2022 – The Year in Review or All About Federal Student Loans

Melissa Maichle .

2022 brought us a little closer to what life was like before COVID-19 changed the world. And although it may feel ‘normal’, we’re still processing under a number of exceptions and waivers instituted in 2020 since the COVID-19 National Emergency is on-going. As of this writing, it is set to expire on March 1, 2023. However, there have been major changes in the world of federal student loans this year — some temporary, some permanent — that are worth revisiting.

In March 2020, the CARES Act ‘paused’ repayment and temporarily reduced interest rates to 0% for loans held by the Department of Education (ED). The expiration date has now been extended for the seventh time to January 1, 2023. What does this mean? A lot of people are going to have trouble ‘fitting’ this new payment into their budget. Keep in mind, your 2020 graduates have not had to make a single federal student loan payment! Read our August Blog for tips you can share with all alumni that may be getting ready to start repaying their loans.

Just because payments were paused it doesn’t mean all federal student loan activity stopped. On October 6, 2021 ED announced it would waive a number of requirements in the Public Service Loan Forgiveness (PSLF) program to allow eligible borrowers to apply payments not previously considered ‘qualified’ towards the required 120. The temporary waiver program, which ended on October 31, helped about 236,000 borrowers who should have been eligible to receive loan forgiveness but were denied due to the confusion over the definitions of qualifying loans, payments, employment, etc. On October 26, ED announced permanent changes that will go into effect on July 1, 2023 and will make it easier for eligible borrowers to get the promised relief.

Speaking of relief, in April, ED announced the Fresh Start program for defaulted borrowers. The benefits include allowing borrowers who defaulted on federal loans prior to the repayment pause to receive federal aid (under certain conditions and when properly documented, of course!) and/or enter an income-driven repayment plan to attain good standing and the benefits that go along with it.

In our blog, Federal Debt Relief Program: Questions and Answers, we took a deep dive into the program announced by the Biden administration. As promised the application, for those who needed to complete one, became available in October. The program hit a bump in the road in late October, however, as the 8th Circuit Court of Appeals put a temporary hold on processing loan forgiveness in response to a law suit filed by six states. The Biden administration remains optimistic that this set back is temporary since this very same law suit was thrown out of a lower court citing that the plaintiffs lack standing.

Finally, ED released updated regulations for Borrower Defense to Repayment discharges on November 1 that will go into effect on July 1, 2023. The Department has been processing targeted, group discharges for borrowers that attended a number of now-closed colleges and is providing updates on this web page.

This is an awful lot of activity around a program that is ‘on pause’! All these changes are confusing for us, so imagine how our students feel! Student loan exit counseling is going to be more important than ever in 2023, so if you need guidance or additional staff, let us help! Email info@heag.us or visit our website, www.heag.us, for more information.

Sources: https://padmin.com/blog/president-biden-extends-the-national-emergency-through-february-2023/