Congress Just Agreed to a $2 Trillion Coronavirus Relief Bill. Here's What it Means for Families, Retirees, Small Businesses, Student Loan Borrowers and More

Senators have passed a roughly $2 trillion emergency aid bill to try to prop up the economy as the coronavirus continues its deadly march through the U.S.

Congress is aiming to send the bill to President Donald Trump by the end of the week so he can sign it into law. The bill includes cash payments for millions of Americans, billions of dollars for small business loans, expanded unemployment benefits, and suspended student debt collection.

The agreement comes after six days of long negotiations between lawmakers, in which Democrats accused Republicans of prioritizing corporate bailouts at the expense of workers and average citizens, while Republicans said Democrats delayed the process by introducing several unrelated provisions.

The end product is the largest stimulus package in history, and it touches several parts of Americans' financial lives. U.S. Secretary of Treasury Steven Mnuchin said in interviews over the weekend it would help stabilize the economy over the next three to four months.

Here’s what you need to know about how the bill affects your personal finances.

Direct Deposits to Millions of Households

The package includes direct payments of up to $1,200 for each adult ($2,400 for married couples filing jointly) and an additional $500 for each child under 17. That money should reach roughly 140 million households and could cost about $300 billion, according to an estimate from the right-leaning Tax Foundation. The Foundation estimates that the average payment will be about $1,500.

Here’s how it works: Workers with adjusted gross incomes of $75,000 or less will get the full amount. For single parents, that increases to $112,500 and for married couples filing jointly, it's $150,000.

After that, the payment decreases by $5 for every $100 above those amounts. So a tax filer with no children and an adjusted gross income of $85,000 would receive a $700 check. A married couple with average salaries, about $62,000 each, and two kids could expect $3,400. Payments stop completely at $99,000 for single filers and $198,000 for joint taxpayers. (There's a higher stop out for those with children. See a full breakdown of who will get a check.)

If you've already filed taxes this year, those income limits are based on what you earned in 2019. For those who haven't filed, the government will use 2018 income. Americans who do not earn enough money to file a tax return but who receive Social Security benefits will also receive the full payment.

The left-leaning Tax Policy Center estimates about two-thirds of the payments would go to low- and middle-income households. Because of the income-based phase outs, the top 20% of households—those with incomes of $163,000 or more—would get just 11% of the benefits, according to the analysis.

How long will it take to get your money? That’s unclear at this point, though experts say it could take several weeks and possibly months. The details of how the money will be sent out will likely be decided by the Treasury Department, and last week, Mnuchin said checks could arrive starting April 6.

Yet judging by previous times taxpayers have received stimulus checks, it may be a minimum of eight weeks to begin receiving direct deposits, while paper checks would take a little longer, says Erica York, an economist at the Tax Foundation. In those times, taxpayers received money the same way they selected to receive their most recent tax refund.

Mnuchin has also said the government would consider a second payment if the crisis persists beyond the next two to three months.

Small Business Loans to Stem Layoffs

Another major part of the spending bill is a $350 billion loan program meant to be a lifeline for small businesses. Called "Paycheck Protection Loans" in the latest version of the bill, the money could reach more than 30 million small businesses that employ an estimated 58 million workers, Republican Senator Marco Rubio of Florida, who worked on this provision, said last week. Nearly half of America’s private-sector employees work at companies with less than 500 workers.

Small businesses can apply for low-interest loans that cover up to two-and-a-half months of payroll expenses, including salaries, sick leave, and other compensation benefits. The maximum loan amount is $10 million. The loans can cover payroll, rent, utilities, or existing debt obligations. Interest rates on these loans can't exceed 4%.

The key point here is that the loans are intended for business owners who agree to keep their payroll steady, meaning workers across the country could continue getting a regular paycheck. A business will have to make a "good faith certification" that the money will go toward retaining workers, maintaining payroll, or paying necessary expenses like rent.

Finally, if an employer continues to pay workers through June, the amount of the loans that went toward eligible costs would be forgiven. That means they'd essentially be grants to small businesses. Eligible costs for forgiveness include payroll costs for employees earning up to $100,000 annually, rent or mortgage payments, and utilities. The amount forgiven would be scaled back if an employer lays off workers or reduces their pay.

Time is crucial with these loans, small business experts say, since businesses are dealing with an immediate, significant drop in regular business. Researchers at J.P. Morgan found in a 2016 study that half of small businesses only had enough savings to survive about a month without cash coming in. Karen Kerrigan, president of the Small Business & Entrepreneurship Council, which advocates for small businesses, says she'd hope loan applications could be approved in a period three to five days.

