CARES Act: Coronavirus stimulus checks, unemployment claims, and student loan help, explained
The early numbers from the coronavirus economic crisis are grim. Millions of Americans are waiting for federal help in the form of direct payments, unemployment insurance benefits, or food assistance.
Last week, Congress officially passed a $2 trillion stimulus package, called the Coronavirus Aid, Relief, and Economic Security (CARES) Act, aimed at helping workers, businesses, and states deal with the economic fallout from efforts to curb the coronavirus outbreak.
Though relief is on the way, there may be frustrating delays in getting assistance due to the overwhelming demand and unprecedented nature of some of these programs. For instance, there are reports of unemployment websites crashing and jammed phone lines in New York and Florida as state agencies struggle to keep up with so many new people needing services.
The channels for obtaining this stimulus also vary. For some aspects of it, like the $1,200 direct payments that will go out to most workers, the distribution of these funds will largely be automatic if individuals have filed a tax return in the past two years (more on that below). For others, including unemployment insurance and small-business loans, people will have to apply with their individual state agencies and banks.
While the stimulus aims to infuse the economy with support for workers and businesses, there’s still a lot of confusion about how to get that help. Vox has answered nine of your key questions about the stimulus bill below.
1) What’s the best way to apply for unemployment insurance?
Each state has its own unemployment office; if you have been laid off or furloughed from your job, you can file there — either online or by calling.
Each state has its own specific guidance, but due to high demand, some states are advising people to call on certain days or at certain times depending on the alphabetical order of their last names or order of their Social Security numbers. Many states are also recommending filing online over calling, due to busy phone lines.
Vox has put together a chart of each state’s base weekly unemployment insurance benefits and links to each state’s unemployment website where you can get the process started. The new stimulus will add $600 per week to that base amount for four months, until the end of July.
The delays to sign up will be frustrating.
“Some are much better prepared than others or just have a different timetable. So one of the things we may have to do is get more resources to the state agencies that do this,” House Speaker Nancy Pelosi told Vox on a recent press call.
Part of the reason there’s such a high demand is more people are now eligible for benefits. The CARES Act opened up unemployment benefits to a range of people who weren’t eligible before, including gig economy workers like drivers for Uber or Lyft, freelancers, and independent contractors. Part-time employees who lost their jobs due to the coronavirus will also be covered, as will people who had to stop working to take care of a sick member of their family or homeschool their children.
Bottom line: If the coronavirus is responsible for your layoff, furlough, or drastic reduction of your hours — or is preventing you from finding work because fewer employers are hiring — you have a good chance of getting these expanded benefits. It’s worth applying as soon as possible through your state’s website or phone lines, even if you are unsure whether you’ll be covered.
2) How much will unemployment insurance cover?
Laid-off or furloughed Americans who file for unemployment through their states will see an extra $600 per week added to that existing state benefit through the end of July. The average benefit in the US is about $385 per week, but some states are more generous than others (for instance, the maximum weekly benefit in Arizona is $240 per week while the maximum weekly benefit in Washington state is $790).
Just the increased $600 per week benefit alone adds up to about $10,000 over four months, said Andy Stettner, a senior fellow at the Century Foundation. It’s an attempt to ease the financial burden of laid-off workers struggling to make ends meet.
“That is a way to get a lot more money to people who really need it,” he said. “It has the ability to prevent some of the real damaging parts of unemployment: reducing your savings, food security, having trouble maintaining your housing.”
Many states are cautioning they don’t yet know when the additional federal money will show up but are still telling newly laid-off people to file a claim and get the process started. The process could be a bit more complex for contract or self-employed workers who need to file for a newly created program called Pandemic Unemployment Assistance and are waiting for states to set up these programs. Experts said these people should still file claims as soon as possible, rather than waiting.
People who were already on unemployment and in the system before the coronavirus hit could see the changes happen the fastest. It could take a bit longer for millions of folks who are filing for unemployment all at once because states are still processing their claims.
