Millions of Americans are hurtling toward a major fiscal cliff when the calendar turns from 2020 to 2021.
Congress has so far failed to reach an agreement on another round of stimulus, and several of the sweeping CARES Act-backed legislative relief programs are coming up on their sunset date — from several unemployment insurance (UI) enhancements to a batch of other safety nets helping federal student loan and mortgage borrowers.
Legislators are reconvening this week, with negotiations for more aid on the agenda. A bipartisan group of senators unveiled a $908 billion relief bill on Tuesday that would send relief to state and local governments and boost weekly jobless checks by $300 a week. But that’s just one hoop in a long line of hurdles that lawmakers will need to clear to get out another round of aid. Most experts caution Americans to prepare their finances for no relief at all.
“This has been the time to break the glass — as in, ‘in case of fire, break glass’ — in that they need to take all reasonable and prudent steps possible to obtain help if facing a loss of employment or income,” says Mark Hamrick, Bankrate’s senior economic analyst and Washington bureau chief. “The proverbial jury is still out whether the House and Senate, along with the president, will approve another needed round of relief legislation.”
Here’s a list of seven federal relief programs expiring at the end of the year and how to prepare now if they aren’t extended.
1. Access to certain enhanced unemployment benefits
Deadlines: Dec. 31 (while others have already expired)
The CARES Act dramatically shored up UI benefits at a time when as many as 1 in 4 Americans were applying for the program to make ends meet, largely as a result of lockdowns and restrictions that shuttered retailers, offices, gyms, restaurants, bars and more.
Lawmakers created three new UI programs, which became entirely federally run and funded:
- Pandemic Emergency Unemployment Compensation (also known as PEUC): This program provided Americans an additional 13 weeks of benefits.
- Pandemic Unemployment Assistance (PUA): The creation of PUA allowed typically ineligible gig workers, independent contractors, freelancers and others to apply for jobless benefits if they were facing job loss or a reduction in hours.
- Federal Pandemic Unemployment Compensation (FPUC): As a result of this program, an additional $600 in weekly checks was provided to all Americans drawing unemployment benefits.
Both PEUC and PUA are set to expire on Dec. 31. According to The Century Foundation, a left-leaning research institution, those two expirations could leave almost 12 million Americans in the dust, with about 7.3 million individuals getting kicked off from PUA and another 4.6 million losing PEUC.
When it comes to the extra weekly payments of $600, or FPUC, those expired at the end of July. But according to a widely watched tracker you still might be seeing an increase in your weekly check if you live in these states (or jurisdictions):
- Alabama
- Alaska
- Washington, D.C.
- Idaho
- Iowa
- Kansas
- Louisiana
- New Mexico
- North Dakota
- Wisconsin
That’s because President Donald Trump in early August took executive action to temporarily boost those weekly payments after Congress couldn’t strike a deal to renew FPUC (Senate Republicans wanted to provide a smaller supplemental weekly amount so as not to deter Americans from getting back to work). In most cases, the memorandum boosted those weekly checks by $300 through what came to be known as the Lost Wages Assistance (LWA) program.
Most states were only allowed to make six weeks of those extra payments, most of which have already been depleted.
2. Student loan deferment
Deadline: Dec. 31
Lawmakers and the president essentially pressed the pause button on federal student loans: No interest is accruing and no payments are due. That’s all set to change after Dec. 31, with the clock starting again in January.
When it comes to your student loans, the Department of Education recommends pursuing an income-based repayment plan if you fear being unable to afford your payments come 2021. You might also be able to work out an individualized forbearance program if you find yourself unable to make payments.
3. For renters, an eviction moratorium
Deadline: Dec. 31
A Trump administration provision from September directed the Centers for Disease Control and Prevention (CDC) to halt evictions for most renters through the rest of 2020 on fears that it could spread the virus.
That program allowed renters (with an income threshold of $99,000 or less for single filers and $198,000 for married filers) to avoid eviction if they could certify that they were unable to pay their rent due to the pandemic and could become homeless if they’re forced to leave their home. Applicants seeking relief through the program had to also state that they made their “best effort” to obtain other government assistance to pay their rent and that they’re currently paying as much as they can afford.
Those protections are set to end when the calendar turns to 2021.
4. For homeowners, mortgage forbearance programs and foreclosure protections
Deadlines: Dec. 31, though it differs
More than two-thirds of all homeowners have a federally backed mortgage, according to independent research nonprofit, the Urban Institute. Through the CARES Act, they’ve been granted certain programs that protect against foreclosure and prevent hard-hit borrowers from having to make payments during coronavirus-related financial distress.
Homeowners with a federal or GSE-backed (meaning Fannie Mae or Freddie Mac) mortgage loan, lenders or loan servicers are legally protected from foreclosure until Dec. 31, according to the Consumer Financial Protection Bureau (CFPB).
Meanwhile, homeowners can also request a 180-day payment pause (with the option to renew it for another 180 days after that ends for a total of 360 days), during which interest and payments won’t be due. The deadline to request both the initial and secondary forbearance option varies, with some of those federally backed mortgages having a Dec. 31 deadline. Theoretically, however, Americans could still take advantage of the program well into 2021 if they want to request their second 180-day extension or if they’re working with a specific firm with a later deadline.
5. 401(k) hardship withdrawals
Deadlines: Dec. 30
The CARES Act allowed individuals with 401(k)s and IRAs to take out up to $100,000 — or 100 percent of their vested account balance if it’s less than that amount — without the typical 10 percent early withdrawal penalty, all through what’s known as “hardship distributions.”
Americans will still need to pay income taxes on that money, though they can stretch it out over a three-year period. They can also pay back all or a portion of what they owe without it being counted against the maximum annual contribution limit. Working with your employer and plan administrator, however, is a must.
Americans have up until Dec. 30 to take advantage of the program, as long as they can supply proof that they or someone in their household has faced hardship from the virus. That can be something like facing job loss or getting infected with the disease.
