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Q&A on COVID-19 stimulus bills

HEALTH CARE & COVERAGE SUPPORTS

I have lost or may lose my health care coverage. What options do I have?

You may have several options. First, President Biden has opened a special enrollment period on many states’ Affordable Care Act exchanges, including Delaware’s, through May 15, 2021. This allows American citizens and nationals, as well as those lawfully present in the United States, to chose coverage through the exchanges mid-year without the need for a qualifying life event. The American Rescue Plan Act takes several steps to ensure that coverage is affordable.

For all Affordable Care Act exchange consumers in 2021 and 2022, the American Rescue Plan Act may reduce the amount you pay for your coverage. Beneficiaries making up to 150 percent of the federal poverty line will be eligible for a silver-level plan with a $0 monthly premium, after subsidies. No consumer, regardless of income level, will be expected to contribute more than 8.5 percent of their income to premiums for a silver-level plan.

If you have lost your job or are seeing reduced hours, you may have multiple options available to you through the American Rescue Plan. First, the bill subsidizes 100 percent of COBRA premiums for six months. Second, if you receive unemployment compensation at any point in 2021 and meet eligibility requirements, you will be able to secure a silver-level health insurance plan at HealthCare.gov for a $0 monthly premium, after subsidies. You may also be able to receive assistance with the plan’s cost-sharing requirements, such as copays or coinsurance.

In 2020, I received an advance premium tax credit to help me secure coverage through the Affordable Care Act, but my income did not match what I projected. Is there help available?

Yes, as a one-time exception to the general rule. Generally, if you received advance premium tax credits throughout the year that exceeded the amount for which you were eligible, you would owe a repayment when you file your taxes. (Note that these subsidies are paid directly to your insurer and reduce the amount you pay out of pocket for your premium.) Because of substantial variance in many Americans’ incomes, however, the American Rescue Plan waives the repayment requirement for excess subsidies received in 2020.

What hospital and health system assistance has been passed?

Congress has provided hospital and health system assistance in multiple forms. First, the Provider Relief Funds includes a total of $178 billion for a grant program to support health care providers. Eligibility for this funding is expansive, including public entities, Medicare- and/or Medicaid-enrolled suppliers and providers, and other entities designated by the Secretary, so long as the entity provides diagnoses, testing, or care for individuals with possible or actual cases of COVID-19. Funds may be used for health care–related expenses or lost revenues that are attributable to coronavirus, but only to the extent that another entity is not obligated to or has in actuality reimbursed the provider. Note that this funding is not limited to hospitals.

Second, the CARES Act includes a 20 percent add-on to the Medicare inpatient reimbursement rate for discharges of an individual diagnosed with COVID-19 during the declared emergency period. This payment should narrow or eliminate the gap between standard reimbursement rates and the cost of providing care for hospitals.

Third, Congress has taken two steps to delay or offset scheduled changes to Medicare reimbursement rates. Through March 2021, the Medicare sequester will be paused, eliminating a 2 percent reduction to reimbursement rates for both fee-for-service providers and Accountable Care Organizations. In addition, a 3.75 percent across-the-board supplement will be added for all providers paid under the 2021 Physician Fee Schedule.

What is the formula for supporting hospitals and health systems?

No formula for allocating the full $178 billion fund to support health care providers is provided in statute. HHS will be able to disperse funding prospectively or retroactively following an application from an eligible entity that includes a statement justifying the need of the provider for the payment. HHS will review applications for and make payments from this funding on a rolling basis.

What support has been included for community health centers?

The CARES Act provided $1.32 billion in additional funding for community health centers. In addition, mandatory appropriations for the Community Health Center Fund, which were set to expire on May 22, 2020 have been extended through September 30, 2023. The American Rescue Plan Act adds an additional $7.6 billion for community health centers.

UNEMPLOYMENT INSURANCE

How do I file for unemployment insurance?

To receive unemployment insurance benefits, you must file a claim with the unemployment insurance program in the state where you worked.

