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Debt Relief and the CARES Act: Which Borrowers Benefit the Most?

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Abstract

COVID-19 and associated social distancing measures have had major labor market ramifications, with massive job losses and furloughs. Millions of people have filed jobless claims since mid-March—6.9 million in the week of March 28 alone. These developments will surely lead to financial hardship for millions of Americans, especially those who hold outstanding debts while facing diminishing or disappearing wages. The CARES Act, passed by Congress on April 2, 2020, provided $2.2 trillion in disaster relief to combat the economic impacts of COVID-19. Among other measures, it included mortgage and student debt relief measures to alleviate the cash flow problems of borrowers. In this post, we examine who could benefit most (and by how much) from various debt relief provisions under the CARES Act.

Suggested Citation

  • Rajashri Chakrabarti & Andrew F. Haughwout & Donghoon Lee & William Nober & Joelle Scally & Wilbert Van der Klaauw, 2020. "Debt Relief and the CARES Act: Which Borrowers Benefit the Most?," Liberty Street Economics 20200818, Federal Reserve Bank of New York.
    • Handle: RePEc:fip:fednls:88582
    Note: Heterogeneity Series IV: COVID-19 and Credit Market Outcomes
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    More about this item

    Keywords

    COVID-19; pandemic; CARES Act;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty

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