Legal Sidebari

President Trump’s Executive Actions on
Student Loans, Wage Assistance, Payroll
Taxes, and Evictions: Initial Takeaways
August 10, 2020
In enacting the Coronavirus Aid, Relief, and Economic Stability Act (CARES Act), Congress provided
relief to those confronting economic hardship as a result of the Coronavirus Disease 2019 (COVID-19)
pandemic. Certain CARES Act protections related to student loans are scheduled to expire in fal 2020.
Other CARES Act relief, including moratoria on certain evictions and foreclosures and an additional $600
in weekly unemployment compensation, have already expired. Stil other CARES Act relief, including
deferred collection of payroll taxes, extends to some taxpayers but not others. On August 8, 2020, in four
executive actions, President Trump directed federal agencies to extend student loan relief, provide further
lost wage assistance, expand tax collection deferrals, and explore additional eviction or foreclosure
protections. This Sidebar takes a first look at the President’s executive actions, explaining how these
actions relate to existing or expired CARES Act authorities and potential statutory questions. This Sidebar
closes by flagging potential issues for Congress.
Student Loan Payment Relief
On August 8, 2020, President Trump signed a presidential memorandum expressing his view that
payments and interest accrual on student loans should remain suspended past September 30, 2020, “until
such time that the economy has stabilized, schools have re-opened, and the crisis brought on by the
COVID-19 pandemic has subsided.” The memorandum directs the Secretary of Education to “continue
the temporary cessation of payments and the waiver of al interest on student loans held by the
Department of Education until December 31, 2020.”
The memorandum cites Section 455(f)(2)(D) of the Higher Education Act (HEA), which al ows eligible
borrowers to defer certain federal y held student loans if they experience economic hardship. Such a
deferment temporarily relieves the borrower of an obligation to pay principal instal ments on the loan. For
some (but not al ) loans, a deferment also temporarily suspends the accrual of loan interest.
To implement the proposed suspension of payments and interest accrual, the presidential memorandum
directs the Secretary of Education “to take action pursuant to applicable law to effectuate appropriate
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waivers of and modifications to the requirements and conditions of economic hardship deferment
described in” HEA Section 455(f)(2)(D). Under HEA Section 435(o)—which Section 455(f)(2)(D)
incorporates by reference—a borrower is eligible for an economic hardship deferment if the borrower is
(1) working full-time and (2) earning an amount of money that fal s below a specified threshold. But HEA
Sections 455(f)(2)(D) and 435(o) also authorize the Secretary of Education to promulgate regulations
making additional borrowers eligible for an economic hardship deferment. The Secretary of Education
previously issued regulations making economic hardship deferments available to certain borrowers who
might not otherwise meet the criteria specified in Section 435(o). The presidential memorandum
contemplates that the Secretary of Education wil exercise available statutory authorities to further expand
economic hardship deferment eligibility to borrowers adversely affected by the COVID-19 pandemic.
The presidential memorandum may raise several questions for policymakers. First, as mentioned above, a
deferment under Section 455(f) does not suspend interest accrual for al types of student loans. To the
contrary, Section 435(f)(1)(B) states that for certain loans, interest “shall accrue and be capitalized or paid
by the borrower” during the deferment period. It therefore may be uncertain whether Section 455(f),
standing alone, al ows the Executive to waive “all interest on student loans held by the Department of
Education” as the presidential memorandum contemplates. That said, the presidential memorandum
directs the Secretary of Education to take action pursuant to “applicable law” to effectuate the
memorandum’s directives. The Trump Administration might attempt to argue that other provisions of
federal law give the Secretary of Education the power to waive al interest on student loans held by the
Department of Education, even if Section 455 does not.
Second, the memorandum does not explicitly specify who wil be eligible for the expanded economic
hardship deferments. The memorandum appears to contemplate, however, that the Secretary of Education
wil make those deferments available to al borrowers who are currently covered by the CARES Act’s
payment and interest suspension provisions.
Third, while the presidential memorandum states that “[a]l persons who wish to continue making student
loan payments shal be al owed to do so,” it does not specify whether borrowers wil need to apply for the
deferments, or if the Secretary of Education wil instead automatical y grant deferments to eligible
borrowers unless they opt out. Under existing regulations, deferment is (with limited exceptions) not
automatic; a borrower must usual y request a deferment and submit an application containing various
documents. Although the Secretary of Education could potential y amend those regulations to
automatical y grant deferments, doing so could have both advantages and disadvantages. On one hand,
dispensing with the requirement that borrowers file an application to receive a deferment could reduce
burdens on both borrowers and the federal government. On the other hand, some borrowers might prefer
not to receive an automatic deferment, preferring to continue paying off their loans. For instance, some
student loan forgiveness programs—such as the Public Service Loan Forgiveness (PSLF) Program—
require the borrower to make payments over an extended period to receive relief.
Fourth, Section 3513 of the CARES Act affords borrowers certain types of relief that the presidential
memorandum does not mention. For instance:
 Section 3513(e) suspends involuntary collection on student loans covered by the CARES
Act’s principal and interest suspension provisions.
 Section 3513(d) affords borrowers certain consumer credit reporting protections during
the suspension period.
 Section 3513(c) requires the Secretary of Education to “deem each month for which a
loan payment was suspended” under the CARES Act as if the borrower “had made a
payment for the purpose of any loan forgiveness program or loan rehabilitation program,”
such as the PSLF program.

