: one credit per $1,890 of earnings in 2026, up to four credits a year, and 40 credits (10 years of work) to qualify for retirement benefits. Your benefit is then calculated from your 35 highest-earning years, which is why wages above the $184,500 cap neither pay the tax nor count toward the benefit.

The 2026 maximum benefit for a worker retiring at full retirement age is $4,152 a month, and the average retired worker receives $2,071 a month after the 2.8% cost-of-living adjustment, per the SSA. Medicare tax works the same way: 40 credits gets you premium-free Medicare Part A at 65. If you're wondering whether to prioritize a 401(k) or Roth IRA on top of that, the answer is yes; Social Security replaces about 40% of pre-retirement income for a median earner, and less for higher earners.

What If I Overpaid FICA?

With one employer, overpaying is rare; payroll software stops the Social Security withholding at $184,500. With two employers it's common. If you earned $120,000 at your main job and $100,000 at a second job in 2026, each employer withheld 6.2% on its own payroll, so $13,640 in Social Security tax came out on $220,000 of wages. The maximum for the year is $11,439. You claim the $2,201 difference as a credit on Schedule 3 (Form 1040), line 11, and it comes back with your refund. Every major tax filing software does this automatically from your W-2s, and so will a decent accountant.

If a single employer withheld too much, the fix is different: the employer is supposed to correct it, and if it won't, you file Form 843 with the IRS rather than claiming it on your 1040. The Medicare portion can't be overpaid in the same way, since it has no cap, but the Additional Medicare Tax reconciles on Form 8959.

FICA Tax FAQ

Can I opt out of FICA?

No, unless you're in one of the exempt groups above (students working for their school, ministers with an approved Form 4361, certain nonresident visa holders, some public employees with their own pension system). A regular employee can't decline Social Security and Medicare coverage.

Does a 401(k) contribution reduce FICA?

No. Traditional 401(k) contributions reduce income tax, not FICA. HSA and FSA contributions through your employer's cafeteria plan reduce both. Here's how 401(k) contribution limits work for 2026.

I had two jobs and both took out Social Security. Do I get the extra back?

Yes, if your combined wages exceeded $184,500 in 2026. Claim the excess on Schedule 3, line 11, when you file. Your tax software will calculate it from your W-2s.

Do students pay FICA?

Students working for the school they attend, while enrolled and regularly attending classes, don't. Students working anywhere else do, from the first dollar. A summer job at a restaurant pays full FICA; a research assistantship at your own university usually doesn't.

Is FICA tax deductible?

Not for employees. Self-employed people deduct half of their self-employment tax on Schedule 1, line 15, which reduces adjusted gross income but not the self-employment tax itself.

Do the "no tax on tips" and "no tax on overtime" rules mean no FICA?

No. They're income tax deductions (up to $25,000 for tips, $12,500 or $25,000 joint for overtime, 2025 through 2028). Social Security and Medicare tax still come out of every tipped and overtime dollar; see the list of eligible tipped occupations for who can claim the tips deduction.

Final Thoughts

FICA is the simplest tax you pay and the one you have the least control over: 7.65% of every wage dollar, capped for Social Security at $184,500 in 2026, matched by your employer, and doubled if you're self-employed. The two things worth acting on are the ones most people miss. If you had more than one employer, check Schedule 3, line 11, before you file. And if you're choosing between retirement accounts, remember that a payroll HSA is the only one that skips FICA as well as income tax. The rest of your tax planning happens on the income tax side.

Editor: Clint Proctor Reviewed by: Chris Muller

The post What Is FICA Tax And Who Pays It? 2026 Rates And Limits appeared first on The College Investor.