“The system’s a little clogged up right now,” said Michele Evermore, a senior policy analyst at the National Employment Law Project. “People should keep trying.” Evermore noted that even if some workers are being told they’re not eligible this week, that could change in the coming weeks as states start receiving the federal money.
For more information, check out this guide on how to receive unemployment benefits.
3) Who will receive those $1,200 direct payments?
Direct payments will be distributed based on the adjusted gross income that’s reported on an individual’s or couple’s 2018 and 2019 tax returns, broken down as follows:
- Most adults making less than an adjusted gross income of $75,000 annually will receive a $1,200 one-time payment. Payments will go out to individuals whose income is as much as $99,000, but those bringing in more than $75,000 won’t receive the full amount.
- Married couples without children will receive a total of $2,400 if their joint income is less than $150,000 annually. Payments will go out to couples whose income is as much as $198,000, but those bringing in more than $150,000 won’t receive the full amount.
- Households with children will also receive $500 each for each child if the parent’s income qualifies for these payments.
- Taxpayers who have filed as “head of household” in the past will receive the full $1,200 if their income is less than $112,500.
There are also some key nuances to keep in mind:
- Adults who are claimed as dependents by other adults, including many college students, will not be eligible for a direct payment, nor will people in households with members who are unauthorized immigrants.
- Adults, except for those receiving Social Security benefits and other specific support, will have needed to file a tax return in 2018 or 2019 in order to obtain these payments. If you have not filed a tax return for either of those years, the IRS will provide an online form for people to file a return for this year. Completing this return does not put people on the hook for any taxes, but it is required to obtain the direct payment.
- The amounts of the direct payments for individuals making more than $75,000 and couples making more than $150,000 will decrease $5 based on every $100 an individual makes over $75,000. An individual with an income of $85,000, for example, would receive a $700 payment.
For more information, check out this explainer from Vox’s Dylan Matthews.
4) When will people receive direct payments?
The answer to this question depends on if you have filed taxes in 2018 or 2019.
- If you have filed taxes in either of those years — and the IRS has your bank account information — the direct payments are expected to be shared via direct deposit within the next three weeks, so roughly by April 24. According to a Washington Post report, the IRS plans to start initiating these deposits beginning next week.
- If you have filed taxes but the IRS does not have your bank account information, the Treasury Department is planning to create an online portal where people can share their bank account information so the money can also be directly deposited. Depending on how quickly this information is processed, you’ll also likely receive payments starting in the next three weeks, though there may be some delays.
The IRS is also able to mail checks directly to the address listed on the tax return, but mailed checks are expected to take up to 20 weeks, or five months. The Post report indicates that individuals receiving checks by mail may not get up them until as late as September.
- If you have not filed taxes in either of these years but you receive Social Security benefits, you do not need to file an additional tax return. The IRS will use the information in your existing files in order to send the payment.
- If you have not filed taxes in either of these years and do not receive Social Security benefits, you will need to file a “simple tax return” in order to obtain the payment. This tax return will require less information than a standard return and will focus on an abridged set of questions including name, Social Security number, number of dependents, and deposit information.
The IRS is expected to provide more information about how to complete this return on its website. It’s not yet clear at this point how long it will take the agency to process these returns and distribute the payments corresponding to them.
5) How can small businesses apply for loans?
Here’s what both include:
- Economic Injury Disaster Loan Program (EIDL): The EIDL includes a $10,000 emergency grant that businesses and nonprofits can apply for, which won’t have to be repaid at all. It also includes low-interest loans that will have to be repaid, which organizations can apply for in order to cover operating expenses while large sectors of the economy are locked down. These loans cap out at $2 million per business or nonprofit.
Applications for the EIDL are handled directly by the Small Business Administration, so organizations can apply directly on the agency’s website. The application is for the broader loan, but businesses can indicate that they want the $10,000 grant as part of it. Any business that feels it has incurred damages since a public health emergency was declared on January 31, 2020, is eligible to apply.
- Paycheck Protection Program (PPP): Loans from the Paycheck Protection Program can help businesses and nonprofits cover up to eight weeks of payroll costs and some other expenses. They are 100 percent forgivable if a business does not lay off any employees or rehires by June 30, 2020, employees that have already been laid off.
