College Students and the CARES Act
Last updated September 28, 2020
On Friday, March 27, 2020 our government approved the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), an economic stimulus plan amounting to roughly $2 trillion of support. This includes direct payments, changes to unemployment benefits, as well as support for states and businesses of all sizes. Here are the top six things to know about the stimulus package.
Top 6 Things to Know about the Stimulus Package (CARES ACT)
- Adults will receive a one-time payment up to $1,200 and $500 per child 16 or younger. Update: One-time payments for eligible adults started in April. If you believe you are eligible for a one-time payment and have not received it, visit the IRS website to track the status of your economic impact payment.
- Unemployment Insurance is extended to four months, and recipients will receive an additional $600 per week on top of their state unemployment benefits. Update: The additional $600 per week ended on July 30, 2020. However, the Lost Wages Assistance (LWA) program was enacted to provide $300 to $400 in extra pandemic-related compensation to unemployed and underemployed workers.
- Federal student loans have deferred payments and waived interest on federal student loans through December 31,2020.
- Higher education institutions will receive money for emergency aid grants to students and continuing work study payments.
- Small to midsize businesses can apply for a federal loan to continue paying employees, healthcare premiums, and other debt obligations.
- $100 billion has been allocated to support hospitals and clinics including personal protective equipment and testing equipment.
Direct Payments to Taxpayers
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 will receive the full $1,200 payment if you meet all the following requirements:
- You are 18 years of age or older
- Filed your taxes for 2018 or 2019 (qualifying income levels are based on your 2019 federal tax returns, if already filed, otherwise, it’s based on your 2018 tax returns)
- You are not claimed as a dependent on anyones federal tax returns, or could not have been claimed as a dependent, even if you filed your own taxes
- Your adjusted gross income is $75,000 or less (for single tax filers) 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, your payment will be reduced by $5 for each $100 above the $75,000/$150,000 thresholds. For example, if you are a single taxfiler who made $76,000, you will receive a one-time payment of $1,150
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 $500 for each child under the age of 16.
You are not eligible for any payment if you are in the following categories:
- If you are a student (includes College Students) between the ages of 18 and 24 and your parent or legal guardian claims you as a dependent on their federal taxes.
- If you make more than $99,000 a year ($198,000 for married couples)
The plan allows for more workers to qualify for unemployment benefits. This means, part-time workers, self-employed, freelancers, independent contractors, and gig economy workers are now eligible for relief. The total amount of unemployment benefits you will receive depends on the state you live in, however, under the new plan, unemployment insurance will be extended to four months, and every eligible worker will receive an additional $600 a week on top of their state benefits through July 31, 2020. The Lost Wages Assistance (LWA) program was enacted in late August to provide $300 to $400 in extra pandemic-related compensation to unemployed and underemployed workers. To be eligible, you must have been unemployed August 1, 2020. Many states have approved an additional weekly benefit of $300-$400 which will be added to your regular weekly benefits as soon as September 8, 2020 (amounts and time frames will vary by state).
Education Relief Act (subset of CARES Act)
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.
Relief for student loan borrowers
The federal government has automatically waived interest and deferred payments on federal student loans through September 30, 2020. 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 a payment is not required until after September 30. The CARES Act also stops involuntary collection of student loan debt during this time, including garnishment of wages, tax refunds, and social security benefits.
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.