On Friday, The House of Representatives narrowly passed a $3 trillion stimulus package, which included another round of direct checks, rent forgiveness, additional unemployment benefits and much more.
It’s what many Democrats have dubbed an initial offer to Republicans, as the push for a second stimulus package moves to the Senate in an effort to stave the economy while the U.S. recovers from COVID-19. The Senate Majority Leader Mitch McConnell, R-Ky, labeled the package “an unserious product,” while President Donald Trump said the bill was dead on arrival.
But the Trump administration has signaled support for a second stimulus. Meanwhile, Federal Reserve Chairman Jerome Powell has said the economy needs more help, and will require it through 2021. But Republicans have claimed they’re worried about the national debt and want to first get the economy open again. A big sticking point for McConnell, besides the high price tag and some stipulations within the bill, is that there are no protections for companies from lawsuits related to their Covid response.
Now begins the negotiation process. The good news? It’s likely that savers will see another boost from whatever ends up coming out of the Senate. There are some perks, after all, that will certainly make its way into a bipartisan agreement. Here are the likely candidates that would impact your ability to save or pay down debt.
A Second Round Of Direct Payments
A bipartisan effort on a second round of stimulus will almost certainly include another issue of direct checks. The House bill proposes a similar amount, $1,200, for individuals, if they’re making less than $75,000 a year.
For those with kids, though, they could welcome a nice addition if the House stipulation gets through Senate negotiations. In the first stimulus check, parents received an additional $500 for each child. The House bill increased that number to $1,200. While the numbers might look a little different, providing additional help to parents who have had to deal with juggling work and children at home would be a welcomed benefit.
The bill also extends the checks to college students, who weren’t included in the first round of payments. Households with undocumented immigrants also received a nod, in the House bill, which won’t likely pass Senate Republicans’ eyes.
For savers, this is another great opportunity to either pay debts or save for retirement. According to a survey by YouGov, 28% of those receiving checks planned to either boost emergency savings, pay down debt or save for retirement with the checks. Some additional stimulus funds provide another opportunity to hit one of those buckets.
Hazard Pay For Essential Workers
The House bill includes a $200 billion allotment, named the Heroes Fund, to provide hazard pay for essential workers. Essential workers would include anyone that has had to continue working during the height of the crisis, which would range from nurses to grocery store clerks.
The fund would provide a $13 per hour raise for all essential workers through 2020, allowing them to collect up to an additional $25,000 in income, if they make less than $200,000 a year. If they make more than that amount, they can earn up to an additional $5,000.
For savers, such as those with a nurse’s salary, the extra boost could be dramatic, whether it’s to pay more towards student loans or even potentially saving up for a house. For lower-paid frontline workers, the extra funds could dramatically ease their monthly bills or even help pay down credit card debt.
While it’s not easy for Republicans to argue against this stipulation – especially considering the amount of respect these workers have garnered over the past two months – where the debate will likely focus is on how much to provide and who qualifies.
Student Loan Forgiveness Extension
Students could get an additional relief in a compromised bill. The CARES Act, the name for the first stimulus bill, suspended interest and loan payments through September 2020 for most people with Federal student loans. But the new House bill extends the student loan reprieve to September 2021, and adds all types of Federal student loans into the mix, including Federal Perkins Loans and additional loans not owned by the Department of Education.
Whether it’s a student a year or two out of college or a decade out, this could prove valuable. Ensuring that interest isn’t building while a newly graduated student looks for a job or as a more veteran employee takes pay cuts, it would help prevent the ballooning of the debt.
It could also provide an opportunity for those that still have a job and plan to continue to make payments, since you potentially have some time to repay without having interest build. Student loan refinancing rate provider Credible found that on a standard 10-year repayment plan of $305 monthly payments, to cover a $29,000 loan, you would pay a total of $36,555 with an interest rate of 4.53%. Due to compounding factors, you would owe over $7,500 in interest.
Not having to worry about that growth, even for a year, would ease the repayment process.