Details on the HEROES Act

    Now that the $3-trillion HEROES Act has passed the House, the second stimulus check is all but guaranteed for Americans in need of financial help for COVID-19.

    But let’s get real: When will I see the second stimulus check in my mailbox or bank account?

    Will I get student loan forgiveness? Will pandemic unemployment be extended? Will the HEROES Act do something truly heroic and get the debt collector off my back?

    These are some of the urgent questions that 40 million unemployed Americans are asking.

    Countless Americans who have suffered job losses, foreclosures, bankruptcies, broken families, serious depression, and other illnesses during the coronavirus lockdown have had their hopes raised by the HEROES Act.

    The humongous coronavirus relief bill championed by House Speaker Nancy Pelosi passed by the Democrat-run House of Representatives May 15 by a margin of 208 to 199.

    But what’s really in the HEROES Act?

    And what’s just political posturing, more false hope in this Three Horses of the Apocalypse year with the terrifying COVID-19 pandemic and resulting lockdowns devastating the economy, the riots breaking out from city to city, and the looming bitterest presidential election campaign (or non-campaign) in modern U.S. history.

    We dug into these vital questions. Here are the facts:

    HEROES Act Senate Vote

    The Republican-controlled Senate will vote on the Democratic House bill in June at the earliest. Don’t expect the HEROES Act to become law, at least in its current form.

    Look for extensive political negotiations and cuts before the House and Senate agree to pass an ambitious second coronavirus relief bill, President Trump sign its, and the mythical second stimulus check becomes a reality in your bank account sometime in the fall.

    Senate Majority Leader Mitch McConnell, R-Ky. called the bill “an unserious product from an unserious majority.” Republicans say it’s a progressive wish-list fat with non-pandemic pork, such as benefits for the cannabis industry.

    Note that the $3 trillion bill passed by only nine votes. Fourteen Democrats voted against it. Progressives didn’t think it was progressive enough. But the massive relief legislation was an effective Democratic strategy that puts the bill in the Republicans court, pushing the reluctant GOP to pass some form of ambitious second pandemic relief bill after the April CARES Act.

    President Trump said the bill was “Dead on arrival. Of course, Nancy Pelosi knows that,” even before the House passed it.

    But Trump will likely support another round of economic relief payments, including a second stimulus check, and extensions of pandemic unemployment and the Paycheck Protection Program that gives COVID-19 relief loans, or in effect grants, to small businesses.

    What Is in the HEROES Act?

    The HEROES Act is a massive, $3 trillion proposal, even more ambitious than the $2.2-trillion CARES Act.

    The sweeping relief legislation promises a second stimulus check, debt relief, student loan forgiveness, hazard pay, six more months of COVID-19 unemployment, housing and food assistance, and nearly $1 trillion in aid for state and local governments so they can pay “vital workers like first responders, health workers, and teachers” who are at risk of losing their jobs due to budget shortfalls.

    The HEROES Act also makes changes to the federal government’s new Paycheck Protection Program for small businesses. The plan currently requires small businesses to use 75% of the money for payroll expenses, or be forced to pay it back as a loan.

    The new proposal eliminates the 75% requirement, so small businesses could use the money as they pleased. In a classic case of unintended consequences, many businesses found they couldn’t use the money on payroll. Their employees didn’t want to be put back on the payroll because they were making more from COVID-19 unemployment.

    Stimulus Check

    The HEROES Act includes a one-time stimulus check payment, similar to the CARES Act, of up to $6,000 per household, but with several more generous features.

    Individuals earning up to $75,000 would get a one-time $1,200 check. Couples earning up to $150,000 would be eligible for $2,400.

    The HEROES Act pays $1,200 for each dependent (up to three dependents), more than double the CARES Act payment (which paid $500 per dependent), and allows adult dependents.

    The first round of stimulus checks excluded adult dependents, which excluded many college students and immigrants. People without a Social Security number were excluded from the first round of checks. The HEROES Act says all you need is a taxpayer ID number. Republicans won’t get excited over that.

    Hazard Pay

    The HEROES Act sets aside $200 billion for hazard pay. Hazard pay would be:

    • Given to a wide variety of “essential” workers, including doctors, nurses and other frontline medical personnel, police officers, firefighters, social workers, grocery clerks, postal workers, and childcare and cafeteria workers.
    • A $13-an-hour raise paid until workers receive a total of $10,000 if their regular pay is less than $200,000 per year. Or up to $5,000 total if they make more than $200,000 a year.
    • Paid for 60 days after the pandemic ends if the $10,000 or $5,000 totals aren’t reached first.
    • Distributed by employers, who will apply to the government for hazard pay, add it to their workers’ paychecks, deduct payroll taxes from all hazard payments.

