What to Expect When Paying for College in 2022

The cost of college has long put a strain on many families, and the coronavirus pandemic’s financial impact has heightened stress levels over the last two years.

The federal government allocated several emergency funding streams to colleges to assist students affected by COVID-19, including the Higher Education Emergency Relief Fund under the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act. But much of that funding, first disbursed in 2020, has been spent.

“Any funding that’s left is likely going to be targeted funding to specific sets of students who might be experiencing disruptions or economic hardships,” says Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators, a membership organization for student financial assistance professionals. “But institutions have full discretion on how they utilize those funds.”

Even so, students can still expect to see some relief through an increase in Pell Grants and a temporary pause on student loan payments. They can also appeal financial aid decisions that don’t meet their needs.

[READ 10 Financial Aid Tips for College Students.]

COVID-19’s Effect on Financial Aid

Students should 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 financial information from the “prior prior year,” so applicants completing the form for the 2022-2023 academic year, for example, will need their 2020 tax return. As many families experienced COVID-related layoffs or wage cuts, their total income may have looked different two years ago than it does now.

Even with job losses, some families earned higher than typical income in 2020 due to extra unemployment benefits or severance packages. If a financial aid offer doesn’t match current need due to changes in financial circumstances, students can file an appeal.

Regarding appeals, “the Department of Education gives us guidelines that we have to follow and that normally includes if there’s a loss of employment, job reduction, a decrease in pay or unexpected medical expenses that aren’t covered by insurance,” says Joshua North, director of financial aid at Bridgewater College in Virginia. “When we get those appeals, we’ll look and try to find if there’s anything that we can do to make an adjustment. It never hurts to ask.”

Those who had lower than typical income in 2020 may qualify for more financial aid this year. That will likely go down in subsequent years if their income has increased.

“High school seniors, especially, who are making a decision about what college to enroll in need to take note if they did have these income circumstances,” says Shannon Vasconcelos, director of college finance for Bright Horizons College Coach, an education consulting company. “Don’t enroll in a college thinking you can afford it based on this year’s financial aid offer, as it’s likely to change in future years.”

Federal Pell Grants

President Joe Biden recently signed Congress’ 2022 fiscal year spending bill, which includes a $400 increase to the maximum federal Pell Grant award, bringing it up to $6,895 for the 2022-2023 award year.

“Every time the maximum Pell Grant is increased, it expands the income thresholds that qualify for it, so it’s not a meaningless increase,” Draeger says. “It’ll have a large and widespread impact. We were hoping for more, but even with this increase more people should qualify for it. And those who qualify for it will qualify for a little more next year.”

Tuition Costs

When adjusted for inflation, tuition and fees declined on average from the year prior for the 2021-2022 school year, according to the College Board’s Trends in College Pricing and Student Aid 2021 report. But some experts predict a potential rise in tuition costs for 2022-2023 in reaction to current high inflation rates.

Full-time tuition at Bridgewater, for example, will increase by 3.47%, to $38,800, the school reported.

“We do try to keep in mind that students still have to be able to afford college,” North says. “I know our board has the students’ best interest in mind, but just like everything else, tuition does have to go up because we have to keep the lights on and keep paying our staff, too.”

The cost of tuition ultimately depends on each school and often is affected by factors such as enrollment numbers and state budgets.

“Different states and their appropriations for higher education were impacted differently by the pandemic,” Draeger says. “Some states have healthier budgets that can support higher education at a higher amount than other states. There’s also some pretty severe enrollment declines at specific types of institutions that will impact institutional budgets. Whether that will impact them this year or the following year, we are just not sure yet.”

[Read: What You Need to Know About College Tuition Costs.]

Student Loan Payment Pause

The CARES Act provided relief to student loan borrowers in March 2020 by temporarily pausing payments and collections on most federal student loans through September 2020. That suspension has been extended several times, including most recently in December 2021, when the U.S. Department of Education announced plans to halt payments until May 1, 2022.

Experts predict another extension, as the Biden administration recently told student loan servicers to hold off on sending notifications to borrowers about restarting payments in May.

“If you’re taking out a loan, I wouldn’t go into it expecting widespread forgiveness,” Draeger says. “(T)his idea of just wiping away all debt or a big portion of the debt is far from decided in Washington, D.C.”

In the meantime — as another extension is not guaranteed — borrowers should contact their loan servicers to make sure all their information is up to date, including their address and phone number, and determine expected monthly payments so they can start budgeting.

Vasconcelos suggests borrowers start setting aside that monthly total in a savings account.

“That helps your budget adjust to having to make that payment,” she says. “And you start accumulating a chunk 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 payments are unaffordable, borrowers can request an income-driven or an extended repayment plan.

[Read: 5 Student Loan Questions You Shouldn’t Be Afraid to Ask]

Looking Ahead: FAFSA Simplification Act

Changes to the FAFSA are coming, but won’t take full effect for a few years.

The FAFSA Simplification Act — an overhaul to federal student financial aid that will change how aid is determined and streamline the application process — was expected to be implemented during the 2023-2024 award year. That has been delayed by a year, though a phased implementation approach is already underway. Questions on the FAFSA about drug convictions and Selective Service registration no longer affect eligibility, for instance.

“In future years, we will see the FAFSA even further simplified and hopefully tied more closely to the IRS so that when people are completing their taxes, they’ll have a good idea breakdown of how much federal grant aid they will qualify for,” Draeger says.

The FAFSA Simplification Act will also reallow incarcerated students to qualify for funding next year.

Trying to fund your education? Get tips and more in the U.S. News Paying for College center.

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What to Expect When Paying for College in 2022 originally appeared on usnews.com

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