To file in Delaware, please visit:
https://labor.delaware.gov/divisions/unemployment-insurance/

Questions can be answered via email at uiclaims@delaware.gov or phone at 302-761-8446.

How much can I get from Unemployment Insurance?

The American Rescue Plan extends all of the emergency unemployment programs from the CARES Act and the Families First Act until September 6, 2021. This includes coverage for self-employed workers (Pandemic Unemployment Assistance) and additional weeks of coverage for workers who have exhausted their state benefits. The weekly supplement (Federal Pandemic Unemployment Compensation) amount will be $300 per week until September 6. Each state administers its own unemployment insurance program, so unemployed workers should continue to apply for and receive these benefits through their state unemployment office.

If you are currently receiving benefits under these programs, your benefits will continue without interruption. Updates and additional details regarding the Act’s unemployment provisions impact on Delaware will be provided at www.DOL.Delaware.gov, at UI.delawareworks.com and at pua.delawareworks.com.

What if I’m not eligible for traditional Unemployment Insurance?

Under the Pandemic Unemployment Assistance (PUA) Program, originally created by the CARES Act, states are permitted to offer unemployment benefits to individuals who are self-employed, seeking part-time employment, or who otherwise would not qualify for regular unemployment compensation. To qualify for PUA benefits, you must be ineligible for regular unemployment benefits and be unemployed, partially unemployed, or unable or unavailable to work because of certain health or economic consequences of the COVID-19 pandemic. PUA was set to expire on March 14, 2021 and the American Rescue Plan extended the program to September 6, 2021.

The CARES Act also created the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides 13 additional weeks of unemployment benefits to individuals who exhaust their regular state benefits. The PEUC program was also set to expire on March 14, 2021, and the American Rescue Plan extends the program to September 6, 2021.

Is there a waiting period after I file my claim before I start receiving benefits?

Delaware no longer requires you to wait one week before receiving benefits after they grant your initial unemployment insurance claim.

Do I have to pay taxes on my unemployment benefits?

Unemployment benefits are generally treated as income for tax purposes. The American Rescue Plan waives federal tax on up to $10,200 of unemployment benefits an individual received in 2020. For married couples, each spouse can exclude up to $10,200 of their benefits. That would reduce couples’ joint taxable income by a maximum $20,400. Amounts over $10,200 for each individual are still taxable. The break applies to the current tax-filing season.

The tax exclusion is available to any taxpayer who earned less than $150,000 in “modified adjusted gross income” in 2020, regardless of filing status, such as single or married. The IRS is expected to issue additional guidance for taxpayers that already filed their 2020 tax returns.

More information from the IRS can be found here:
https://www.irs.gov/faqs/irs-procedures/forms-publications/new-exclusion-of-up-to-10200-of-unemployment-compensation

SMALL BUSINESSES

What support is there for small businesses?

See my small business webpage.

What type of assistance will independent contractors be eligible for?

They are eligible for PPP loans and SBA disaster loans, as well as $1,000 grants under the SBA disaster loan program. They are also eligible for Unemployment Compensation under this law, as well as many of the tax benefits.

What assistance is there for nonprofits?

Nonprofits are eligible for the same EIDL loans and grants and PPP loans as small businesses. Prior to March 2021, many small nonprofits were excluded from PPP. However, the American Rescue Plan extended PPP eligibility to nonprofits listed under Section 501(c) of the Internal Revenue Code, except for 501(c)(4)s which remain ineligible for PPP as well as those made ineligible in SBA regulations. The plan also makes local offices of larger nonprofit organizations eligible for PPP. 501(c)(3)s, 501(c)(6)s, and the newly eligible nonprofits with multiple physical locations are eligible for PPP, provided that each location does not exceed 300 employees. Those newly qualified employers should act quickly to apply before the program closes, possibly as soon as the end of March if Congress does not extend it further.

Applying nonprofits will be asked to provide a SSN for the head of the organization or the person applying for the loan. This is used just to keep track to make sure the authorized person is applying, and the SBA says it does not get shared with credit bureaus or affect the credit of the person applying.

Nonprofits can also access the Employee Retention Tax Credit, which is designed to make it easier for businesses that, despite challenges posed by COVID-19, choose to keep their employees on the payroll. Additionally, charitable organizations will benefit from an enhanced charitable giving incentive in 2020 and 2021: individual taxpayers who do not “itemize” their returns will be able to claim up to a $300 charitable deduction, and married couples can claim up to a $600 deduction.

Where should I go to apply for small business assistance?

The Delaware SBA District Office website is an ideal first stop for any of the SBA-provided benefits: https://www.sba.gov/offices/district/de/wilmington

Are there rules on affiliation or multiple locations that limit who is eligible?

Yes. For PPP loans, most businesses and nonprofits with more than one location will have to add their employees from each location for purposes of determining whether they fall below the employee cap in their industry sector. For businesses in the food service and hospitality sector as well as for local offices of larger nonprofit organizations eligible for PPP, this restriction is waived.

There are also restrictions if a small business is controlled by another entity, or even if an equity investor has a large enough stake in the business, as well as other investments that could, in effect, push the business under consideration above the size eligibility threshold. It is recommended that you visit SBA.gov for rules on eligibility for PPP loans.

CONSUMER FINANCE

Is there any relief for student loan repayments?

The Department of Education and its loan servicers will suspend all payments on federally owned student loans through January 31, 2020. This includes all Direct Loans and Federal Family Education Loan program loans owned by the Department of Education (but not those owned by private entities). Interest will not accrue on amounts owed during this time. The CARES Act, passed March 2020, also encourages employers to implement loan repayment programs, allowing them to exclude up to $5,250 of student loan payments from their taxable income.

Is there any financial relief for renters?

The American Rescue Plan provides $21.6 billion to states, local governments with populations over 200,000, and territories to provide emergency rental, utility, and other housing-related assistance and housing stability services to renters. This is in addition to the $25 billion in rental assistance provided in the December relief bill. To be eligible for assistance, renters must have incomes below 80 percent of the area median income; qualify for unemployment insurance or have experienced financial hardship during or due, directly or indirectly, to COVID-19; and have a risk of homelessness.

More information about the Emergency Rental Assistance (ERA) program, including a listing of local governments eligible to participate, is available on the U.S. Department of Treasury’s website at: https://home.treasury.gov/policyissues/cares/emergency-rental-assistance-program

How do I apply for rental assistance?

The Delaware State Housing Authority (DSHA) will administer the ERA program in Delaware. DSHA is working now to develop a web portal for applicants, assure resources to provide application assistance, and ensure they have capacity to review and process thousands of payments to landlords. DSHA is working to reopen the program to the general public sometime in late March. For more information, please visit: http://destatehousing.com/OtherPrograms/ot_dehap.php

Is there any financial relief for homeowners?

The American Rescue Plan Act provides $9.961 billion for a new Homeowner Assistance Fund at the Treasury Department, which will provide funds to states, Tribes, and territories to provide direct assistance to homeowners. The law makes assistance available for homeowners who are experiencing a financial hardship associated with the coronavirus pandemic and whose mortgage (if they have a mortgage) is below the conforming loan limit for the area, which is set annually by Fannie Mae and Freddie Mac and is currently between $548,250 and $822,375 for a one-family home. Homeowners are not required to have a mortgage to receive assistance, and funds can be used to provide mortgage payment assistance, help reinstate a mortgage, facilitate interest rate reductions, provide utility or broadband internet assistance, cover housing-related insurance costs, among other purposes which may be determined in the future. We expect Treasury will put out guidance to further clarify eligible uses of funds, as well as more technical guidance on how funding recipients can determine whether a household is eligible for assistance.

Are evictions permitted during the pandemic?

