Policy proposal to fight Covid-19 inequalities in student debt and financial aid

Inequity is a problem that plagues almost every type of system imaginable. The Covid-19 has drawn the curtain and exposed many of these inequalities. American higher education is no exception. A new report highlights how Covid-19 has exacerbated inequalities related to student debt and financial aid.

In one note from Third way, Dominique baker, an assistant professor of education policy at Southern Methodist University, explains how inequalities in higher education related to student financial aid are intensified by the coronavirus pandemic. This memo is part of a new Third Way series, called Academix result.

In this note, Baker presents three policy recommendations to improve the inequalities in financial aid and student debt that are made worse by Covid-19.

Improve demand for financial assistance.

Applying for federal financial aid is already difficult, especially for low-income students. the Free Application for Federal Student Aid (FAFSA) is heavy and complex, which is why low-income students are less likely to complete it. The Covid-19 has made this problem worse in many ways.

Since the app relies on income data for the last year before the pandemic, many students ‘information will not reflect their families’ current financial situation. Baker has a simple solution.

Congress and the Department of Education can create a national update for the FAFSA and ask students a simple series of questions to add more timely information. By adding questions as simple as: “Have you or a member of your family lost your job or been on leave for a week or more since January 2020?” Students can report that their situation has changed.

Baker said the department should also communicate with students about getting their FAFSA and explain their ability to appeal for their financial aid if needed. Clear information and communication are essential to ensure that students get the financial help they need. Baker also said the ministry should reinstate previous guidelines that give schools more leeway in handling appeals.

To expand student loan relief.

Due to the current economic insecurity, Baker said Congress should expand student loan relief under the CARES Act. the CARES law suspended student loan payments and interest until September, but more relief will be needed as the economy tries to recover.

Job losses from the pandemic have been disproportionate among people of color and those with fewer years of schooling. This is especially true for those who have enrolled in higher education but have not completed. They are likely to be in debt, but without a degree, they have never seen an increase in their income and are most likely to struggle even before the pandemic.

Until a vaccine is developed and widely distributed, it will be difficult for the economy to fully recover. An extension of the repayment suspension will provide significant relief to borrowers who are currently struggling as they try to provide only basic necessities. Baker also stressed that the ministry must plan to communicate to borrowers when the payment break is over.

Fund agencies that study higher education.

Baker’s latest recommendation may seem small, but its importance is huge. She said funding should be maintained for statistical agencies, like the National Center for Education Statistics (NCES), which study education. NCES produces important surveys that help policy makers and researchers understand trends in higher education. This will be even more important in understanding the impact of the pandemic on higher education.

Infection rates are currently increasing in many parts of the country, making a rapid economic recovery even less likely. These ideas are reasonable, simple and essential. Congress could easily include these ideas in the next coronavirus relief program, and it would make a big difference in the lives of American students and borrowers.


Related readings:

What the coronavirus boost means for your student loans

Pelosi Offers $ 1,200 Stimulus Checks, $ 10,000 Student Loan Discount, and College Money


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