Life is About to Get Much More Expensive for Millions of Families

Jul 17, 2023

Several pandemic-era safety net programs will be coming to an end at roughly the same time this fall, creating a major economic squeeze for millions of families.

Why it matters: Scores of Americans will soon start facing bigger bills for student loan payments, child care, health care and food, deepening the impact of years of inflation.

“The real issue here is that these policies have definitely been a lifeline for families in the pandemic, in the recovery,” a White House official told Axios. “Even though they were always intended to be temporary, there is a significant risk of disruption as they roll off.”

State of play: Student loan payments will come due again in October, for the first time in more than three years.

Pandemic-era funding for child care will expire almost simultaneously. One estimate, by the Century Foundation, projects that more than 3 million children will lose access to care, and 70,000 child care programs will close, as a result.

Another survey found that around 4 in 10 child care providers expect to raise tuition when the grant program ends.

Work requirements for food stamps will also come back into effect this fall.

That will likely cause at least 500,000 people to lose their food assistance, and the recent debt ceiling agreement, which expanded work requirements to more beneficiaries, puts another 750,000 people at risk, according to an estimate by the Center on Budget and Policy Priorities.

And states will continue to trim their Medicaid rolls, removing people who enrolled during the pandemic but are no longer eligible. Most states began the process this summer.

More than 2 million people have already been disenrolled — and 75% of those people probably have incomes low enough that they should still qualify, but were removed because paperwork wasn’t in order.

What they’re saying: “That we have all of these really big forms of assistance shutting down at the same times raises a lot of concerns that some families will be affected on multiple dimensions,” said Krista Ruffini, an assistant professor at Georgetown’s McCourt School of Public Policy.

“It’s all of these additional costs that are coming at the same time, especially in a context where we continue to see inflation — albeit at a lower level,” she added.

The other side: All of these measures were always meant to be temporary. Some economists say they’ve have an inflationary effect, and unwinding them may actually be good for the economy writ large.

“We’re in kind of a weird situation, where that will present some hardship to the people who are losing the benefits,” said Michael Strain, director of Economic Policy Studies at the American Enterprise Institute. “At the same time, from a macroeconomic perspective, we’re kind of rooting for slower growth to get inflation back to the Fed’s target.”

“Having them be temporary meant that they were going to go away at some point. And when things go away, that’s hard for people. But that’s what they were designed to do,” he added.

What’s next: While big-ticket assistance programs are going away, the Biden administration has rolled out several regulatory actions to try to ease the transitions.

Shortly after the Supreme Court released its opinion striking down Biden’s student loan forgiveness plan, the president announced a one-year on-ramp for loan repayments and finalized a new income-driven loan repayment plan that will slash many borrowers’ monthly payments.

On Friday, the administration announced that more than 800,000 borrowers are receiving $39 billion in loan forgiveness through administrative “fixes.”

The White House earlier this week announced a proposal that would cap out-of-pocket costs for families participating in a federal childcare program, which the administration said would help nearly 80,000 families pay less for child care.

And though Medicaid coverage is shrinking, Democrats have successfully beefed up Affordable Care Act subsidies, making affordable options available to more people.

Although the debt limit deal extended SNAP work requirements, it also created more exemptions for certain populations, including people experiencing homelessness. The administration has also previously announced an increase in SNAP benefits following a congressionally-mandated review of the program.

What they’re saying: “Emergency measures played a critical role in strengthening the recovery and helping families weather the pandemic and its aftermath,” White House Assistant Press Secretary Michael Kikukawa said.

“Now, the strength of the job market, along with Biden Administration policies to strengthen health coverage, nutrition programs, and protections for student loan borrowers, will help working people as these programs, which were always intended to be temporary, phase down.”

What we’re watching: Biden likely will campaign heavily on plans to bolster safety-net programs — a big contrast with congressional Republicans.

“On a forward-looking basis, there’s just a huge philosophical disagreement on what these safety net measures should look like,” the White House official said.


By Caitlin Owens, Axios
Illustration by Sarah Grillo/Axios