Personal Finance
As Benefits Expire, Millions Of Americans Facing Financial Hardship
Congress has started to work on the next stimulus bill, which Treasury Secretary Steve Mnuchin said will “start” at $1 trillion. However, many of the current benefits from the CARES Act will expire at the end of the month.
That could create a significant economic disruption for millions of Americans as unemployment benefits expire. It will also cause payments on student loans to be no longer deferred. Additionally, evictions and mortgage foreclosures will resume.
Impact on Millions of Americans
Half of the American households reporting that they have lost income during the coronavirus pandemic. Also, unemployment rates still above 10%. With this, the sunsetting of the enhanced unemployment benefits at the end of the month will have a significant impact. It will greatly affect nearly 25 million Americans who are receiving the benefits.
“If policymakers don’t act this week to extend the increased benefits, they will expire while unemployed workers and the economy need substantial support,” said Center on Budget and Policy Priorities chief economist Chad Stone.
Without the enhanced Federal unemployment benefits, those 25 million Americans will only have their state unemployment benefits to rely on. In some states, like Oklahoma, that’s only $100 per week.
“These benefits are wholly insufficient,” said Michele Evermore, senior policy analyst for the National Employment Law Project.
“Losing the $600 will mean people will put themselves in physical jeopardy by showing up to unsafe jobs to keep themselves afloat,” she then added. “For the people who can’t find jobs, they’re going to lose their homes. They’re not going to be able to afford food, and they’re going to take on debt that will stay with them for years.”
Possible Solutions
Many Republicans, including President Trump, don’t want the enhanced benefits extended. They feel it is a deterrent to getting Americans back to work.
Treasury Secretary Steve Mnuchin is in favor of another stimulus check for every American instead. He believes that people can use the money immediately. He also mentions, “we can get that into hard-working Americans’ bank accounts very, very quickly.”
For the nearly 45 million Americans who are paying back student loans, the payment pause ends in September, putting additional financial stress on those who must resume payments.
“If borrowers are forced to resume repaying their student loans on Oct. 1, delinquencies and defaults will skyrocket,” said Mark Kantrowitz, nationally-recognized expert on student financial aid, scholarships and student loans. “This year’s college graduates are entering the worst job market ever,” he also said.
On Eviction Proceedings
In the meantime, 30 states are now allowing eviction proceedings to resume, and the eviction moratorium for properties backed by a federal mortgage or receiving government-assisted housing ends on July 25.
This means up to 40 million Americans could lose their homes in the next few months, said Emily Benfer, a housing law expert.
“This data shows us that all the terms people have been using to describe what’s coming – ‘cliff’, ‘tsunami’, ‘avalanche’ and so on – might actually be an understatement,” said John Pollock, coordinator of the National Coalition for a Civil Right to Counsel.
Up Next:
