A Year in Review: The Biggest Financial Aid News of 2022

By Maria Carrasco, NASFAA Staff Reporter

Looking back at 2022, some of the biggest news surrounded President Joe Biden's student loan cancellation plan, which would cancel between $10,000 and $20,000 in student loan debt for eligible borrowers. While the plan is currently stalled and faces several legal challenges, many are waiting to see what happens. Additionally, the Biden administration has extended the pause on student loan repayment and interest accrual until six months after court cases over loan cancellation are resolved, or June 30, 2023 — whichever comes first. 

Also front and center in 2022 was FAFSA simplification, with Federal Student Aid (FSA) releasing more guidance, updates in negotiated rulemaking for borrower defense, the 90/10 rule, Prison Education Programs, Public Service Loan Forgiveness (PSLF), and more. The Department of Education (ED) also released more guidance on its Fresh Start initiative.

And as we head into the new year, there will be changes in the 118th Congress, with the House controlled by Republicans and Senate controlled by Democrats. 

Here is a look back at some of the biggest financial aid news from 2022:

Biden's Student Loan Debt Cancellation and Legal Challenges

In late August, President Joe Biden announced days before the student loan repayment pause was set to expire that he is canceling between $10,000 to $20,00 in student loan debt for millions of eligible borrowers and extending the pause on payments and interest accrual for federally-held student loans until Dec. 31, 2022.

In the coming months, the administration announced more details of the student loan cancellation plan, including how borrowers could apply, which type of federal loans were eligible, and the timeline for borrowers to receive the relief. However, several lawsuits arose from the plan, including two that will be heard by the Supreme Court this year. The first lawsuit is from six Republican-led states, and the second is a lawsuit brought by a conservative group, on behalf of two borrowers who were excluded from Biden's relief program.

Ultimately in November, the student loan cancellation plan came to a stop after a federal appeals court barred ED from discharging any debt while a lawsuit was under consideration, formally blocking the administration's debt cancellation plan in a 3-0 decision. Additionally, another federal judge struck down the plan, declaring the action an "unconstitutional exercise of Congress's legislative power."

In response to the legal challenges facing the debt cancellation plan, the Biden administration later announced the pause on payments and interest accrual was extended until this year. Currently, the Supreme Court has set a February date to hear those two cases and the legality of Biden's plan, with a decision expected in June 2023.

FAFSA Simplification 

With implementation of the FAFSA Simplification Act approaching, FSA released more guidance last year on several items for the 2023-24 award year, which includes cost of attendance (COA), professional judgment (PJ), provisional independent student status, and Pell Grant Lifetime Eligibility Used (LEU) restoration on their campuses. FSA announced in the Federal Register it would implement these changes for the 2023-24 award year using authority granted by Congress in the Consolidated Appropriations Act of 2022. 

Additionally, FSA released the 2024-25 Draft Student Aid Index (SAI) and Pell Grant Eligibility Guide, which contains details about the transition from the expected family contribution (EFC) to SAI and the methodology for determining eligibility for federal student aid. FSA said a final version of the guide will be published prior to the start of the 2024-25 processing cycle and additional guidance from ED will be provided as it becomes available.

Negotiated Rulemaking

Some of the biggest news around negotiated rulemaking in 2022 included final rules to borrower defense, income capitalization, total and permanent disability (TPD), and PSLF, among other things.

That includes a single federal standard for borrower defense to repayment, a new definition of aggressive and deceptive recruitment — one of five grounds under which a claim could be filed under the new rules — and reinstating a ban on pre-dispute arbitration and class action waivers. The final rule would provide for five grounds under which a claim could be filed under substantial misrepresentation, substantial omission of fact, breach of contract, aggressive and deceptive recruitment, or a federal or state judgment or departmental adverse action against an institution that could give rise to a borrower defense claim.  

Additionally, under the final rules institutions that receive federal student aid will be banned from requiring borrowers to sign mandatory pre-dispute arbitration agreements or to waive their ability to participate in a class-action lawsuit. Institutions also cannot compel students to go through an internal dispute resolution process before contacting the accreditor or government agency about their complaint.

ED also eliminated all nonstatutory instances of interest capitalization, keeping in line with its other efforts to make student loans less burdensome for borrowers.. 

When it comes to TPD, the department made changes to make it easier for borrowers who qualify to receive TPD, such as automating discharges when possible, and relaxing strict documentation requirements. 

For PSLF, the department codified many of the provisions included in the temporary PSLF waivers in place from October 2021 to October 2022. It also added to the final rules that individuals who work as contractors for qualifying employers can qualify for PSLF in states where a position cannot be filled by a direct employee of the qualifying employer, which has been a long-standing concern for physicians in Texas and California. ED also committed to publishing a subsequent final rule exploring how else they can expand eligibility to individuals working in public service jobs at for-profit organizations.

ED also released final rules on the 90/10 rule, Prison Education Programs, and changes in ownership. And in December, ED released both guidance on the new 90/10 regulations as well as its first annual list of funds to be counted in upcoming 90/10 calculations.

Operation Fresh Start

The department's Fresh Start initiative was first introduced in April along with an extension of the student loan repayment pause to allow “all borrowers with paused loans to receive a ‘fresh start' on repayment by eliminating the impact of delinquency and default and allowing them to reenter repayment in good standing."

ED in August announced updates to Fresh Start, which would enable defaulted borrowers to reenter repayment in good standing and give defaulted borrowers benefits including access to repayment options and federal student aid eligibility, as well as protect borrowers from involuntary collections, restore future rehabilitation eligibility, and remove borrowers' default status from federal credit reporting features.

According to ED, eligible loans will include defaulted William D. Ford Federal Direct Loan (Direct Loan) Program loans, defaulted Federal Family Education Loan (FFEL) Program loans (both ED-held and commercial-held), and defaulted ED-held Perkins Loans. Additionally, eligible loans must have entered default status prior to the start of the repayment pause on March 13, 2020.

Midterm Elections

In the midterm elections last year, Republicans won control of the House and Democrats maintained control of the Senate. Take a look through what higher education legislation NASFAA will be looking at this year, how the midterms impacted higher education leadership, or listen to our “Off The Cuff” episode with Lanae Erickson, senior vice president for social policy & politics at Third Way, on the impact of the midterm elections. 

Fiscal Year 2023 Spending Package

In late December, congressional appropriators unveiled their $1.7 trillion package that would fund the government for the remainder of the fiscal year (FY) 2023 budget cycle. The bill would allocate $79.6 billion to ED and its programs, a $3.2 billion boost from the FY 2022 enacted level. The spending package contains $24.6 billion for federal student aid programs, including a $500 increase to the maximum Pell Grant award, bringing the total to $7,395 for the 2023-24 award year. Congressional leaders say this Pell Grant increase will be the largest increase in the maximum award since the 2009-10 award year, and further build off last year's $400 increase. President Joe Biden  formally signed the year-end omnibus package into law on Dec. 29, 2022. 

 

Publication Date: 1/3/2023


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