For Americans worried about rising prices and shrinking household budgets, January could bring another blow to the bottom line.
At the end of the month, the government’s temporary moratorium on federal student loan payments expires, meaning loans will once again accrue interest and borrowers will be expected to resume monthly payments.
And barring congressional action, on Jan. 15 many American families will lose monthly payments from the government totaling hundreds of dollars, gained from a temporary expansion of the child tax credit under President Joe Biden’s pandemic relief law.
The looming cutoff of two sources of significant federal pandemic aid to U.S. families threatens to add to Americans’ pessimism about the state of the economy, 10 months before they go to the polls to decide whether Biden’s party will retain control of Congress.
A Gallup poll released Dec. 2 found that 45% of American households say inflation is causing them financial hardship, and a Wall Street Journal poll published Tuesday found that about 60% of Americans think the economy is poor or not good and headed in the wrong direction.
An extension of the expanded child tax credit is included in Biden’s Build Back Better legislation, his package of climate, tax and social-spending measures. But the bill is stalled in the Senate. Prospects for an extension of the student loan moratorium are even dimmer -- there is little interest internally at the White House, according to two people familiar with discussions on the issue.
Treasury Secretary Janet Yellen said during a hearing last week that the expanded child tax credit has put about $77 billion into the pockets of families, helping 61 million American children so far. The monthly payments can be as much as $300 per child, or $3,600 per year.
The expiration of the payments is already top-of-mind for some congressional Democrats.
“Many families have found it invaluable for meeting school needs, health-care needs, and some of the other things to enrich the lives of their children,” said Representative Lloyd Doggett, a Texas Democrat and a senior member of the tax-writing Ways and Means Committee. “It is lifting families out of poverty, and we’ll have a real reversal and setback if it’s not continuing.”
Without an extension, the tax credit would revert to $2,000 per child, and Americans would have to wait until tax filing season to claim it on their returns.