Businesses are able to apply for 2.5 times their monthly payroll costs, up to $10 million, and they can use any funds they receive to cover worker salaries, rent, and utilities. Businesses and nonprofits can apply for the PPP directly with their banks or lenders.
The Treasury Department has released an example of what the application includes, and it will officially go live for businesses and nonprofits on Friday, April 3. It will go live for self-employed workers and sole proprietorships on Friday, April 10.
It’s worth noting that businesses and nonprofits can apply to both loan programs and ultimately receive both if they do not use the money for the same purpose. (A business could not use an EIDL loan to pay April payroll and then use PPP to do the same, for example.) Organizations could also refinance an EIDL loan they’ve received since January 31, 2020, into a PPP loan.
For both, businesses and nonprofits are encouraged to apply as quickly as possible given the expectation that there will be high demand for the programs. Since both also have a limited amount of funding, applying sooner is also important in case their allocated funding is fully used.
Because the EIDL is already set up, experts tell Vox that the $10,000 grant it provides could be the fastest way for businesses and nonprofits trying to get money more quickly. Once the PPP is fully established, Treasury Secretary Steven Mnuchin has said that he expects loans will be turned around on the same day as the application. Since PPP is a new program, however, it could take a few days or weeks before it’s fully functional.
6) How will student loans be treated? How will college students be treated?
Loans that are eligible for suspension include direct loans from the federal government received anytime in the past 10 years. Interest payments on these loans will also be suspended automatically. Students don’t need to take any action for this to go into effect, but they should check their individual loan provider for more information.
Loans that are not eligible to be suspended include those from private lenders like Sallie Mae or Wells Fargo, Federal Family Educational Loans (FFEL) not owned by the US Department of Education, Perkins loans, or loans from states. However, borrowers could consolidate their Perkins loans and FFEL loans into a direct consolidation loan in order to qualify for relief or a zero percent interest rate. If you’re not sure what type of loan you have, you should contact your loan servicer.
If you are still employed and have a stable income right now, you can still keep making payments on your loans, which will go to paying off your accumulated interest and principal. But not every federal loan qualifies; this may only be a good idea if you’re on a standard 10-year loan, not on income-based repayment.
Wage garnishing for those who were previously behind on their federal student loan payments will also be suspended for six months.
Recent college graduates or those who are about to enter the workforce at this time are at a disadvantage when it comes to applying for unemployment benefits because of their limited work history.
There’s a provision in a bill from House Democrats that would allow recent college graduates to qualify for something called a “job seekers allowance,” which is about half of the benefits available for the rest of workers. But that didn’t make it into the final CARES Act, and unless Congress includes this in a future relief bill, recent college graduates are in a tough spot to get federal unemployment assistance.
7) What if I can’t pay my rent or mortgage?
So far, there is no national rent or mortgage freeze, but certain states and cities are passing laws or putting in temporary measures to keep people in their homes.
So far, 34 states and Washington, DC, have passed measures to temporarily bar evictions, according to USA Today: Maine, New Hampshire, New York, Massachusetts, Pennsylvania, New Jersey, Connecticut, Rhode Island, Virginia, Maryland, Delaware, Kentucky, West Virginia, Tennessee, North Carolina, South Carolina, Louisiana, Oklahoma, Texas, Nebraska, Kansas, Wisconsin, North Dakota, Minnesota, Illinois, Michigan, Indiana, Iowa, Arizona, Nevada, California, Oregon, Washington, and Hawaii.
Some municipalities want to go further. The Boston City Council recently passed a nonbinding resolution calling for an end to rent and mortgage collection during the coronavirus outbreak, but it’s not legally binding unless Boston Mayor Marty Walsh or Massachusetts Gov. Charlie Baker agrees to it.
Expanded unemployment insurance will theoretically help people pay their rent, but that program only runs until July — and we still don’t know how long the coronavirus will keep all of us social distancing. Vox recently asked Pelosi whether Congress should pass a rent moratorium. While Pelosi didn’t endorse that idea specifically, she said future bills need to contain stronger provision for renters.
