Coachella debt, wage garnishments & mortgage trends

May 2, 2025
by RJ Hamster

Hey Peter, here’s the latest Rocket Money Minute, our easy-to-read newsletter of money news, pop culture, and what it means for your wallet.

Key Takeaways

The risks of buy-now-pay-later plans for 60% of Coachella-goers

What the “new normal” for mortgage rates means for your wallet

Millions of federal student loan borrowers in default could see lower paychecks as of May 5

60% of Coachella tickets used buy-now-pay-later

What Happened

A new Billboard report found that 60% of Coachella ticket buyers used a buy-now-pay-later plan to afford their pass. Some put down just $49.99 for tickets that start at $649, for a $41 fee — meaning many attendees headed into the festival with a balance of up to $600. Buy-now-pay-later (BNPL) plans like these are becoming more common, not just for concerts, but for everyday spending too like groceries and takeout.

How This Impacts Your Wallet

BNPL plans can make big purchases feel more manageable in the moment, but it’s easy to underestimate the long-term cost. Some charge fees or interest if you miss a payment, and overusing them can strain your monthly budget. Ideally, you’re saving up in advance for purchases, especially for non-essential spending. If you do use BNPL, treat it like any other form of debt: track your payment dates, avoid stacking multiple plans, and make sure it fits within your budget.

Will mortgage rates ever return to 4%? Probably not

What Happened

Mortgage rates are a lot higher from the record lows we saw during the pandemic, but that was the exception — not the rule. When inflation surged in 2022, the Federal Reserve raised interest rates to cool things down, indirectly sending mortgage rates up. Today, 30-year fixed rates average above 6.5% in April 2025. And while that may feel high, it’s not unusual: in the ‘90s and early 2000s, mortgage rates also hovered between 6–8%, climbing up to 18% in the 1980s.

How This Impacts Your Wallet

If you’re looking to buy a home, you’ll likely be facing higher borrowing costs than you would have a few years ago. Experts don’t expect rates to fall back down to 3-4% anytime soon, and even if they dip over time, they’re likely to stay closer to historical norms. That means bigger monthly payments and more interest paid over time. Instead of trying to time the market, focus on what you can control: improving your credit, boosting your down payment, and finding a mortgage that fits your monthly budget.

Student loan wage garnishments start as early as May 5

What Happened

The U.S. Department of Education announced it will restart collections on defaulted federal student loans starting May 5, 2025. That means if you’re in default, the government can start taking money directly from your paycheck, tax refund, or even Social Security check — a process known as “wage garnishment”. These collection efforts had been paused during the pandemic but have restarted after the ramp-up period ended on September 30, 2024.

How This Impacts Your Wallet

If your loans are in good standing or you’re on an income-driven repayment plan, you’re all set. But if you’re behind, it’s important to act now. Wage garnishment can take a chunk of your income before it even hits your bank account. If you’re at risk, contact your loan servicer or visit studentaid.gov to learn about options like repayment plans, loan rehabilitation or consolidation to stop collections before they start.

Did you know? 🏡

Mortgage rates hit a record high of 18.63% in 1981 — making today’s 6.5% average feel a bit easier on the wallet.

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