What Students Need to Know About the Stimulus Package (CARES Act)

On Thursday, March 11, 2021, President Biden signed into law the $1.9 trillion economic relief package, known as the American Rescue Plan. This new stimulus package includes direct payments to individuals and families, extensions to unemployment benefits, financial support for college and universities, and tax breaks for low-income families. Here is what you need to know about the stimulus package.

Top 5 Things to know about the $1.9 Trillion Economic Relief Package

1. Most adults received a one-time payment up to $1,400 along with an additional $1,400 for each dependent (now including college students). See below for details on who qualified.
2. Colleges and universities received $40 billion. At least half of the funding must be allocated to support students in financial need. See below for tips on accessing these funds.
3. Unemployment insurance was extended an additional 25 weeks (until September 6, 2021) and recipients received an additional $300 per week on top of their state unemployment benefits.
4. $22 billion was available for emergency rent and eviction relief - sent to cities for distribution.
5. Expanded SNAP eligibility benefits were made available.

Direct Payments to Adults and their Dependents

There are several factors that determine who receives a stimulus check. Here is a breakdown of who is eligible and how much they may receive.

You should receive the full $1,400 payment directly if you meet all the following requirements:

1. You are 18 years of age or older
2. Filed your taxes for 2019 or 2020
3. You are not claimed as a dependent on anyone's federal tax returns, or could not have been claimed as a dependent, even if you filed your own taxes
4. Your adjusted gross income on your most recent tax returns is $75,000 or less (for single tax filers), $112,500 or below for the head of household, or $150,000 or less if married and filing jointly.

You will receive a partial payment if you made more than $75,000 ($150,000 if married).

If your adjusted gross income is more than $75,000 for individuals and $150,000 for married couples, you will receive a partial payment. Payments will completely phase out if you made $80,000 or more.

If you are claimed as a dependent or could have been claimed as a dependent, you will not receive your own check.

If your parent or legal guardian claims you as a dependent on their federal tax returns, they will receive a one-time payment of $1,400 for each dependent. This includes college students who are claimed as dependents.

You are not eligible for any payment if you are in the following categories:

• If you make more than $80,000 a year ($160,000 for married couples)
• If you do not have a social security number

When will the payments arrive?

Many recipients should receive their payments via direct deposit, prepaid benefits card, or paper check. Track the status of your payment via the I.R.S.’s Get My Payment tool. As of January 1, 2022 all payments from the government to qualified recipients are complete. 

Relief for Colleges, Universities, and College Students

Colleges and universities will receive nearly $40 billion as part of the relief package. At least half of the funds given to schools must be allocated to student emergency financial aid. Students who receive aid can use it on everything from tuition and housing to food and mental healthcare. Processes for distributing funds will vary by institution. Contact your school’s financial aid office to learn how to apply for aid.

For Student Loan Borrowers

The payment and interest freeze on federal student loans are still in effect through June 30, 2023. An additional benefit from the new plan is that any student debt that was forgiven after Dec. 31, 2020, or that becomes forgiven through Jan. 1, 2026, will no longer be considered taxable as part of the relief package, thus potentially saving student loan borrowers thousands of dollars in taxable income. 

In addition, on August 24, 2022, the Biden-Harris Administration announced some targeted student debt relief. "Borrowers with annual income during the pandemic of under $125,000 (for individuals) or under $250,000 (for married couples or heads of households) who received a Pell Grant in college will be eligible for up to 20,000 in debt cancellation. Borrowers who met those income standards but did not receive a Pell Grant will be eligible for up to $10,000 in relief."

Please also note that private student loans are unfortunately not covered by the CARES Act. 

Expanded SNAP benefits are still available for college students.

Expanded Supplemental Nutrition Assistance Program (SNAP) eligibility was available in the last stimulus package in 2020 and is still in affect. College students with low incomes can now more easily access SNAP benefits. Congress has temporarily waived the student worker requirements if:

1. A student is eligible for federal or state-funded work study programs during the regular school year or,
2. A student has an expected family contribution (EFC) of $0 during the current academic year

Waiving these requirements increase access to SNAP benefits for many more students. The temporary waiver will remain in place until thirty days after the COVID-19 public health emergency is lifted.

Extended Unemployment Benefits

Unemployment benefits have been extended an additional 25 weeks (expiring on September 6, 2021). Eligible recipients will also receive a temporary additional payment of $300 a week, but only through September 6 at the latest.

Part-time workers, self-employed, freelancers, independent contractors, and gig economy workers are eligible for relief through the Pandemic Unemployment Assistance program through Sept. 6. For more information contact your state’s unemployment insurance office.

Tax Relief for unemployment benefits recipients

Though unemployment benefits are taxable, the new bill makes the first $10,200 of benefits tax-free for people with incomes of less than $150,000. This applies to 2020 taxes only.

Assistance for Renters and Homeowners

The American Rescue Plan allocated $22 billion for emergency rental assistance. Financial assistance can be used for rent, utilities or to cover the costs of other housing expenses.

To be eligible for assistance you must meet all of the following:

1. Household income for 2020 must not exceed 80 percent of the area median income;
2. At least one household member must be at risk of homelessness or housing instability; and
3. Individuals must qualify for unemployment benefits or have experienced financial hardship because of the pandemic.

Priority will be given to families with lower incomes and who have been unemployed for three months or more.

