The cost of college has long strained many families, and the financial impact of the coronavirus pandemic has heightened stress levels over the past two years.
The federal government has allocated several emergency funding streams to colleges to help students affected by COVID-19, including the Higher Education Emergency Relief Fund under the Aid Act, Relief and the economic security of the coronavirus, or CARES law. But much of that funding, first disbursed in 2020, has been spent.
“Any remaining funding will likely be targeted funding to specific groups of students who may be experiencing economic disruption or hardship,” said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, an organization members for students. support professionals. “But the institutions are free to use these funds.”
Even so, students can still expect to see some relief through increased Pell grants and a temporary pause in student loan repayments. They can also appeal financial aid decisions that do not meet their needs.
The effect of COVID-19 on financial aid
Students must file the Free Application for Federal Student Aid, known as the FAFSA, each year to be considered for federal, state, and institutional financial aid.
The FAFSA uses “previous year” financial information, so applicants filling out the form for the 2022-2023 academic year, for example, will need their 2020 tax return. As many families have suffered layoffs or COVID-related pay cuts, their total income may have looked different two years ago than it does now.
Even with the job losses, some families earned more than usual income in 2020 due to supplemental unemployment benefits or severance pay. If a financial aid offer does not match current needs due to changes in financial circumstances, students can file an appeal.
Regarding appeals, “The Ministry of Education gives us guidelines for us to follow which normally include if there is a job loss, job reduction, salary cut or unexpected medical expenses that are not covered by insurance,” says Joshua North. , director of financial aid at Bridgewater College in Virginia. “When we get those calls, we will search and try to find if there is anything we can do to make an adjustment. It never hurts to ask.”
Those with below-average incomes in 2020 may qualify for more financial assistance this year. This will likely decrease in subsequent years if their income has increased.
“High school students, in particular, who are deciding which college to enroll in should take note if they had these income requirements,” says Shannon Vasconcelos, director of college finance for Bright Horizons College Coach, an education consulting firm. “Do not enroll in college thinking you can afford it based on this year’s financial aid offer, as that is likely to change in future years.”
Federal Pell Grants
President Joe Biden recently signed Congress’ fiscal year 2022 spending bill into law, which includes a $400 increase in the maximum federal Pell Grant to $6,895 for the award year. 2022-2023.
“Every time the maximum Pell grant is increased, it increases the income thresholds that are eligible for it, so it’s not a meaningless increase,” says Draeger. “It will have a big and widespread impact. We were hoping for more, but even with this increase, more people should be eligible for it. And those who are eligible for it will get a bit more next year.”
When adjusted for inflation, tuition and fees were down on average from the previous year for the 2021-2022 school year, according to College Board Fee and Fee Trends. student aid 2021 report. But some experts are predicting a potential increase in tuition fees for 2022-2023 in reaction to the current high inflation rates.
Full-time tuition at Bridgewater, for example, will rise 3.47%, to $38,800, the school reported.
“We try to keep in mind that students should always be able to afford to go to college,” says North. “I know our school board has the best interests of the students in mind, but like everything else, tuition has to go up because we have to keep the lights on and keep paying our staff as well.”
The cost of tuition is ultimately up to each school and is often affected by factors such as enrollment numbers and state budgets.
“Different states and their funding for higher education have been impacted differently by the pandemic,” says Draeger. “Some states have healthier budgets that can support higher education at a greater amount than other states. There are also pretty severe enrollment declines at specific types of institutions that will impact institutional budgets. Whether it affects them this year or the year after, we just aren’t sure yet.”
Suspension of student loan payment
The CARES Act provided relief to student borrowers in March 2020 by temporarily suspending payments and collections on most federal student loans through September 2020. This suspension has been extended several times, including in December 2021, when the U.S. Department of Education announced plans. suspend payments until May 1, 2022.
Experts are predicting another extension, as the Biden administration recently told student loan servicers to suspend sending notifications to borrowers about restarting payments in May.
“If you take out a loan, I wouldn’t go in there expecting a blanket forgiveness,” Draeger says. “(C) his idea of just erasing all or most of the debt is far from decided in Washington, DC”
In the meantime – as another extension is not guaranteed – borrowers should contact their loan officers to ensure that all of their information is up to date, including their address and phone number, and to determine expected monthly payments in order to so they can start budgeting.
Vasconcelos suggests borrowers start setting aside that monthly total in a savings account.
“It helps your budget adjust to having to make that payment,” she says. “And you start accumulating a large amount of money in that savings account that can be used to make a big lump sum payment on your loans.”
But if monthly student loan repayments are unaffordable, borrowers can apply for an income-based repayment plan or an extended repayment plan.
Looking Ahead: FAFSA Simplification Law
Changes to the FAFSA are coming, but won’t take full effect for a few years.
The FAFSA Simplification Act — an overhaul of federal student financial aid that will change how aid is determined and streamline the application process — was due to be implemented in the 2023-24 award year. This has been delayed for a year, although a phased implementation approach is already underway. Questions on the FAFSA regarding drug convictions and Selective Service registration no longer affect eligibility, for example.
“In the coming years, we’ll see the FAFSA even more streamlined and hopefully tied more closely to the IRS, so that when people file their taxes, they’ll have a good idea of the breakdown of the federal grants they’re getting. they will be eligible,” says Draeger.
The FAFSA Simplification Act will also allow incarcerated students to qualify for funding next year.
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