When COVID Relief Measures Expire How to Prepare | Family Finance
While the country transitions back to something resembling pre-pandemic life – with packed stadiums at sporting events, indoor dining at restaurants resumed in-person schooling – it’s time for your financial life to transition back to normal, too.
A number of expanded benefits offered as part of a COVID-19 federal relief package are scheduled to end in the coming months. These include unemployment, housing loan benefits that could affect millions of Americans.
To avoid any surprises, families should begin recalculating their budgets in anticipation of changes to their cash flow with the end of these benefits.
Here’s when expanded federal COVID-19 relief benefits end:
- Expanded unemployment benefits: Sept. 6.
- Foreclosure moratorium for federally backed mortgages: July 31.
- Ban on evictions: July 31.
- Pause on student loan payments: Sept. 30.
- Help with health insurance premiums: Sept. 30.
These federal dates could be extended further, options for relief will vary by state.
Expanded Unemployment Benefits
Unemployment benefits will drop by at least $300 weekly starting on Sept. 6 as the federal government’s expanded relief program ends. In addition to this extra weekly payment, the federal government had also extended unemployment assistance from 50 weeks to 73 weeks, which is also set to conclude.
With this expiration date quickly approaching, Bruce McClary, senior vice president of communications at the National Foundation for Credit Counseling, says it’s clear some individuals will still struggle to resume full-time employment by September.
“For people who are not too confident about their situation, it’s a good idea to reach out get help putting together a budget that is workable,” he says. “You might be having to reduce expenses cut costs to get through a longer period of unemployment connect with other resources to fill the void when these benefits go away.”
No matter your situation, he says, “It’s better to start working on that emergency plan now than to wait until September gets here, all of the sudden your unemployment benefits aren’t what they used to be you’re having to scramble.”
But in some states, those relying on extra jobless benefits won’t have any more time to prepare for their conclusion. So far, 26 states have opted to cancel the expanded federally funded unemployment programs ahead of the federal end dates.
Some states face a legal battle over this issue. In Indiana, for example, state officials are facing a lawsuit after their attempt to cancel the federal benefit early, which has so far resulted in the reinstatement of the program. Benefits across states may continue to change rapidly.
“Across the states, it’s very different. Be educated about what changes are being made,” says Aaron Leak, founder wealth manager at ECL Private Wealth Management, which serves the Chicago Rockford areas in Illinois the Dallas-Fort Worth area in Texas. He says it’s important to ask, “Does that apply to you? Are you still able to take advantage of any other benefits?”
Foreclosure Moratorium for Federally Backed Mortgages
Some homeowners spared from foreclosure during the pandemic will see the process resume starting July 31.
During the pandemic, the federal government put a foreclosure moratorium in place for some federally backed mortgages. As foreclosures on single-family homes resume, homeowners can work with their mortgage servicer or with counselors approved by the U.S. Department of Housing Urban Development for help.
“As those programs term out for people, they have to realize a few things will happen depending on their situation: They’re going to go back to their regular mortgage payment when the forbearance ends they need to be in a position to afford that payment,” McClary says. “If they can’t afford that mortgage payment, they should start working with their mortgage servicer to identify a way to modify the mortgage,” which may include refinancing or restructuring.
Ban on Evictions
The Centers for Disease Control Prevention announced it intends for the latest extension of protections for tenants who are unable to make rental payments to July 31 to be the final extension of this ban.
The order specifies that tenants must meet certain criteria, including having attempted to get government assistance, earning an individual income of less than $99,000 in 2020, being unable to make payments due to substantial loss of income or extraordinary out-of-pocket medical expenses.
As evictions resume, McClary says tenants can work with their landlords to discuss back payments to possibly avoid eviction. There may also be further state protections beyond those offered by the federal government that tenants can utilize.
Pause on Federal Student Loan Payments
Those holding federal student loans during the pandemic were also able to take advantage of certain relief flexibilities, including suspended loan payments, 0% interest rates stopped collections on defaulted loans.
This freeze on federal student loan payments other benefits are set to end on Sept. 30 – a possible budget shock for some, says Erik Kroll, a certified financial planner owner of Hilltop Financial Advisors Student Loans Over 50.
“We’ve been used to not having to make student loan payments for 15 months now, by the time September rolls around it will have been a whole year a half,” Kroll says. “People have gotten used to their budgets cash flows without having to add in their student loan payments.”
Student loan servicers may be overwhelmed with the resuming of payments, Kroll says, so getting any forms in early may help ease the transition. Those who must recertify their income should check the deadline to do so determine whether it’s beneficial to submit updated income information ahead of the deadline.
“This comes down to cash flow planning making sure everything is in line ahead of time doing everything you can to increase whatever income you do have,” he says.