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Early in the pandemic, Alondra Barajas had a temporary job for the Census Bureau, doing phone work from the two-bedroom apartment she shared with her mother and four younger siblings. When that job ended in late 2020, she struggled to find employment. But Ms. Barajas learned from an ad on Instagram that she might qualify for an unusual form of assistance: monthly payments of $1,000 for a year. The payments are part of a pilot program from the city of Los Angeles, one of the nation’s largest experiments with a guaranteed income, the New York Times reported. The idea is that the best way to close the wealth gap and give people the opportunity to build a more stable life is to provide unrestricted cash payments to some of the most vulnerable Americans. The concept, sometimes referred to as universal basic income, has had advocates for decades. Andrew Yang made it a centerpiece of his 2020 Democratic presidential campaign. At the same time, detractors have long argued that the approach incentivizes people not to work. Still, it is gaining traction, city by city. More than 48 guaranteed income programs have been started in cities nationwide since 2020, according to Mayors for a Guaranteed Income, a network of leaders supporting such efforts at the local, state and federal levels. Some efforts are publicly funded, and others have nongovernmental support. Jack Dorsey, the former chief executive of Twitter, donated $18 million to help the initiative.

When federal student loan borrowers take a breath from celebrating the cancellation of some or all of their federal student loans, millions of them could be in for an unpleasant surprise: While President Biden's sweeping student debt relief won't be subject to federal income tax, in seven states borrowers may have to pay state income tax on all those canceled loans, NPR.org reported. Before 2021, student debt cancellation was generally considered a form of income, and therefore taxable both at the federal and usually state levels. But in March 2021, the American Rescue Plan changed that, at least temporarily: Until the end of 2025, Congress said, the U.S. government will not consider canceled student loan debts to be taxable income. Now that the Biden administration has unveiled its sweeping new debt cancellation plan, this federal exemption is a really big deal. That's because most places follow the federal government's lead when it comes to income tax. "The majority of states that have an income tax essentially say, 'Whatever the federal government says is gross income, we say the same thing,'” explains John Brooks, a Fordham University professor who studies both tax policy and student loan law. But seven states are out of step with federal tax policy and have either said they will tax debt relief or still have policies that could require it, barring a change in state law. States where borrowers may be taxed for loan cancellation include: North Carolina, Indiana, Mississippi, Arkansas, Minnesota, Wisconsin and California. 

Florida homeowners will see another surcharge included on their insurance premiums in 2023 in order to help the Florida Insurance Guaranty Association (FIGA) cover the claims from insurance companies that have gone into receivership, ABCActionNews.com reported. This new charge is the second to hit homeowners this year and the third in the last two years. When an insurance company goes insolvent and is liquidated, the FIGA steps in and takes on all of its existing claims and pays back premiums. From 2013 to 2020, the nonprofit never had to issue these assessments, but as multiple companies went into receivership last year, they took on thousands of claims and hundreds of millions in financial responsibility. FIGA’s executive director Corey Neal, just before May’s special session, said they had about 8,000 claims and expected maybe 2,000 more in coming months, many of those from St. Johns and Avatar Insurance. However, that was a serious underestimate because just three months later, after Southern Fidelity and then Weston went under. Now, FIGA has about 14,000 claims it needs to pay out.

Energy costs have been a source of significant pain for Americans who are dealing with the fastest inflation in 40 years, the New York Times reported. Russia’s invasion of Ukraine has put a strain on global energy supplies, pushing up fuel prices. And while people can choose a cheaper protein at the grocery store or repair a vehicle instead of replacing it, there is often only one choice when heating a home. “You can’t switch the way you heat your home based on fuel prices,” said Mark Wolfe, the executive director of the National Energy Assistance Directors’ Association, which projects that heating costs will rise 12.3 percent this year — even faster than overall inflation. For natural gas, the country’s most common heating source, the association expects an increase of more than 20 percent, to $856 for the heating season, from $709 a year ago. In recent years, the Home Energy Assistance Program has received an annual appropriation of almost $4 billion. The American Rescue Plan, a big pandemic relief package in 2021, provided an extra $4.5 billion. But help on that scale appears unlikely to be repeated. The House and Senate appropriations committees have approved funds akin to the prepandemic allocation for the fiscal year that starts Oct. 1. In early August, 58 members of Congress signed a letter urging the committees to increase the funding.

President Biden’s plan to cancel student debt and modify payments for millions of Americans could cost as much as $1 trillion, according to budget analysts, challenging the administration’s efforts to scale down the federal deficit, the Wall Street Journal reported. Analysts expect strong interest in both debt cancellation and in programs that allow borrowers to pay a lower percentage of their income to keep up with their loans. The expected popularity of the policy could drive up costs and raise questions about whether the expense can be offset by other Biden administration policies, as the White House says. The total price tag for the program could reach $1 trillion, according to the Penn Wharton Budget Model, a widely regarded analysis frequently cited by policy makers. Other analysts say that the total bill could be nearly $500 billion, a range that shows the uncertainty and complexity of projecting the student-loan portfolio’s performance. The White House hasn’t released comparable estimates of the policy’s total cost, though it said the debt-cancellation portion of the plan alone would reduce revenue the government receives from student-loan payments by about $240 billion over a decade. The White House hasn’t proposed to raise taxes or other forms of revenue to offset the cost of the student-loan programs, but it says the debt-forgiveness portion is paid for through the reduction in the federal deficit that has occurred this fiscal year.

