COVID-19 has changed our lives drastically. Who would have thought to pass almost half an academic year taking virtual classes, right?
What does this sudden outbreak mean to the college students and graduates? All universities are taking online classes, with students keeping up with the fact that this is what their college life is going to be for quite some time now.
However, one sigh of relief comes with the CARES Act, which has jotted down a provision to provide relief for college going students and graduates.
Federal Student Relief Loan
If you have taken a federal student loan and feel stuck because of the lockdown and financial disturbance, then don’t. All of your due installment payments, along with interest, are deferred to the end of September 2020 without any penalties.
You may call this administrative forbearance and know that you need not pay your installments because the government has bought you time till things settle down.
The better news is that if you have made a payment anytime on or after March 13, 2020, then you can ask for a refund of the same by contacting your loan servicer.
The CARES Act has also dissolved loan term limits. What this means is that student loans, given for a said duration of time and have to be used within that period, are not bound by this usage period since all schools and colleges are closed. You can use this amount once your school or college resumes.
Work-Study Funds are converted to grants.
Worry not if you were a recipient of the work-study wage under the Federal Work-Study Program and obviously can’t earn this amount now because of the nation-wide lockdown. The CARES Act has provisioned this wage as a grant that can be paid to you by your college even when it’s closed. This program is known as the Federal Supplemental Educational Opportunity Grants (FSEOG), and the CARES Act provisions that your university can pay this amount to you as a financial aid during these trying times.
The CARES Act has permitted universities to continue paying this Work-Study grant to students even if the academic institutions don’t open for the entire year. The amount of this program will be based on the scheduled hours and not previously worked hours, and has the facility to be disbursed as a single one-shot payment or in installments.
Another benefit bestowed by the CARES Act is the stimulus checks of $1,200, which are being distributed to all taxpayers based on their 2018 or 2019 federal income tax returns. The quantum of money you receive will be dependent on your reported income in the last returns. If you have already filed 2019 returns, then the amount will be calculated based on the latest, if not, later on, the information found on 2018 returns.
If you are single and earn up to $75,000, then you will receive $1,200, and if you have qualifying dependent children up to the age of 16 years, then an additional $500 per child.
Accordingly, if you earn more than $75,000, then the amount of the stimulus check will be reduced. If you are filing jointly, then the threshold is $1,50,000 to receive the $1,200 stimulus check.
The stimulus check payments phase out if you are single and earn $99,000, $1,36,500 if you file as the head of a household, and $1,98,000 for joint filers with no children.
If you are a student and have claimed on your parent’s returns, then, unfortunately, you cannot claim the stimulus check again. However, if you are not a dependent, then you would be eligible to receive this check.
If you worked full-time or part-time along with your college and were laid off because of the COVID-19 pandemic, then you are eligible to receive the expanded unemployment payment provisioned under the CARES Act. The unemployment payment has been increased by $600 per month for four months through July 31. Individuals who were not eligible before like part-time employees, freelancers, gig economy workers, and self-employed are also likely to claim the expanded unemployment benefit under the CARES Act.
Though all your classes are currently functioning in a virtual format and are expected to do so in a similar fashion in the future as well, you would still be eligible to receive the American Opportunity Tax Credit worth up to $2,500 or the Lifetime Learning Credit worth up to $2,000. Therefore, stay vigilant and claim it when the time comes.
The Bottom Line
We understand that the COVID-19 outbreak has disturbed the entire academic year, with classes shifting to online platforms. Students supporting their education using federal loans and Work-Study wages still have a haven, all thanks to the CARES Act.
As the MyTaxFiler team always says, keep updated with the latest news and make knowledge of one of your biggest allies. For more details, feel free to touch base with our experts at C19Grants@mytaxfiler.com.