Biden’s American Rescue Plan is a lifeline for low-income renters


The American Rescue Plan Act of 2021, a $1.9 trillion COVID relief bill signed by President Joe Biden last week, provides a range of benefits that will help lift millions out of poverty, especially children.


From emergency rental assistance directly helping low-income renters stay safe in their homes, to education funding, the aid that is most important to low-income renters have been detailed below.


Emergency Rental Assistance

The American Rescue Plan provides $27.4 billion for emergency rental assistance. Of this amount, $152 million will be set aside for each state; and $315 million for territories.


Eligible renters must have incomes at or below 80% of Area Median Income (AMI). They must also qualify for unemployment benefits or had other financial hardships due to the pandemic. Renters at risk of homelessness are also eligible.

State and local programs must prioritize serving households with incomes below 50% of AMI, or people unemployed for more than 90 days. State and local programs can add other priorities.


Emergency rental assistance can be used to pay for back-rent and rent going forward. It can also pay for delinquent utilities and utility bills going forward. It can pay for internet connections and other housing related expenses. Assistance can be received for 18 months.


In addition, the law provides $5 billion for emergency housing vouchers. These vouchers will be targeted to people experiencing homlessness or at risk of homelessness. They will also be targeted to domestic violence and human trafficking survivors.


Low-income renters in rural areas will benefit from $100 million provided to USDA. This will assist tenants in USDA rural rental housing. Tribes will also receive $750 million. This money will be disbursed through federal block grant programs that serve tribes.

How does this help low-income renters?


Millions of low-income renters have faced the threat of eviction since the pandemic began a year ago. Low-income renters are currently protected by the CDC national eviction moratorium, but it will expire on March 31. Although most renters have been able to stay in their homes under the moratorium, they still owe rent. When the moratorium expires, millions of renters will owe thousands of dollars in back rent and fees.


Emergency rental assistance and emergency housing vouchers will help low-income renters catch up on back-rent and utilities. It will also provide ongoing support for renters as the economy continues to recover from the pandemic.


Homeless Assistance

The American Rescue Plan has $5 billion to help people experiencing homelessness or at risk of homelessness. These funds can support rental assistance and supportive services. The funds can also be used to develop new affordable rental housing. In addition, the money can be used to acquire non-congregate housing (like motels) and convert these properties into permanent affordable housing or emergency shelter.


How does this help low-income renters?

With so many low-income renters facing the threat of eviction, these funds will help homeless shelter and service providers pay for new places for at-risk renters to stay. It will help make congregate shelters safer, and provide more shelter options where people can have privacy. The emphasis on funding permanent housing and shelter shows a strategy of re-using current buildings to address housing shortages over the long term.


Direct Payments

There will be stimulus checks of $1,400 per adult, plus $1,400 for each child declared as a dependent on tax returns. People earning up to $75,000 income ($150,000 for couples) qualify for the full payment. The payment phases out up to $80,00 income ($160,000 for couples). People earning more than $80,000 do not get direct payments.


How does this help low-income renters?

The direct payments will put cash in the pockets of desperate renters very quickly. Because this is the third round of coronavirus stimulus payments to go out, the Treasury Department should be able to get the first payments out within days of the president’s signature. 

Although these checks will likely not be enough to cover all the back rent and debts of low-income renters, it will absolutely help with the most immediate needs, including food and medicine.


Unemployment Benefits

Low-income renters who have lost their jobs during the pandemic will continue receiving a $300 per week federal boost in their unemployment benefits. The federal boost will extend through September 6, 2021. Although this is lower than the $400 per week approved by the House, the benefit period extends a month longer.


In addition, the law says that the first $10,200 in unemployment benefits will be considered nontaxable income for households making less than $150,000. 

How does this help low-income renters?


Many low-income renters work in the industries hit hardest by the pandemic, such as restaurants, hotel, travel, retail, and other services. Although it is not as generous as the benefits provided earlier in the pandemic, weekly unemployment benefits are a big part of keeping low-income workers afloat until the coronavirus is under control.

When the federal government was paying unemployed workers an extra $600 per week at the beginning of the pandemic, many people found themselves earning more than they did before losing their jobs. This puts many of these workers at risk of moving up a tax bracket. 

These workers may then end up owing taxes, rather than getting a refund. Treating the first $10,200 of unemployment benefits as nontaxable income will keep most low-income renters from facing this tax penalty.