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The memorandum does not expressly address these topics. Notably, however, when the Trump
Administration took administrative action in March 2020 to grant relief to student loan borrowers, the
Secretary of Education instructed the U.S. Treasury and collection agencies to cease involuntary
collection actions and wage garnishments for at least 60 days.
Also, it is presently unclear whether the Secretary of Education wil give stakeholders an opportunity to
comment on any regulations she might promulgate to implement the memorandum. Federal law ordinarily
requires the Secretary of Education to engage in a negotiated rulemaking process with stakeholders and
accept and consider public comments before a regulation governing student loans becomes effective. But
the Secretary of Education may bypass these procedures when following them would be “impracticable,
unnecessary, or contrary to the public interest.” Given the significant and continuing impact of COVID-19
and Section 3513’s impending expiration date, the Secretary of Education might be able to publish
regulations to implement aspects of the memorandum that become effective immediately, without first
accepting public comment.
Lost Wage Assistance
The President’s second executive action deals with wage assistance. The CARES Act authorized and
appropriated full funding for “Federal Pandemic Unemployment Compensation” (FPUC). FPUC provided
an additional $600 in weekly unemployment compensation. FPUC covered weeks of unemployment
“ending on or before July 31, 2020,” meaning that qualified individuals have stopped receiving FPUC.
Citing the need to “provide financial assistance” to those “who have lost employment as a result of the
pandemic,” the President directed the Secretary of Homeland Security, acting through the Administrator
of the Federal Emergency Management Agency (FEMA), to approve a “lost wages assistance program.”
Under this program, “states” (defined to include the District of Columbia and the territories) may apply
for a federal grant to make $400 weekly payments to individuals who, for each week of assistance
claimed, also receive at least $100 in weekly unemployment assistance from other specified sources. The
federal grant would contribute $300 to this weekly payment using up to $44 bil ion appropriated to
FEMA’s Disaster Relief Fund, which is available for “necessary expenses in carrying out” the Stafford
Act. States would be required to contribute the remaining $100 from funds available to the state. The
memorandum recommends that states use their unobligated Coronavirus Relief Fund money to pay their
state match. Grants are to be available for weeks of unemployment ending between August 1, 2020, and
December 6, 2020, but the program could terminate earlier if Congress enacts supplemental COVD-19-
related unemployment compensation or the Disaster Relief Fund’s balance fal s below $25 bil ion from its
present level of “more than $70 bil ion.”
The President relies on Section 408 of the Stafford Act as authority for the lost wage assistance set forth
in the memorandum. In general, Section 408(a) al ows the President to provide financial assistance to
“individuals and households” who, “as a direct result of a major disaster, have necessary expenses and
serious needs in cases in which the individuals and households are unable to meet such expenses or needs
through other means.” The statute authorizes housing assistance (under Section 408(c)) and what FEMA
terms “other needs assistance” (under Section 408(e)). This latter category includes financial assistance
“to address personal property, transportation, and other necessary expenses or serious needs resulting
from the major disaster,” and the President cites this particular subsection as support for his lost wage
initiative.
The Stafford Act requires the President to promulgate regulations “to carry out” Section 408, including by
setting “criteria, standards, and procedures for determining eligibility for assistance.” FEMA’s regulations
implementing Section 408 define key statutory terms: “serious need” and “necessary expense.” A “serious
need” is “the requirement for an item, or service, that is essential to an applicant’s ability to prevent,
mitigate, or overcome a disaster-related hardship, injury or adverse condition.” A “necessary expense” is

