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Federal action on pandemic response provides student debt relief, potential unemployment benefits

One measure extends student loan payment deadline to Dec. 31

August 13, 2020 2948

With top Democratic lawmakers and White House officials struggling to reach a compromise on another round of broad coronavirus relief, the White House Saturday issued four presidential memos, or measures, aimed at mitigating the impacts of the pandemic by addressing jobless benefits, evictions, student loans and payroll taxes. 
 

With top Democratic lawmakers and White House officials struggling to reach a compromise on another round of broad coronavirus relief, the White House Saturday issued four presidential memos, or measures, aimed at mitigating the impacts of the pandemic by addressing jobless benefits, evictions, student loans and payroll taxes. 

Previous pandemic relief and consumer protections allocated in the CARES Act expired July 31. Much of the new relief will not take effect immediately and requires additional clarification from federal agencies, funding from Congress or state action. 

Measure extends pause on student loan payments, interest

Dentists with heavy student debt may find immediate relief from the presidential memo that extends by three months the emergency student loan relief granted in March under the CARES Act.

That current payment leeway is set to expire Sept. 30 for roughly 40 million Americans, but the new memo extends the pause on monthly payments and interest for many federal student loan borrowers until Dec. 31. The loan deferral applies only to loans issued directly by the federal government and not to private student loans. 

The American Dental Education Association estimates that the average debt per dental school graduate in 2019 was $292,159 with 64% of graduates reporting having over $200,000 in debt. 

Unemployed workers might receive $400 weekly benefit

Another measure would potentially extend pandemic unemployment benefits by theoretically giving unemployed workers $400 per week above their existing unemployment insurance, replacing the $600 provided by the expired Cares Act. 

However, significant questions remain as to how — and even if — states will implement the measure.

The proposal would require each state to put up the first 25% in order to claim federal funding. Gov. Gavin Newsom stated Monday that the state share for California could amount to an additional financial burden of $700 million per week. The governor noted that it would not be possible in the current budget climate to carry the added cost of hundreds of millions of dollars without cutting essential services or further burdening businesses and individuals. 

Payroll tax assistance for working families

Another of the president’s memos aims to help working families by pushing back employees’ share of payroll tax payments into 2021. However, the Treasury Department must clarify several outstanding questions about the order’s implementation before employers can make any changes to their payroll systems. 

The memo states that the “Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred.” Although the president said he would “make permanent cuts” or even “terminate” the payroll tax, without further action, the deferred taxes would be due starting in 2021. Health care groups have criticized those claims noting that such cuts would interrupt the key funding stream for Medicare and Social Security. 

CDA will continue to closely monitor the new relief measures and update members as more information becomes known.