House passes Biden's Build Back Better spending plan, here's how it may impact your finances

House Democrats on Friday passed the Build Back Better Act, President Joe Biden's signature spending plan that includes about $1.75 trillion worth of investments to expand child care programs, reduce health care costs, combat climate change and increase affordable housing, among other things.

This version of the Build Back Better plan has the potential to directly impact the finances of millions of households with a series of new and expanded tax credits, as well as a new surtax on the wealthiest Americans with a personal income over $10 million, according to the White House.

The bill is now headed to the Senate where it faces opposition from Republicans and moderate Democrats, like Sen. Joe Manchin of West Virginia, who want to limit spending and avoid adding to the federal debt. This will likely be a point of contention after the Congressional Budget Office (CBO) found that enacting this legislation would add $367 billion to the deficit between 2022 and 2031.

Keep reading to learn about the financial implications of the Build Back Better spending plan, and visit Credible to compare interest rates on a variety of financial products, from personal loans to student loans.

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What's included in the Build Back Better Act?

The Build Back Better agenda includes a host of historic investments that will "set the United States on course to meet its climate goals, create millions of good-paying jobs, enable more Americans to join and remain in the labor force, and grow our economy from the bottom up and the middle out," according to the White House.

Here are a few major investments included in the bill that may impact your finances:

• Expanded Child Tax Credit
• Increased Pell Grants and HBCU funding
• Electric vehicle tax incentives
• Affordable housing provisions
• Medicaid and ACA expansions

Read more about each policy in the sections below.

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Expanded Child Tax Credit

Build Back Better extends the expanded Child Tax Credit (CTC) under the American Rescue Plan Act through 2022. This raises the current cap of $2,000 per child to $3,000 per child ages 6-17 and $3,600 per child 5 years old and younger.

It also makes full refundability permanent, which means that low-income families who don't typically earn enough money to file a tax return will continue to qualify for the full credit. This will permanently reduce child poverty by up to 40%, according to the Center on Budget and Policy Priorities (CBPP).

In addition to expanding the CTC, Build Back Better caps the cost of child care for young children to 7% of a family's income. The bill also establishes a framework for free universal preschool for more than 6 million American children ages 3 and 4 years old.

Families who are struggling to afford child care and other necessary expenses can consider borrowing a fixed-rate loan to cover costs. You can compare personal loan interest rates for free on Credible.

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Increased Pell Grants and HBCU funding

Pell Grants are given to undergraduate students who display extreme financial need. Biden's spending plan will increase the maximum Pell Grant amount by $550 for more than 5 million students enrolled in public and private nonprofit colleges. 

Additionally, Build Back Better includes tuition assistance for students at Historically Black Colleges and Universities (HBCUs) with family incomes below $125,000, as well as increased funding to enhance research and development programs at these schools.

However, there is one higher education provision that was cut from Biden's economic package: tuition-free community college. Learn more about how to pay for college, including private student loans, on Credible.

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Electric vehicle tax incentives

In a framework of the bill, the White House has referred to its Build Back Better plan as "the largest effort to combat climate change in American history." Part of this investment in clean energy comes in the form of tax credits for electric vehicles.

The current reconciliation bill could lower the cost of American-made electric vehicles by up to $12,500. It also includes investments in electric vehicle infrastructure that could make charging stations more widely accessible for drivers. 

One thing to note, though: Electric vehicles can still be more expensive to buy and cost more to insure than traditional gas-powered vehicles. To make sure you're getting the lowest possible auto insurance rate for your situation, compare quotes from multiple insurers on Credible.

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Affordable housing provisions

Build Back Better would fund the construction, rehabilitation and improvement of more than 1 million affordable housing units in an effort to boost housing supply and reduce housing costs for renters and homeowners. 

It will also expand housing vouchers to hundreds of thousands of additional families and invest in down payment assistance programs for first-generation homebuyers. All told, the framework includes a $150 billion investment in affordable housing, according to the National Association of Realtors (NAR).

Prospective homebuyers and current homeowners should also consider borrowing a home loan or refinancing their current mortgage now before rates inevitably rise. Visit Credible to compare mortgage offers across multiple lenders at once.

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Medicaid and ACA expansions

While data shows that medical costs are the leading cause of bankruptcy in America, some aspects of Build Back Better are aimed at health care including expanded Medicaid programs and expanded tax credits on insurance premiums.

The White House estimates that the current framework will reduce premiums for more than 9 million Americans by extending the Premium Tax Credit, which is available for eligible individuals who purchased health care coverage through the Affordable Care Act (ACA).

According to the CBPP, Build Back Better would also enhance Medicaid by reducing coverage gaps for the Children's Health Insurance Program (CHIP), adding 12 months of postpartum coverage for pregnant people and improving the quality of community-based housing services for seniors and people with disabilities.

If you're struggling to keep up with mounting medical debt, consider borrowing a debt consolidation loan to repay overdue hospital bills at a low, fixed interest rate. You can learn more about debt consolidation and see if this option is right for you by getting in touch with a knowledgeable loan officer at Credible.

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