The federal eviction moratorium issued by the Centers for Disease Control and Prevention (CDC) to prohibit evictions based on nonpayment of rent is in effect through March 31, 2021. Evictions can still proceed for causes other than nonpayment of rent. To be protected, qualified renters facing eviction must provide a signed declaration to their landlords. The CDC declaration can be found here: https://www.cdc.gov/coronavirus/2019-ncov/downloads/EvictionDeclare_d508.pdf

Are foreclosures permitted during the pandemic?

The federal foreclosure moratorium for homeowners is now in place through June 30, 2021. President Biden also extended the mortgage payment forbearance enrollment window until June 30, 2021 for borrowers who wish to request forbearance and provide up to six months of additional mortgage payment forbearance, in three-month increments, for borrowers who entered forbearance on or before June 30, 2020.

To request forbearance, you’ll need to reach out to your servicer. If your loan is backed by HUD/FHA, VA, USDA, Fannie Mae, or Freddie Mac, you only need to explain that you have a COVID-related financial hardship, directly or indirectly related to the pandemic. Even for those loans not backed by Fannie Mae, Freddie Mac, or the federal government, mortgage servicers are generally required to discuss relief options with you.

You can learn more about your options as a renter or homeowner through the Consumer Financial Protection Bureau page here: https://www.consumerfinance.gov/coronavirus/mortgage-and-housing-assistance/

EMERGENCY LEAVE

The Families First Coronavirus Response Act (FFCRA) signed into law on March 18, 2020 required certain public employers and private employers with fewer than 500 employees to provide their employees 10 days of paid sick leave and up to 10 weeks of paid family leave to employees under certain COVID-19 circumstances. The mandate for employers to provide emergency paid sick leave and emergency family and medical leave expired on December 31, 2020.

What if an employer wants to voluntarily offer expanded paid sick leave?

Although the FFCRA mandate for employers to provide paid leave was not extended, the American Rescue Plan does extend and expand the FFCRA refundable payroll business tax credits for certain employers that want to voluntarily provide the leave to employees. The expanded payroll tax credits are now available from April 1, 2021, to September 30, 2021.

For the purposes of qualifying for the tax credits for paid sick leave, the American Rescue Plan added the following additional qualifying reasons for an employee to take leave: The employee is seeking or awaiting the results of a diagnostic test for or a medical diagnosis of COVID-19 after an exposure or at the employer’s request; the employee is obtaining a COVID-19 vaccine; or the employee is recovering from any injury, disability, illness or condition related to a COVID-19 vaccine. The ARP also provides a new annual allotment of up to 80 hours (10 days) per employee of qualifying paid sick leave available for 2021 tax credits. For the purposes of qualifying for the tax credits for family and medical leave, the American Rescue Plan added the same qualifying reasons for an employee to take leave as outlined above and increased the aggregate cap for tax credits from $10,000 to $12,000 per employee.

The IRS is expected to provide updated guidance on the extension of these credits. Please visit: https://www.irs.gov/coronavirus/employer-tax-credits

CASH PAYMENTS TO AMERICANS

Who qualifies to receive a check and how much will an individual receive?

Under the American Rescue Plan, individuals making up to $75,000 per year will receive $1,400, and couples making up to $150,000 per year will receive $2,800. If you are an individual earning between $75,000 and $80,000 or a married couple earning between $150,000 and $160,000, you are eligible for a reduced payment. Eligible families will also receive an additional $1,400 payment per child and adult dependent. Eligibility will be based on a tax filer’s 2019 or 2020 Adjusted Gross Income (AGI), whichever is the latest on file with the IRS.

The ARP also ensures that individuals who have a Social Security Number (SSN), but are part of a family in which not all members have an SSN, a “mixed-status” family, receive their $1,400 economic rebates instead of being excluded from the relief altogether. This provision, consistent with the December relief bill, will allow for “mixed-status” families to also receive the direct payments enacted through the CARES Act, of up to $1,200 per person.

