Relief checks news summary | 28 January 2023
Headlines | Saturday, 28 January 2023
- Concerns that interest rate hikes could lead to increases in unemployment
- Texas is one of many states seeing egg prices rise rapidly, what factors are contributing to the increase?
- Social Security Adminstration begins sending out larger benefit checks
- The Department of Education received the highest number of applications for student debt relief from California and Texas.
- New York offers residents a debt relief program for those who completed their undergraduate degree at an institution in the state.
- Congressional Budget Office shortens its timeline for exhaustion of Social Security funds
- IRS informs the public that their tax refunds may be lower than those received over the past two years.
President Biden's flagship Student Loan Forgiveness program has been delayed by a number of legal challenges. While its fate most likely won’t be known until the summer, there is another program to receive up to 24 months of loan forgiveness available to residents of New York State.
The Get On Your Feet Loan Forgiveness Program was launched in 2015 which “under certain conditions, you may have all or part of your education loans forgiven or cancelled in exchange for performing a qualifying service for a defined period of time.”
The Social Security Administration (SSA) has begun sending out increased monthly payments for retired workers and Supplemental Security Income (SSI). Thanks to the 8.7% cost-of-living adjustment (COLA) increase, retiree payments will increase to more than $140 per month on average. According to SSA, average payments in January 2023 are $1,827 dollars.
We take a look at when these payments will arrive...
Biden attacks GOP on debt ceiling talks
“I will not let anyone use the full faith and credit of the United States as a bargaining chip. In the United States of America, we pay our debts."
"They seem intent on being the party of chaos and catastrophe."
How to use the IRS Free File tool
For around 70% of filers, the IRS offers a handy Free File online tool to simplify the process of filing a tax return. Individuals earning less than $73,000 per year can take advantage of the tool to submit their returns.
Here's everything you need to know to get set up...
Passing widespread student loan debt forgiveness was one of Joe Biden's big pledges while on the campaign trail in 2020. Last summer he was finally able to pass a significant package that would be worth up to $20,000 per borrower, but his efforts have been blocked by a series of legal challenges.
The Biden administration has taken matter to the Supreme Court, who are set to begin hearing arguments in the coming weeks.
Senate GOP refuses to support debt ceiling increase
Nearly half of all Republicans in the Senate have signed an open letter demanding that significant spending cuts are included in debt ceiling talks. The Democrats hold a majority in the Senate so do not need to find a bipartisan solution, but this letter shows the strength of the feeling amongst Republican members.
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Which states made the most student debt forgiveness applications?
Rather predictably, the most applications came from the largest states. Seven states had more than 1 million applications
1. California, 2,202,565
2. Texas, 2,035,304
3. Florida, 1,541,485
4. New York, 1,503,527
5. Pennsylvania, 1,097,017
6. Ohio, 1,028,607
7. Illinois, 1,010,760
Numbers has been released in a freedom of information request about the number of students that applied for the Biden administration’s debt forgiveness plan. Politico made the request and have released the data publicly.
In total the Education Department received 25,031,094 applications. This does not include those who were automatically enrolled but this data has not been released. The White House anticipated that as many as 40 million people could be eligible to sign up for the programme.
Of these 25 million applicants, 16,485,454 had their requests confirmed meaning around 66% of applications were accepted.
After three years of pandemic-affected tax seasons, the IRS is hoping to start of 2023 on the front foot. The agency is benefitting from $80 billion in new funding to help clear the backlog of unprocessed returns from previous years.
One change that won’t be introduced this year, however, are new tax rules governing the reporting of online payment services. The IRS had intended to make 1099-K forms mandatory for taxpayers who receive more than $600 in earnings from services like Venmo, PayPal, Cash App and Zelle.
Social Security benefits will be suspended for those who are convicted and incarcerated for more than 30 consecutive days. While benefits for disability, retirement and survivors will start up again after the beneficiary is released, those who receive Supplemental Security Income beneficiaries, also managed by the Social Security Administration (SSA) , will need to reapply if imprisoned for more than 12 months.
Note though that family members that receive payments from the SSA based on the work record of the incarcerated beneficiary will not be affected.
Depending on the correctional facility, the process of reinstating, or applying for the first time, may be facilitated by the penal institution. Here’s a look.
Positive GDP sings might not be enough to stave off recession
The latest data for US GDP has been released. The economy grew at an year-on-year rate of 2.9% compared to the end of December 2022. However, this marked a slight slowdown on the third quarter of 2022 which stood at 3.2%.
Particularly poor sectors such as home sales and construction played a factor in the hiccup as did less-than-expected sales over the Christmas period.
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Mortgage rates drop to lowest rate in four months
Freddie Mac reported on Thursday that the weekly average of the most popular home loan, the 30-year fixed-rate mortgage dropped again to 6.13%, as of 26 January. That’s its lowest level in four months after peaking in late October and once again in early November at 7.08%.
Demand in the housing market had been decreasing, but “ample demand remains, fueled by first-time homebuyers.” The improving conditions for homebuyers, prices and borrowing costs dropping, has created a thaw in demand “from the months-long freeze that gripped the housing market.” However, “potential homebuyers remain sensitive to changes in mortgage rates.”
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The US Federal Reserve, the country’s central bank, has a dual mandate.
The bank is responsible for establishing a monetary policy that keeps inflation under two percent and supports full employment.
These two priorities often come into conflict during periods of economic uncertainty and crisis because the main tool deployed by the Fed is the raising and lowering of the Federal Funds Effective Rate. As the lender of last resort, the central bank specifies a base rate – the Federal Funds Effective Rate –that reflects economic conditions, which other lenders often tack additional interest onto before dispersing loans to individuals and businesses.
For more on how interest rates work to decrease inflation, read our full coverage.
Personal income data released
The Bureau of Economic Analysis has released its personal income report from December, which showed an increase of $49.5 billion or 0.2 percent. When adjusting for inflation, the same increase was reported, meaning that collectively Americans received a 0.2 percent bump in total income.
Additionally, personal savings as a percent of disposable income also continued to rise after reaching the lowest level recorded since 2008. In December, the savings rate clocked in at 3.4 percent, up from 2.9 percent in November.
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White House Press Secretary provides update on debt ceiling negotiations
Look, we’ve been very clear that the debt limit should be dealt with without conditions. We’ve been very, very clear on that, and we continue to make that clear. And — and we believe that Congress should act in a bipartisan way — as they did three times in the last administration, as they did 78 times since 1960, 49 times with a Republican president, and 29 times with a Democratic president.
This is incredibly important. We have seen reports that if a default happens, 6 million jobs could be lost. Right? We’re talking about an economy that we saw the GDP, just the other day, at 2.9 percent growth, which is better than was antici- — expected.
So we’re seeing a growing economy. We’re seeing record unemployment, 50-year low. We’re seeing almost 11 [million] jobs created under this President.
The upcoming debt ceiling debate, and its consequences, are being fiercely debated. While it is more than likely that an accomodation will be found, the US has never defaulted on its debt obligations, the longer negotiations take the more damage is done to the economy.
Economic analysts are already looking at the permutations leading up to default day in mid June.
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