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“the cost associated with acquiring an item or items, obtaining a service, or paying for any other activity
that meets a serious need.”
Whether Section 408 authorizes lost wage assistance may turn on how these definitions are applied. One
reading might require FEMA to ensure that individuals use federal financial assistance for an item,
service, or activity that is essential to coping with COVID-19. While this reading might be more or less
flexible, it would potential y exclude expenses that are disaster-related but not “essential,” as wel as
expenses that are not disaster-related at al . The President’s memorandum does not appear to expressly
identify or limit the items, services, or activities for which federal lost wage assistance may be used. That
said, it seems likely that at least some eligible claimants might use lost wage assistance to pay for
“essential” expenses al owed under Section 408’s implementing regulations and policies.
Another provision of the Stafford Act might also bear on the scope of the President’s Section 408
authority. Section 410(a) of the Act specifical y authorizes FEMA to provide benefit assistance to
individuals who are “unemployed as a result of a major disaster.” (Authority to implement this assistance,
which FEMA cal s “Disaster Unemployment Assistance” (DUA), has been delegated to the Secretary of
Labor.) However, DUA extends only to weeks of unemployment “with respect to which [an] individual is
not entitled to any other unemployment compensation” and limits the weekly payments to “the maximum
weekly amount” authorized under the law of the state where the disaster occurred. The President’s
memorandum provides benefits to a different population (“eligible claimants” who receive at least $100
in unemployment assistance from other specified sources) at an amount ($400) not tied to state law.
This aspect of the memorandum has generated some disagreement. At least one legal commentator argues
that Section 410’s express authorization for narrower disaster-related unemployment compensation
prevents the President from using Section 408 to provide broader disaster-related unemployment
compensation, while another commentator rejects this argument.
Payroll Tax Deferral
The President’s August 8 actions also included a memorandum instructing the Treasury Secretary to defer
certain payroll tax obligations between September 1 and the end of the year. Under the Internal Revenue
Code, employees and employers both owe payroll taxes. But employers are responsible for withholding
their employees’ portion of the tax and are liable for unpaid employee obligations. President Trump’s
August 8 memorandum instructs the Treasury Secretary to defer—that is, postpone the deadline for—the
withholding, deposit, and payment of the employee portion of the Old-Age, Survivors, and Disability
Insurance (OASDI) component of Federal Insurance Contributions Act taxes, which represents 6.2
percent of employees’ wages. This deferral is general y limited to employees whose pretax wages and
compensation amount to less than $4,000 during any biweekly pay period. (The memorandum does not
purport to affect the employer portion of OASDI taxes, which Section 2302 of the CARES Act al owed
employers to defer between March 27, 2020, and the end of the year).
To defer the relevant obligations, the President instructs the Treasury Secretary to rely on 26 U.S.C. §
7508A, which al ows the Secretary to postpone certain tax liabilities of persons affected by a federal y
declared disaster for up to a year. The President has already issued applicable declarations in connection
with COVID-19 for al 50 states, the District of Columbia, and the territories.
The President’s memorandum echoes a letter from March in which he instructed the Treasury Secretary to
use his Section 7508A authority to “provide relief from tax deadlines” to Americans adversely affected by
COVID-19. The Secretary responded to that letter by postponing the due date for certain federal income
tax payments from April 15 to July 15. In extending that deadline, the Treasury Secretary determined that
any taxpayer who owed the relevant obligations was “affected” by COVID-19 for purposes of Section