“It’s a very big challenge, and it’s frightening to people because they’re shelter[ing] in place and then they’re evicted,” Pelosi told Vox. “What? How do we deal with that? There are some provisions in the CARES Act, we certainly must do more.”
8) Where can I get help if I need assistance for food?
Recent bills have added more funding to the SNAP program (also known as food stamps) as well as WIC, a nutrition program focused on providing food for women and children. Additionally, the Department of Agriculture has relaxed requirements for some of the aid it oversees, including coverage of school lunches for children who are now staying at home because of the coronavirus.
The CARES Act contains $15 billion for food stamps, $450 million for food banks, and $8.8 billion for childhood nutrition programs. These funds are in addition to money passed in the Families First Act — the second coronavirus relief bill Congress took up. That contained $500 million for WIC and $400 million for the Emergency Food Assistance Program, which helps local food banks procure supplies. Pelosi has made it clear she plans to ask for more money in future bills.
Applications for both SNAP and WIC are handled individually by different states; links to each state’s website can be found here for SNAP and here for WIC. Depending on the state, people are able to apply via phone, online, or in person. Recipients for both programs need to meet eligibility criteria based on income and resources limits (like household assets, etc.). Importantly, you can receive SNAP if you are don’t have a fixed address or a place to stay.
SNAP applications are typically processed within 30 days, though applications can be expedited so benefits start coming in as quickly as within seven days.
Additionally, existing SNAP recipients could see more money directly deposited into their EBT accounts if they aren’t already receiving the maximum amount that each state allocates for their family size. The additional funding in recent stimulus bills is being used to make sure that states could distribute the maximum amount of money every family can receive in both March and April.
Families that have students who were previously receiving reduced or free lunches in school will also receive additional funds to cover these costs. Those that are already on SNAP will see this money added automatically, while those who are not on SNAP will have to fill out an application. This program is being implemented state by state, so applications will be handled directly on state websites; more information is expected as it’s implemented this month.
9) Are there other ways to help if I’m in a position to do so?
If you are able to help small businesses struggling with coronavirus closures and workers who are dealing with layoffs, there are several ways you can contribute.
- Buy from small businesses and tip workers well: While businesses have been forced to temporarily shutter during the coronavirus outbreak, many restaurants and bars remain open and are relying on takeout orders for their current income. Purchasing either takeout orders or gift cards from these businesses, and tipping delivery people generously, can be one way to help.
Additionally, if there are other businesses you work with on a regular basis like hairstylists or child care workers who are currently unable to do their jobs, prepay for future sessions now or keep paying the regular amount you would if there were no coronavirus crisis.
- Contribute to direct funding campaigns: Some small businesses and workers have started crowdfunding campaigns explicitly aimed at raising money to combat the effects of layoffs and lost income. Giving to these efforts can be one way to contribute quickly and directly to individual people or businesses.
Journalist Yashar Ali, for example, has a crowdfunding campaign he started to send money to hourly workers who’ve been laid off or negatively affected by business closures related to the coronavirus. Many businesses have also used their social media platforms to let their customers know about other funding campaigns they may be doing as well.
- Donate to organizations and nonprofits focused on providing relief: There are many organizations and nonprofits dedicated to getting money and food quickly to people who need it, and donating to these groups is another way to contribute. GiveDirectly is among those focused on responding to the crisis and is working on distributing $1,000 payments to households that are currently on SNAP.
Other organizations working to address the effects of the coronavirus include the National Domestic Workers Alliance, which is raising funds to give out $400 in emergency assistance to home care workers, nannies, and house cleaners; or No Kid Hungry, which is focused on providing food for children who are currently sheltering in place.
- Participate in a mutual aid program: In communities across the country, people are launching “mutual aid” efforts in which residents of an apartment building or in a neighborhood volunteer to help with tasks for those who may be unable to do so themselves. People have volunteered to do chores like pick up medication and groceries for those who may find such activities more challenging. Offering financial help, too, or donating goods to neighbors who need them, could be part of these mutual aid efforts.