Child Tax Credit

The American Rescue Plan temporarily expands the child tax credit. It provides $3,600 per child under age 6, and $3,000 per child ages 6-17. The amount is gradually reduced for couples earning more than $150,000 ($75,000 for individuals).


The credit is refundable. If a taxpayer does not owe the government taxes, the government returns the excess credit as a refund.


Instead of having to save and stretch a lump sum check, families who qualify for the full credit can receive monthly payments. These households can receive up to $300 per child each month from July through the end of the year.


Many Democrats and some Republicans would like to make this a permanent change to the tax code.


How does this help low-income renters?

Low-income families with children struggled to make ends meet even before the pandemic. This is especially true for female-headed households. This would provide guaranteed support throughout the year so that childrens’ basic needs can be met. 


It is estimated that this measure will reduce child poverty by 45%. The reduction in poverty will happen across all racial groups. However, Black, Hispanic, and Native American children will see the greatest reductions in poverty.


Energy Assistance

The Low-Income Home Energy Assistance Program (LIHEAP) provides energy assistance to both low-income renters and homeowners. The relief package provides $4.5 billion for LIHEAP.

How does this help low-income renters?


This funding will help low-income renters pay for heat, electricity, water, and other critical utilities. It can help renters catch up on their utility payments and cover current payments.


Health Insurance

The relief package will also make health insurance more affordable and available to more people. It increases the subsidies available to people who purchase their own plans on the healthcare exchanges. It will also make some subsidies available to people whose incomes were previously too high to qualify.


How does this help low-income renters?

This measure will make health insurance premiums more affordable for low-income renters. This means more low-income households will be able to get insurance, and those who already have health insurance will pay less for it.


Small Business Assistance (PPP)

Small businesses are the largest employment sector in the country. The CARES Act created the Paycheck Protection Program (PPP) to make loans to small businesses. These loans could be forgiven if the businesses met certain conditions, including keeping staff working.The law provides $7.25 billion in new funds for PPP loans. It also will allow more nonprofit organizations to apply.


How does this help low-income renters?

Millions of low-income renters work for small businesses. These loans will help these businesses survive public social distancing requirements. Nonprofit organizations provide essential services in their communities. PPP loans will help them continue serving the needs of low-income renters.


Education Funding

The American Rescue Plan has resources to help get schools open more quickly. It provides $128 billion in grants to state education agencies. 90% of these funds will go to support local education agencies. The relief package also has $39 billion in grants for higher education.

Included in the education funding is $15 billion for the Child Care and Development Block Grant program. This helps keep childcare facilities open and safe during the pandemic, especially in high need areas.


The relief package does not forgive student loans. However, it does say that any student loan forgiveness enacted between December 31, 2020, and January 1, 2026, will be tax free. When debts are forgiven, the amount is usually considered as income for tax purposes. Millions of borrowers may face large tax bills when loan forgiveness moves them up tax brackets.

How does this help low-income renters?


The money for schools is to help them re-open for full in-person learning. Parents often need to stay home from work, or put a hold on job searches, when children cannot go to school. The funding will also help schools improve their systems for remote learning when needed. Some of this assistance can include helping better connect low-income students. 


Childcare facilities have been closed or at reduced capacity around the country. Childcare centers are often small operations, and face many challenges meeting social distancing requirements. Funding to safely open up childcare centers will allow more parent to go back to work.


In Conclusion

President Biden made good on his promise to enact a massive relief bill that would help poor and working families while getting the economy back on track. Although some popular items like the $15 minimum wage did not make it into this legislation, the relief package will have a tremendous impact on low-income renters.


The American Rescue Plan will help people pay rent with rental assistance and carry them through unemployment. It will give low-income families the means to help their children succeed with monthly tax credit payments. It will help small businesses stay open and lower healthcare costs. Most importantly, it will help reduce poverty and set the groundwork for low-income renters to share more in the economic recovery.


Published by Chris Holden

Chris Holden, Affordable Housing Online's Senior Housing Analyst, has been in the affordable housing field for 25 years. Originally from Keene, New Hampshire, he has worked as a researcher, policy analyst, lender, trainer and real estate developer. He also taught political science at Keene State College. He is focused on making housing policies more accessible for low-income renters. View all posts by Chris Holden



Article Date: 
Monday, March 15, 2021