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7508A. The Treasury Secretary wil presumably make a similar determination for covered employees in
implementing the August 8 memorandum.
While the President appears to be on firm legal footing in instructing the Treasury Secretary to postpone
the relevant payroll tax obligations, there is some disagreement about the measure’s practical
consequences. The Trump Administration has argued that deferring payroll tax obligations wil cushion
the blow of COVID-19 by putting more money in employees’ pockets. But some commentators have
contended that the deferral wil prove ineffective because of employers’ liability for their employees’
unpaid payroll taxes. Because merely deferring payroll taxes does not forgive the relevant obligations,
some experts predict that employers wil continue to withhold payroll taxes to satisfy their
responsibilities. The alternative—paying over the extra money to employees and entrusting them to
satisfy their obligations after the deferral period—may expose employers to liability they would rather
avoid. The Trump Administration has indicated that it wil pursue measures to ultimately forgive these
deferred payroll tax obligations.
Evictions and Foreclosures
Final y, the President’s August 8, 2020, executive actions include consideration of eviction and
foreclosure issues. The CARES Act al ows certain borrowers of a federal y backed multifamily mortgage
loan to request and receive forbearance for up to 90 days, during which time an eviction moratorium is in
place for tenants residing in a property affected by the forbearance. The CARES Act also included a 120-
day moratorium on initiating a legal action to recover possession of a dwel ing for nonpayment of rent or
issuing a 30-day notice to vacate, when the property at issue carried a federal y backed mortgage or
benefitted from certain federal assistance. Additional y, the CARES Act al ows borrowers with a federal y
backed single-family mortgage loan to request and receive forbearance for up to 360 days. It also
suspended foreclosures for federal y backed single-family mortgages for 60 days. While some of these
CARES Act protections have expired, borrowers or tenants may also have access to continued federal
relief through other means.
The President directed executive branch officials to consider further measures for providing tenant or
borrower relief. The President instructed the Secretary of Health and Human Services (HHS) and the
Director of the Centers for Disease Control and Prevention (CDC) to examine whether temporarily
halting evictions for nonpayment of rent is “reasonably necessary to prevent the further spread of
COVID-19 from one State or possession into any other State or possession.” The President’s directive
does not cite specific statutory or regulatory authority for such action. But the language quoted above is
similar to language used in HHS’s interstate quarantine statutory and regulatory authorities. The President
directed the Secretaries of the Treasury and HUD to “identify any and al available Federal funds”
available to provide assistance to tenants and borrowers struggling to pay for housing because of the
pandemic, and the Secretary of HUD is to pursue other action “to promote the ability of renters and
homeowners to avoid eviction or foreclosure.” The executive order also directed the Director of the
Federal Housing Finance Agency to “review al existing authorities and resources that may be used to
prevent evictions and foreclosures for renters and homeowners resulting from hardships caused by
COVID-19.”
On its own, the President’s executive order largely just directs relevant officials to review existing
authorities and funding to determine if eviction or foreclosure protections can be implemented through
executive action. Whether these officials have authority to offer any particular protection wil depend on
the text of relevant statutes and any conditions Congress has placed on relevant funding sources.

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Considerations for Congress
Because most of the President’s August 8 actions rely on statutory authorities that Congress has
purportedly conferred on the President or federal agencies, Congress has significant authority to modify,
rescind, or ratify many of these initiatives. Congress could address concerns about the consequences and
effectiveness of the President’s payroll-tax deferral by, for example, passing legislation forgiving payroll
tax obligations during the relevant time period. Congress could also pass legislation ratifying FEMA’s use
of Section 408 for wage assistance or waiving interest on student loans during the COVID-19 disaster to
resolve the potential legal questions discussed above. Finally, Congress could also eliminate or limit the
statutory authorities implicated by these measures if it disapproves of the President’s actions.

Author Information

Kevin M. Lewis
Jay B. Sykes
Legislative Attorney
Legislative Attorney


Sean M. Stiff

Legislative Attorney




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