Well, another year has come to an end, and we have made a pretty good start on another. Let’s say good-bye to the difficult year of 2021, and hope that 2022 has much better news for us all. At this time, we usually try to focus and center ourselves by looking back to see where we have come from, and looking ahead to set our sights on where we are going. Here are some big events that are altering the world of financial aid.
What Happened in Financial Aid in 2021?
The overwhelming news, as with just about everything else, was COVID. It upset everything from college tours to college applications. Major events included:
- College Testing: Many SAT and ACT administration sites were suddenly closed due to COVID restrictions. As a result, many juniors were not able to take the necessary college admission tests. Admissions offices made moves to waive testing requirements, and there are some indicators this may be a bigger trend in the years ahead.
- Student Loan Payments: To alleviate financial hardship for student loan borrowers, the Department of Education put a hold on payments for millions of federal student loan borrowers, and set interest rates at 0%. After several extensions throughout the pandemic, payments are now set to resume after May 1, 2022. In October, ED also announced major updates to the PSLF program, making it easier for borrowers to receive loan forgiveness in exchange for public service.
- FAFSA Changes: After years of concern about the difficulty of the process, ED has affirmed its commitment to major FAFSA simplification; however, progress has been exceedingly slow. The current FAFSA for the 2022-23 academic year contained only minor revisions.
What is Ahead for Financial Aid in 2022?
Changes in the works regarding financial aid include:
- FAFSA: No big changes have been announced for the application itself as of yet. There is ongoing discussion about reworking the IRS Data Retrieval Tool that is used to automatically populate your application with data from your last federal income tax return.
- EFC: The one big item currently on the table is replacing the expected family contribution (EFC). This amount appears on the Student Aid Report, and shows what the family is expected to contribute to a student’s education. It also correlates to anticipated federal aid. The plan is to replace the EFC with a Student Aid Index (SAI). Although the calculations are similar, the SAI could potentially be negative. This would make it easier for colleges to identify students with the greatest financial need.
- Pell Grants: Work is currently in progress to make more students eligible for Pell Grants, which is free money that doesn’t need to be repaid. There is a movement underway to substantially increase, possibly even double, the size of the Pell Grant, but that has not yet been implemented into law.
- Student Loans: In response to continuing inflation, the feds usually tend to raise interest rates. This could affect the rates charged on federal student loans. These rates are traditionally evaluated in May, for July through June of the following year. Although there has been widespread talk of increased student loan forgiveness, no plans have yet been put into action.
It is highly likely that we will see a lot of changes in financial aid in 2022. As always, CFAA will keep you updated on current events as they occur, and give you insights on how they might affect your own college planning schedules. Please contact us with any questions you might have about your personal situation.
Good luck with all your college planning in 2022! Remember that CFAA helps with every step of the financial aid process, from completing the FAFSA and completing the CSS Profile to comparing financial aid offers and making the best choice for your family. Set up a CFAA new client free strategy session or a 15 Minute Power Chat to learn more about finding ways to pay for college. To get the latest financial aid information and college application to-do lists, look for my weekly JustAskJodi emails and check out my monthly CFAA e-newsletter.