More information on economic impact payments is available from the Internal Revenue Service.

The Treasury and IRS have launched a web tool allowing quick registration for Economic Impact Payments for those who don’t normally file a tax return.

What are qualified income levels based on?

There is no minimum income necessary to receive the rebate. However, the rebate phases out above adjusted gross incomes of $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers.

Can those collecting Social Security or disability receive a check?

Yes. In the case that an individual is receiving Social Security as part of retirement or through the Social Security Disability Insurance, the IRS will use an individual’s 2020 Social Security Benefit Statement to determine the recovery rebate to those individuals.

Will SSA administer the funds to my EBT/Debit card that I receive my SSA benefits through?

The IRS will administer the payment either electronically to the account designated on your SSA-1099 or RRB-1099 forms or by mail to the address on your SSA-1099 or RRB-1099 forms. The IRS is frequently updating irs.gov/coronavirus with information related to COVID-19 to help taxpayers.

How does an individual claim a check?

You do not need to claim the check (unless you have not filed a tax return for both 2019 and 2020). These will be automatic payments sent out by the IRS directly to you based on the direct deposit or address provided in your tax returns or Social Security Benefits statement.

The Treasury and IRS have a new web tool allowing quick registration for Economic Impact Payments for those who don’t typically file a tax return.

How long will it take for this check to be delivered?

Rebates sent via direct deposit will take a few weeks. Rebates sent via checks may take a few months. For those eligible, Treasury will send notice by mail to the individual’s last known address as soon as practicable. The notice will indicate the method by which the payment was made, the amount of the payment, and a phone number for a point of contact at the IRS to report any failure to receive your payment.

Will the recovery rebates be taxed or reduce my tax refund in any way?

No. The stimulus payment is a unique, fully refundable tax credit. You will not be taxed on the rebate. And the rebate will not affect your 2020 or 2021 taxes in any way. If you are expecting a refund for those tax years, not related to previous stimulus payments, the amount will not change because of recovery rebates.

Will I be eligible if I haven’t finished filing my 2019 taxes?

If you have not yet finished filing your 2019 tax returns, consult with a tax advisor about filing immediately so that you may be eligible for the recovery rebate. For further information check irs.gov or contact IRS by phone (800-829-1040) for more information.

I think the amount of my Economic Impact Payment is incorrect. What can I do?

If you are missing all or part of your expected payment, you may qualify for the Recovery Rebate Credit and must file a 2020 tax return to claim the credit even if you normally do not file.If you have filed your 2020 tax returns and did not claim the credit on your original tax return, you will need to file an Amended U.S. Individual Income Tax Return, Form 1040-X. The IRS will not calculate the 2020 Recovery Rebate Credit for you if you did not enter any amount on your original tax return.

This is particularly important for individuals who may be entitled to payments for their qualifying dependents. For VA and SSI recipients who don’t have a filing requirement and have a child, they may need to use the Non-Filer tool on IRS.gov in order to have the $1,400 for a dependent added automatically to their $1,400 Economic Impact payment. The IRS encourages people to review their “How do I calculate my EIP Payment”question and answer.

Will I be eligible if I have a lien against me, but I am in non-collect status?

The CARES Act limited offsets of the first Economic Impact Payment to past-due child support. No other federal or state debts that normally offset your tax refunds reduced the first payment. However tax refunds paid under the Internal Revenue Code, including the first Economic Impact Payment, are not protected from federal or state offsets or from garnishment by creditors once the proceeds are deposited into an individual’s bank account.

Can I check the status of my payment?

Please use the IRS’ Get My Payment Tool to see the status of your stimulus payment.

Are there resources available to help me prepare and file my tax forms?

FINANCIAL SUPPORT TO FAMILIES WITH CHILDREN

How much is the Child Tax Credit and who can get it?