    Unemployment Benefits

    The HEROES Act would extend the unemployment benefits from the CARES Act, including the extra $600 weekly federal unemployment benefit, through January 31, 2021. If you’re already receiving Federal Pandemic Unemployment Compensation (FPUC), your payments could be extended to March 31, 2021.

    Gig workers, independent contractors, part-time workers and the self-employed will also be able to take advantage of unemployment benefits through March 2021.

    Student Loan Forgiveness

    The CARES Act suspended interest and payments for most people with federal student loans through September 30, 2020. Interest will not accrue during that period. The HEROES Act extends that break for another, year through September 30, 2021, and expands it to all federal student loans, including Federal Perkins Loans and some other loans

    But the legislation also cancels up to $10,000 for some federal and private loan holders. Democrats scaled this back from a proposed $30,000 in canceled student loan debt.

    The HEROES Act also proposes direct emergency cash payments for financially struggling students, including international students, undocumented immigrant students, and DACA students.

    Don’t expect Republicans to do cartwheels over any of it.

    Rental Aid

    America’s 40-million-plus renters were overlooked by the CARES Act. Not so the HEROES Act, which provides approximately $100 billion for rental assistance.

    Here’s how it would work: An existing nationwide grant rental assistance program would verify a tenant’s inability to pay rent and give vouchers to cover the cost of rent and utilities.

    It would also extend the ban on evictions for nonpayment for a year following its enactment date.

    Mortgage Relief

    The bill also provides $75 billion for a homeowner assistance fund intended to prevent mortgage defaults and property foreclosures.

    It would amend the previous stimulus package so that borrowers of any “covered mortgage loan” (any secured by a mortgage or deed of trust on one-to-four unit dwelling) would be eligible for forbearance for up to a year if they affirm that the coronavirus has affected them financially.

    Previously, only borrowers of federally backed mortgages were eligible for 12 months of forbearance. The legislation also provides a national foreclosure and eviction moratorium for one year, and extends benefits to mortgage servicers, who naturally struggle when the government says they can’t collect mortgage payments.

    Debt Collection Freeze

    Don’t get your hopes up for some magic proposal that stops the debt collector in his tracks.

    The HEROES Act includes a moratorium on debt collections during the pandemic and 120 days thereafter. Democrats realize this would all but destroy the debt collection business.

    So, to make the whole idea more palatable to Republicans, Democrats, usually no fans of debt collectors, included long-term, low-cost loans for debt collectors to compensate them for being denied collecting their debts.

    But there’s no way Republicans agree to a moratorium on debt collections, and no way Democrats agree to helping out debt collectors without a moratorium.

    What Was Left Out of the HEROES Act?

    Plenty. By the time you get your stimulus check, one or two trillion dollars of Democratic pandemic relief will have been cut from the bill during negotiations with Republicans.

    Don’t expect Republicans to suspend negative credit reporting or freeze debt collection, expand the moratorium on evictions and foreclosures, or provide benefits for banks that service legal cannabis businesses.

    The Democrats also left a lot out of the HEROES Act to start. Most notable were proposals for a $2,000 a month stimulus check into the distant future, or to guarantee workers’ wages up to $90,000 a year.

    Those dreams got trimmed down to the reality of a one-time second stimulus check that it says here Democrats and Republicans will pass, with a few minor changes, so we can all move on to another question:

    When do a get a third stimulus check?

    Never, analysts say, at least in this pandemic. This is the last big coronavirus relief package.

    Author

    Bill Fay
    Staff Writer

    Bill “No Pay” Fay has lived a meager financial existence his entire life. He started writing/bragging about it seven years ago, helping birth Debt.org into existence as the site’s original “Frugal Man.” Prior to that, he spent more than 30 years covering college and professional sports, which are the fantasy worlds of finance. His work has been published by the Associated Press, New York Times, Washington Post, Chicago Tribune, Sports Illustrated and Sporting News, among others. His interest in sports has waned some, but his interest in never reaching for his wallet is as passionate as ever. Bill can be reached at bfay@debt.org.

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