What is the Federal Stimulus Package?
The Federal Stimulus Package, also known as the CARES Act, is a law passed by Congress in March 2020 to provide financial assistance to individuals, businesses, and states affected by the COVID-19 pandemic. The package included various measures such as direct payments to households, expanded unemployment benefits, loans for small businesses, and aid for healthcare providers.
One of the key provisions of the CARES Act was the Economic Impact Payment, which provided eligible taxpayers with a one-time payment of up to $1,200 per individual or $2,400 for married couples, plus an additional $500 per child. The package also expanded unemployment benefits by providing an extra $600 per week in federal unemployment insurance on top of state benefits.
In addition, the CARES Act provided funding for various programs aimed at helping small businesses, including the Paycheck Protection Program (PPP), which offered forgivable loans to small businesses to cover payroll expenses and other costs.
How does the Federal Stimulus Package help borrowers?
The CARES Act also provided relief for borrowers impacted by the pandemic. One of the most significant measures was the suspension of federal student loan payments and interest accrual from March 13, 2020, through September 30, 2021. This means that borrowers with federal student loans did not have to make any payments during this period, and interest did not accrue on their loans.
In addition, the CARES Act allowed borrowers with federally backed mortgages to request forbearance on their payments for up to 180 days, with the option to extend for another 180 days. During forbearance, borrowers were not required to make mortgage payments, and no fees, penalties, or interest accrued. Home owners with FHA-insured mortgages were also eligible for a foreclosure moratorium for 60 days.
Furthermore, the CARES Act provided relief for borrowers with certain types of loans owned by the federal government, including Perkins Loans and Health Education Assistance Loans. These borrowers were also able to defer their payments without accruing interest or penalties.
What additional help is available for borrowers?
While the CARES Act provided significant relief for borrowers, some of these provisions have now expired. However, there are still options available for borrowers who are struggling to make payments due to the pandemic.
For example, borrowers with federal student loans can now enroll in income-driven repayment plans, which can lower their monthly payments based on their income. These plans can also result in loan forgiveness after a certain number of years of making payments.
Additionally, borrowers with federally backed mortgages who are still experiencing financial hardship can request another forbearance period of up to 180 days. Some private lenders may also offer forbearance or other forms of relief, so it’s important to contact your lender directly to discuss your options.
Overall, while the Federal Stimulus Package provided much-needed relief for individuals and businesses impacted by the pandemic, borrowers should be aware of their current options and work with their lenders to find the best solution for their specific situation.