The Biden administration’s student loan forgiveness initiative is poised to face an array of legal challenges that could freeze the plan before it gets up and running, threatening a policy that has stirred fierce bipartisan debate and infighting among Democrats, the New York Times reported. The plan announced by the White House last week would wipe out significant amounts of debt for millions of Americans. Those earning less than $125,000 per year would have $10,000 in debt erased, and those who received Pell grants would get $20,000 in debt relief. While it fulfills one of President Biden’s campaign promises to help graduates who have fallen behind in their payments, the plan carries a significant cost — projected to be between $300 billion and $500 billion — to the federal government, which will not receive repayments that it is currently owed. Enacting such a major fiscal outlay through emergency executive powers has raised questions about whether Mr. Biden has the authority to carry out such a policy on his own, and many expect lawsuits and a protracted legal battle, including by those who stand to lose financially from the plan. Those who might try to claim such damages could include loan servicers who are missing out on processing fees or lawmakers who view the policy as an infringement on congressional budgetary authority. Some critics have compared Mr. Biden’s move to similar executive actions undertaken by former President Donald J. Trump, including his use of emergency powers to fund a border wall in 2019. Although that was different than canceling federal debt, opponents of the decision argued that Mr. Trump was abusing his authority by transferring Pentagon funds to pay for wall construction without congressional approval. The Supreme Court allowed the construction to go forward while the case worked its way through lower courts, but Mr. Biden halted work on the barrier upon taking office. Because of the expectation of a legal fight, some have warned that borrowers expecting forgiveness should not yet get their hopes too high. One of the main questions revolving around the student loan program is who — if anyone — has the legal “standing” to claim that they have been harmed by the policy and are entitled to file a lawsuit. The most likely outcome, legal experts say, is that banks or loan servicers who stand to lose money from fees that they would have been scheduled to collect file suits. Since many borrowers would owe less money overall, the amount that they pay each month to companies that manage loan payments would also shrink.

Several states are moving ahead to exempt residents from being taxed on forgiven student loan debt under President Joe Biden’s relief plan, while Mississippi has decided against the exemption, Bloomberg News reported. New York, Pennsylvania, Kentucky, Virginia, Hawaii, and Idaho are the latest states to exempt their residents that qualify under Biden’s plan from state income tax. Others—Arkansas, California, Massachusetts, and South Carolina—are still reviewing whether debt forgiveness will be subject to taxation. The canceled debt will be subject to income taxes in Mississippi, the state Department of Revenue confirmed. As debt cancellation is generally considered income, the federal government exempted student loan debt forgiveness between 2021 and 2015 from federally taxable income. But more than a dozen states don’t fully conform to that provision of the American Rescue Plan Act and have the option to collect taxes. Nonconforming states would have to issue guidelines or pursue legislative action to prevent residents from ending up paying between $500 and $1,100 in state taxes for the 2022 tax year. However, most legislatures have adjourned for the year.

Federal student loans totaling $1.5 billion will automatically be canceled for nearly 80,000 borrowers who went to Westwood College, a for-profit trade school that shut down in 2016, the Education Department said today, the New York Times reported. “Westwood operated on a culture of false promises, lies and manipulation in order to profit off student debt that burdened borrowers long after Westwood closed,” said James Kvaal, the department’s under secretary. From 2002 until it closed, Westwood misled prospective students about its training programs and its graduates’ earnings and career prospects, according to the agency. As it recently did for former students of Corinthian Colleges, the Education Department intends to wipe out the outstanding federal loans of those who attended from 2002 until the school closed without requiring borrowers to apply. The move significantly expands the $130 million in debt cancellation that the agency previously gave to 4,000 Westwood borrowers who applied through the “borrower defense to repayment” relief system, a program for those who attended schools that broke consumer protection laws.

President Biden’s plan to forgive some student debt has sharply divided liberal economists and pitted the White House economic team against both independent analysts and veterans of past Democratic administrations, the New York Times reported. The areas of disagreement include how much the package of debt relief and other changes to student loans will cost taxpayers and whether the plan is “paid for” in budgetary terms. The plan’s impact on inflation, which is rising at a rapid clip, and the degree to which it will help those most in need are also matters of contention. The plan, announced last week, includes forgiving up to $10,000 in loans for individuals earning $125,000 or less and an additional $10,000 for borrowers from low-income backgrounds who received Pell Grants in college. Mr. Biden also proposed changes to loan repayment plans going forward that will reduce monthly costs and eliminate interest accumulation for potentially millions of lower-earning borrowers who maintain payments. White House officials have offered partial estimates of who will benefit most from those moves, and how much they might reduce federal revenue. The officials have made a case for why the package will not add to inflation. And they have claimed it will be “paid for,” though not in any way that budget experts agree fits that term. Conservative economists have attacked the plan, claiming that it would stoke higher inflation and burden taxpayers with hundreds of billions of dollars in new debt. Some liberal economists have defended it as a lifeline for graduates who have been harmed by the soaring costs of higher education. For starters, it’s unclear what share of eligible borrowers will go through the process to request debt cancellation from the Education Department, which has not yet set up the forgiveness program. It is also not clear how many people who apply to have their debt canceled would have paid back their full balance if Mr. Biden had not taken any action. Each of those variables could significantly affect the total cost in lost revenue. Outside groups have tried to estimate the total cost. The Committee for a Responsible Federal Budget calculates the budget impact at somewhere between $440 billion and $600 billion over a decade. The University of Pennsylvania’s Penn Wharton Budget Model estimates just over $600 billion over 10 years. The White House will not complete an official estimate of the plan’s costs until winter at the earliest, according to the White House budget office. But officials say those outside estimates are far too high. The budget office estimates that one part of the program, the debt relief of up to $20,000 per borrower, will reduce loan payments to the government by $24 billion a year over the next decade, assuming three-quarters of borrowers opt into the program.