Dec. 31 Deadlines Loom: What Happens If Congress Doesn’t Act

Investing

With all the recent talk about impending Congressional action on an end-of-year coronavirus relief package, you would be forgiven for losing sight of what’s at stake if that legislation isn’t passed.

As of Dec. 31, 2020. programs that provide the following COVID-related relief will end:

  • Extra unemployment benefits of $300 per week
  • Extended weeks of unemployment benefits
  • Unemployment benefits for gig workers and self-employed individuals
  • Moratorium on eviction for both renters and homeowners

Student loan deferment would also have been on the list, but Secretary of Education Betsy DeVos just extended the deadline one month, to Jan. 31.

Fortunately, Congress is negotiating. Unfortunately, Congress’ track record on timely legislation is far from perfect. Best to know the stakes and what you face if Congress doesn’t come through.

Key Takeaways

  • As of Dec. 31, 2020 several key coronavirus programs expire leaving millions in potential financial jeopardy.
  • If you are unemployed or in danger of eviction, this applies to you.
  • If you’re unable to pay student loans, you have one more month, until Jan. 31, 2021.
  • Negotiations are underway to address most, but not all, of these expirations.
  • Know where you are vulnerable and how to deal with potential bad news.

What’s at Stake

Here’s a brief description of programs about to expire, who they are for, and what they provide.

Extra $300 Unemployment Benefits

The original CARES Act provided a weekly unemployment boost of $600 that expired July 31. Subsequently, President Trump signed an executive memo offering a $300 weekly bonus set to expire Dec. 27.

Barring action by Congress before that date, the $300 weekly bonus unemployed individuals are currently receiving will expire. According to the latest figures from the Bureau of Labor Statistics (BLS), the current unemployment rate in the U.S. is 6.7%, with approximately 10.7 unemployed individuals as of Dec. 4, 2020.

Extended Weeks of Unemployment Benefits

The CARES Act also extended the number of weeks unemployment benefits would be available from 26 weeks to 39 weeks, in most cases. As of Jan. 1, 2021, the additional 13 weeks of coverage will no longer be available unless Congress acts.

BLS statistics also indicate that approximately 3.9 million of the 10.7 million unemployed in the U.S. are long-term unemployed, having been jobless for 27 weeks or more.

Unemployment Benefits for Self-employed Individuals

Another CARES Act initiative, called the Pandemic Unemployment Assistance (PUA) program provided unemployment benefits to classes of workers not normally eligible—namely gig workers, the self-employed, and contractors. Like many other CARES Act programs, PUA is set to end Dec. 31.

According to the BLS, in Nov. 2019 the unemployment rate among self-employed workers was just 2.1%. As of Nov. 2020 the rate is 5.9%.

Eviction Moratorium

Previous legislation under the CARES Act gave limited protection against evictions on homes backed by federal mortgage loans or those receiving some type of federal funding. The Department of Health and Human Services (HHS) expanded those protections to cover more households, including renters, in September. That protection expires Dec. 31.

30 to 40 million

The number of people at risk of eviction in the U.S. if the protections expire on Dec. 31, according to the National Low Income Housing Coalition (NLIHC). 

Student Loan Deferment

Finally, the CARES Act granted a reprieve to students paying off federal student loans by deferring payments on those loans through September 2020, suspending all interest due on these loans, and allowing non-payment of loans to count as payments for certain programs that require them.

In August, President Trump extended the deferment until Dec. 31, 2020. On Dec. 4, 2020, Secretary of Education, Betsy DeVos announced an extension of the forbearance until Jan. 31, 2021. Barring further congressional action, as of Feb. 1, 2021, loan servicers will once again be able to charge interest and, depending on the servicer, students may have to begin repaying their loans. 

Possible Congressional Relief

The best outcome, of course, would be successful negotiation and congressional action to provide extended relief. Negotiations are underway and many lawmakers hope those negotiations will be successful soon enough to make a difference.

One bipartisan group of senators in particular has been working on fixes to the tune of a $908 billion relief package that falls between the $550 billion Senate proposal in September and the $2.2 trillion bill passed by the House in October. That bill is expected to be presented Mon. Dec. 7, 2020 under the title “COVID Emergency Relief Framework.” Here, based on press coverage, is what the bill may include.

Extra and extended unemployment insurance

The bipartisan proposal currently under discussion would provide $300 per week in additional unemployment benefits for four months. Also under discussion is whether to make those payments retroactive for missed months.

Unemployment insurance for the self-employed

Reports indicate any legislation passed will also include an extension of the Pandemic Unemployment Assistance (PUA), providing additional unemployment insurance benefits to self-employed, contract, and gig economy workers. This coverage would likely last through March 2021.

Eviction protection

Legislators working on the relief bill released a template indicating they planned to budget $25 billion for “housing and rental assistance” presumably to continue eviction protection for renters and homeowners.

Student loan deferment

The $908 billion plan being discussed provides $4 billion for “students,” but it is unclear how that money would be used. According to press reports, it could pay for a short-term extension of student loan deferment and interest-payment deferment for some period following the Jan. 31, 2021 expiration of the Department of Education’s just announced extension.

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