The Small Business Administration, which will run this loan program, has previously said it typically takes two to three weeks to approve a loan application within its existing emergency loan programs. The SBA is posting information for small business owners here.

Flexibility for Retirees & Savers

The bill also includes two provisions aimed at easing rules on retirees and retirement savers.

If you’re facing economic hardship tied to the coronavirus, you can tap your retirement savings, withdrawing up to $100,000, without getting hit with a tax penalty. This applies to traditional 401(k), 403(b), and individual retirement accounts (IRAs).

Typically, savers who withdraw from their traditional retirement accounts before turning 59 ½ have to pay a 10% tax penalty, outside of certain exceptions. The way the bill is phrased, there appear to be two different provisions, according to Michael Townsend, vice president of legislative and regulatory affairs at Schwab: one allows for a hardship withdrawal that may be repaid over three years; if it's not repaid, you'd have to pay income taxes on the amount. The other allows for a loan that would be repaid over an extended repayment schedule, Townsend says, noting that he can't confirm these details until he sees the final legislation.

The bill also waives the required minimum distribution (RMD) rules for 2020. That’s good news for people older than 70 ½ this year—who would have been forced, even if they didn't need the money, to withdraw from their traditional retirement accounts during a bear market and pay income taxes on the amount withdrawn.

Taking RMDs would have been particularly painful this year, since the amount you withdraw is based on your account 's value at the end of the prior year, and balances have fallen dramatically since December.

A Pause for Student Loan Payments

Some 35 million Americans with federal student loans will not have to make their monthly payments for the next several months.

U.S. Education Secretary Betsy DeVos had already told borrowers they could get a 60-day forbearance and that interest rates would be set to 0% for 60 days. And the department announced Wednesday that it would stop seizing money from borrowers in default, and return any money seized since March 13. (If you stop making your payments for an extended period, the government can take money from your paycheck, tax return, and Social Security benefits.)

The latest bill expands on that relief: 0% interest continues and all payments are suspended for until the end of September. That six-month period will still count toward loan forgiveness for those borrowers in the Public Service Loan Forgiveness program.

The caveat here is that only “federally held” loans are covered. That’s not exactly the same as saying all federal loans, since there are some loans from private lenders that are guaranteed by the federal government, and these are not affected.

Most loans taken out in the past 10 years will qualify. That's when the government fully switched to its current Direct Loan Program. But The Institute of Student Loan Advisors says most older loans, called Federal Family Education Loans are not held by the federal government. Loans made under the Perkins program also aren't covered. To check if your loans qualify, log onto http://www.studentaid.gov to see which lender is listed. If the lender is the Department of Education, those loans qualify for the payment suspensions.

The payment suspension is a boon for borrowers who've lost their jobs or had their pay cut. But if you're not seeking forgiveness and you can still afford it, you should continue making your monthly payments, experts say. The interest-free period means your entire monthly payment will go toward the principal, which will reduce your total debt load quicker and help you pay it off faster.

The law doesn’t explain exactly how this will work for borrowers—if, for example, it will be automatic or if you’ll need to tell your servicers to pause your payments. Those details will likely come from the Education Department in the coming days. Yet even if the suspension is automatic, you should log into your student loan account now and note your current balance so you can confirm interest has stopped accruing. (Note that it may take some time for servicers to update your balance.)

A late addition to the bill, lawmakers also included a section that allows employers to make tax-free payments toward their employees' student loans until the end of 2020.

Expanded Unemployment Benefits for Laid Off Workers

Republicans agreed to a significant expansion of jobless benefits--what New York Sen. Chuck Schumer, the Senate's lead Democratic negotiator of the bill, called "unemployment insurance on steroids."

The bill includes a four-month enhancement of benefits for workers who lost a job because of the coronavirus. That means laid off workers can receive an extra $600 a week, through the end of July. And in addition to full-time workers who've lost jobs, part-time workers and self-employed workers can qualify for benefits.

The bill also extends unemployment insurance provided by the federal government by 13 weeks, essentially providing up to nearly 10 months of benefits in states that allow the full time period. (Most states currently allow workers to receive unemployment for 26 weeks, but some limit it to 12 or 13 weeks, according to the Center on Budget and Policy Priorities. )

What else is in the bill?

Outside of the personal finance elements, the lawmakers also approved $500 billion to help distressed industries, including $50 billion for airlines and $17 billion for firms deemed critical to U.S. national security. Much of the rest--more than $400 billion--is in the form of loan guarantees that could go to states and local governments, as well as distressed businesses. Payroll taxes employers usually have to pay will be delayed, too.

Lawmakers also included provisions aimed at helping health care workers, including $117 billion for hospitals and veterans' care and measures to reduce supply shortages.

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