The Rescue plan expands the Child Tax Credit for 2021 from $2,000 per child to $3,000 ($3,600 per child under 6). It also makes the child tax credit fully refundable and extends the credit to children age 17 for the first time. The additional $1,000 of credit ($1,600 for a child under 6) phases out at a 5 percent rate for single filers with incomes above $75,000 (and above $112,500 for heads of household and $150,000 for joint filers. (Just as under current law, the “base” child tax credit of $2,000 phases out at a 5 percent rate above $400,000 for joint filers and $200,000 for other filers).

When can I get the Child Tax Credit payments?

Starting in July, the Rescue Plan directs the Treasury Secretary to make periodic credit payments to taxpayers based on 2019 or 2020 tax return information. The frequency of the payments will depend on IRS administrative capacity and whether the taxpayer has direct deposit information on file with the IRS.

How is the Dependent Care Tax Credit changed?

The American Rescue Plan expands the child and dependent care credit for 2021 in several ways. First, it raises the credit percentage from 30 percent of child care expenses to 50 percent of such expenses. Second, it increases allowable child care expenses from $3,000 for one child to $8,000, and from $6,000 for 2 or more children to $16,000. These two changes result in a maximum credit of $4,000 for one child and $8,000 for two or more children (compared to $1,050 and $2,100, respectively, under current law). Finally, the Rescue Plan makes the credit refundable, allowing families with little tax liability to benefit from the credit.

The full credit is available to families with income under $125,000. At $125,000 the credit percentage of 50 percent begins to phase down 1 percentage point for every $2,000 of income until it plateaus at 20 percent for incomes above $185,000. This 20-percent credit rate begins phasing out for taxpayers who earn more than $400,000. Those earning more than $500,000 are not eligible for the credit.

AID TO STATES AND MUNICIPALITIES

How much money do states and municipalities receive?

The American Rescue Plan provides $362 billion to states and municipalities. Delaware will receive approximately $1.362 billion. Below is a list of ways the states and municipalities can use these funds.

To assist States, Tribes, and local governments that must pay for new expenses related to their COVID-19 response, the CARES Act provided $150 billion for state and local assistance through the new Coronavirus Relief Fund (CRF) at the Department of the Treasury. Delaware received the small state minimum of $1.25 billion, with $322 million awarded directly to New Castle County.

Under the December relief bill, the Treasury fund for state and local governments was not replenished. However, the deadline to expend CRF money was extended to December 31, 2021. Also, states and localities benefitted from other funding streams in the December 2020 relief bill, including those for schools, state departments of transportation, and public health purposes.

What can the allocated funding be used for?

The state and local aid provided in the American Rescue Plan can be used for responding to the COVID-19 public health emergency, to offset revenue losses, bolster economic recovery and to provide premium pay for essential workers. The American Rescue Plan also provides $10 billion for the Critical Infrastructure Projects program to help States, territories, and Tribal governments carry out projects directly enabling work, education, and health monitoring, including remote options, in response to COVID-19. State and local relief can be used for local economic recovery purposes, including assistance to households, small businesses and nonprofits, assistance to hard-hit industries like tourism, travel, and hospitality, and infrastructure investment.

How can a state, territory, or local government unit apply?

These funds are provided by formula and do not involve a competitive application. The Department of the Treasury is in charge of disbursement and requires the head of the state, territory or local government to provide Treasury with a signed certification of the proposed uses of the funds. State governments will receive their allocation from the Treasury 60 days after submitting a certification of need to Treasury, demonstrating that the funds are needed to respond to the pandemic and will be used in compliance with the eligible uses as defined by the Treasury. If the Treasury feels more justification is needed for the funding, up to 50% of the state’s allocation can be withheld for up to a year after the state’s certification of need is submitted. For counties, cities, and other local governments, this funding will be provided in two tranches, the second tranche will be sent to the localities by the Treasury department no earlier than one year after the first tranche. Localities will not need to submit a certification of need for the second tranche.

EDUCATION

What support has been provided for education?

