Illinois and 7 other states ask feds to freeze interest on loans used to pay unemployment benefits during pandemic

By Dan Petrella — Chicago Tribune 

Illinois and seven other states are asking the federal government to reinstate a freeze on interest that’s piling up on money they borrowed to pay unemployment benefits during the early phase of the coronavirus pandemic.

Illinois owes nearly $4.5 billion to the federal unemployment trust fund, which has been accumulating interest at a rate of 2.27% since Sept. 6. As of Friday, the state owed $19.6 million in interest, a tab that would grow to more than $100 million if the debt is left unpaid for a year, according to Comptroller Susana Mendoza’s office.

“Taxpayers should not be on the hook for interest just because the pandemic is lasting longer than projected,” Mendoza said in a statement. “States are wrestling with how best to replenish their COVID-depleted unemployment funds and they should not have to do that with the meter running.”

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