For Unsheltered individuals and families

$5 billion will be used for emergency housing vouchers for people experiencing homelessness, people at risk of homelessness, along with survivors of domestic violence.

COBRA Health Insurance Premium Relief

COBRA (Consolidated Omnibus Budget Reconciliation Act), lets someone who lost their job buy health insurance coverage through the former employer. Although COBRA is a nice option for health insurance, it is incredibly expensive. Under the relief bill, the government will pay the entire COBRA premium from April 1 through Sept. 30 for people who have lost a job or had their hours cut. You are not eligible for no-cost coverage or will lose eligibility if:

• You qualify for a new, employer-based health insurance someplace else before Sept. 30
• If you left a job voluntarily.

To learn more about the previous stimulus packages, continue reading below.

Easier Access to SNAP Benefits for College Students

College students with low incomes can now more easily access Supplemental Nutrition Assistance Program (SNAP) benefits. Congress has temporarily waived the student worker requirements if:

1. A student is eligible for federal or state-funded work study programs during the regular school year or,
2. A student has an expected family contribution (EFC) of $0 during the current academic year

Waiving these requirements increase access to SNAP benefits for many more students. The temporary waiver will remain in place until thirty days after the COVID-19 public health emergency is lifted

Rent Assistance and Eviction Relief

The stimulus package allocated 25 billion to be distributed through state and local governments to help renters who are behind on payments. To be eligible for assistance you must meet all of the following:

• Household income for 2020 must not exceed 80 percent of the area median income;
• At least one household member must be at risk of homelessness or housing instability; and
• Individuals must qualify for unemployment benefits or have experienced financial hardship because of the pandemic.

Priority will be given to families with lower incomes and who have been unemployed for three months or more.

For households facing eviction, a moratorium on evictions has been extended through January 31, 2021 (it was originally set to expire on December 31, 2020). In order to be eligible, renters must have experienced a substantial loss of household income or had an extraordinary amount of out-of-pocket medical expenses, among several other conditions. Additionally, you cannot earn more than $99,000 in 2020 (or $198,000 for married people filing their tax returns jointly).

Support for students and student loan borrowers

Student loan deferments:

The CARES Act protections are still in place, meaning that  waived interest and deferred payments on federal student loans through December 31, 2022. The waived interest and deferred payments are automatic, so you do not need to contact your loan servicer. This policy only applies to federal student loans and is a temporary deferment, not forgiveness, meaning, you still have to pay your student loans but payment is not required until after December 31, 2022. The CARES Act also stops the involuntary collection of student loan debt during this time, including garnishment of wages, tax refunds, and social security benefits. It is possible that additional student loan support will be provided past the January deadline.

Please also note that private student loans are unfortunately not covered by the CARES Act. 

Student loan interest rates on subsidized loans:

There is no longer a time limit on interest payments for subsidized student loans. The new agreement means the federal government will continue to make interest payments for students who qualify for subsidized loans while they are in school, regardless of how long it takes them to finish.

A faster, simplified FAFSA application

Anticipated to launch October 1, 2022, the FAFSA (Free Application for Federal Student Aid) will be faster and easier to file. The new FAFSA will only be one-third of its original length, going from 108 to 36 questions. The confusing “expected family contribution” number will be replaced by the “student aid index”, which should hopefully provide more generous aid to low income students. Additionally, the drug conviction and selective service questions will be removed from the form as well.

Expanded Pell Grant Eligibility

Under the new agreement, more students will be eligible for Pell Grant awards with an estimated 1.7 million students receiving the maximum award instead of a partial award (which means more free money for college). Additionally, there will be an increase of $150 for 2021-22 academic year Pell Grant award, bring the total to a maximum award of $6,495. Lawmakers have also expanded Pell Grant eligibility, allowing for incarcerated individuals to be eligible for federal financial aid.

Education Relief Act (subset of CARES Act)

Work-study payments

If you are unable to continue your federal work-study job due to campus closures or another COVID-19 related issue, the plan allows institutions to continue to pay you for the work-study hours you would have been working. Payments are approved for up to one year even if you are unable to perform or complete your work.

Emergency aid grants

Universities and colleges will have broader flexibility to distribute emergency aid to assist undergraduate and graduate students for unexpected expenses or unmet financial needs. Students must meet current federal financial aid eligibility requirements to be a potential grant recipient. The Federal Supplemental Education Opportunity Grant is a program administered by each individual institution, meaning the amount of aid available and who will be awarded will vary. This emergency aid does not need to be repaid, and is not considered financial assistance or income for future FAFSAs. Colleges have up to a year to distribute these funds, so work directly with your school to understand the grant process, requirements, and timing. 

Support for Small Businesses

Local businesses are a part of all of our lives - family-run businesses, our favorite corner store, or one may be your employer. The stimulus plan includes more than $300 billion to help businesses stay open during closures and social distancing efforts. Small businesses, non profit organizations, and the self-employed with 500 or fewer employees per location are eligible for a loan. If these businesses avoid layoffs and continue salaries through June, the loan may be forgiven. This plan will help reduce stress about being laid off and help keep small businesses open!

Helping Healthcare Providers and Hospitals

For the doctors, nurses, and others working at clinics and hospitals around the nation, this plan has allocated $100 billion to support healthcare systems. Money is set aside for more personal protective equipment like masks and gowns which are currently in short supply. The funds will also support more testing supplies and new construction to certain hospitals to help support the increase in beds needed for patients.