Congress has provided nearly more than a quarter billion dollars to support students and educators in light of the pandemic. Just over $7 billion of this has been allocated to Governors Emergency Education Relief Funds, to be used to meet the unique needs of individual states.

What assistance has been provided for child care and early childhood programs?

Congress has provided approximately $39 billion for child care through the Child Care and Development Block grant program and child care stabilization fund. The relief bills also included $ 1 billion for Head Start programs, including to support summer programming.

What support is included for my local schools?

2020’s response bills included a total of more $67.5 billion in funding for public K–12 schools across the country, more than $225 million of which will be allocated for schools in Delaware. These dollars will be distributed in a manner that provides additional support for students in low-income communities. The American Rescue Plan Act adds nearly $123 billion to this figure, including nearly $411 million for Delaware.

Many independent schools have qualified for assistance under the Payroll Protection Program, discussed above. They may also be able to receive support and funding through the Governors Emergency Education Relief Fund, within which $2.5 billion has been reserved for allocation to private schools, with a priority on those serving high numbers of low-income students. The American Rescue Plan Act includes $2.75 billion for assistance to non-public schools, especially those serving high numbers of students from low-income families, approximately $2 million of which is expected to flow to Delaware.

Is there any aid that the University of Delaware or Delaware State are eligible for?

Yes. A total of approximately $77 billion has been reserved for higher education, with most of those funds available on a broad basis; both UD and DSU will benefit from these funds. In addition, approximately $6 billion has been reserved for additional support for historically black colleges and universities (HBCUs) and minority-serving institutions (MSIs), including Delaware State. Institutions must use substantial portions of the money they receive from these programs for grants to students impacted by the virus and have broad flexibility for other funds may be used to respond to the coronavirus.

What forms of relief are college students impacted by COVID-19 eligible for?

College and university students impacted by COVID-19 may be eligible for several types of relief. First, students may receive financial support through the funds their institutions receive from the federal government; substantial portions of such funds are required to be passed on to students in the form of grants. Those grants can be used for expenses related to the disruption of campus operations due to COVID-19 (including eligible expenses under a student’s cost of attendance, such as food, housing, course materials, technology, health care, and child care).

Second, institutions have new flexibilities to help students through campus-based aid programs. Colleges can elect to award affected students emergency Supplemental Education Opportunity Grants in amounts up to the maximum Pell Award, disregarding the FAFSA’s standard amount of need calculation. In addition, institutions may continue to make Federal Work Study payments to students who are unable to complete their normal work as a result of outbreak-related disruptions.

Third, students forced to drop out as a result of COVID-19 will receive certain waivers from normal federal student aid rules for aid associated with the semester a student is unable to complete because of the outbreak. Those semesters will not count against students’ lifetime eligibility limits for Pell grants or subsidized loans. In addition, students will not be required to return Pell grants or federal student loans to the Department of Education for terms they were unable to complete, and the Department will cancel any federal Direct Loan taken out by a student for the disrupted semester.

What protections do borrowers have with respect to federal student loans?

The Department of Education and its loan servicers will suspend all payments on federally owned student loans through September 30, 2021. This includes all Direct Loans and Federal Family Education Loan program loans owned by the Department of Education (but not those owned by private entities). Interest will not accrue on loans during this period. Each of the months during the period of the suspension will be considered as if the borrower had made a payment for the purposes of the Public Service Loan Forgiveness program and for the rehabilitation of loans in default. During the suspension, the Department will report suspended payments to credit agencies as if they were regularly scheduled payments by the borrower. All involuntary collection activities, such as wage garnishments, on loans with suspended payments will stop for the duration of the suspension period.

In addition, borrowers will be able to receive up to $5,250 in employer assistance in repayment of student loans without incurring tax liability on that assistance through 2025. Finally, through 2025, any borrower who sees eligible student debt forgiven, such as at the end of an income-driven repayment plan, will not incur a tax obligation on the discharged amount.