Report: Pandemic Exacerbates Inequities Present in Financial Aid, With Particular Impact on Low-Income Students

By Owen Daugherty, NASFAA Staff Reporter

A new report, published last week by public policy-focused think tank Third Way, examined the ways in which the ongoing pandemic caused by the novel coronavirus has exacerbated inequities that already exist within the financial aid system, finding that the inequities disproportionately impact students of color and low-income students.

“Acknowledging and addressing these inequities and the factors that contribute to them— including barriers to college affordability and disparities in student debt repayment—is imperative in a moment of crisis like the current pandemic, as the economic downturn due to COVID-19 will exacerbate the challenges faced by students and borrowers over both the short and long term,” writes Dominique J. Baker, assistant professor of Education Policy at Southern Methodist University, in the report.

One significant obstacle that already exists in the financial aid system that has intensified due to the pandemic is the cumbersome process through which students apply for federal financial aid.

Data analyzed by the National College Attainment Network (NCAN), previously covered by NASFAA and cited in this report, has shown that those from lower income backgrounds are less likely to file a FAFSA, and the pandemic has only made it worse.

“The data also showed a decrease in the number of high school students filing the FAFSA for the first time—signaling concern about whether students will choose to enroll in the fall and how students will navigate financing college through degree completion if they do,” Baker writes.

The pandemic is also impacting the college affordability issue and the growing intergenerational wealth gap, the report notes, with non-tuition costs rising in recent years and taking up a larger portion of students’ expenses.

For policy interventions to be successful and have their desired impact, they must fully grasp the economic stability brought to millions of families as a result of the pandemic and how it impacts students’ ability to succeed, according to the report.

Notably, the report identifies that essential workers without telework options and those who have lost their jobs are more likely to be individuals of color have fewer years of education.

“This is especially concerning as prior research has found that the children of parents who lose their jobs are less likely to attend college. These individuals and their families may be the ones who need the most help paying for college and are among those who could most benefit from the economic returns to earning a degree,” Baker writes.

Additionally, the disparities already present in student loan debt and repayment among borrowers is being heightened by the pandemic.

There are already mountains of evidence at both the state and federal levels that some groups of students are more likely to struggle with paying down their student loans.

“Disproportionate job loss along racial, income, and education lines will affect the ability of certain individuals to repay,” Baker writes. “This exacerbates long-standing structural challenges to repayment for students who do not complete a degree, who attend a for-profit institution, or who are Black.”

To combat these inequities, the report lays out several policy recommendations for moving forward. Among them are calls for extending federal loan protections that were enacted under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, simplifying the FAFSA with accommodations specific for students who have been impacted by the pandemic, and directing the necessary funding to agencies that are studying the impacts of the pandemic on higher education and students.

“The effects of this crisis on higher education will be felt for decades,” Baker concludes. “The future of postsecondary education, public health and safety, and long-term economic recovery in the United States rely on collecting data on the current moment and analyzing it to make informed decisions moving forward.”


Publication Date: 7/20/2020

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