Giving Compass' Take:
- Andre M. Perry and Anthony Barr propose that cancellation of student debt could decrease racial inequality and increase overall college attainment.
- Why might student debt prevent some Americans from enrolling in or graduating from post-secondary programs? How can funders support policy and organizations that work to lower barriers to college access?
- Read about race and student debt.
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Before the COVID-19 pandemic, many city and state leaders set lofty college attainment goals in preparation for the “future of work”—a phrase that describes the potential impact artificial intelligence (AI) and robotics will have on jobs, skills, and wages. For instance, in February 2019, Gov. Gretchen Whitmer of Michigan set a state goal to increase the percentage of adults over age 25 with a college degree or high-quality certificate from roughly 44% to 60% by 2030.
However, many of these leaders are experiencing significant setbacks as colleges and universities faced overall declines in 2020 enrollment due to COVID-19—down 2.5% from the prior year (a loss of about 400,000 students), according to the National Student Clearinghouse Research Center. Community colleges are seeing the sharpest declines, which is sobering considering how vital these institutions are for disadvantaged students.
A new report from the Detroit Regional Chamber found that the area’s share of high school graduates who did not enroll in any postsecondary education in 2018 increased to 32% (and to nearly 50% in the city of Detroit) from the previous five years. These trends foreshadowed a pandemic dip of students who completed the Free Application for Federal Student Aid (FAFSA). The Chamber reported that applications across the state declined 16% in 2020-21 academic year from the prior year. In the Detroit region, 23,297 students did not complete their FAFSA in the 2019-20 school year, leaving $224 million in federal aid unclaimed.
College enrollments typically increase during economic downturns, as workers try to reskill themselves for jobs that are in greater demand. For example, between 2007 and 2010, postsecondary institutions saw a 16% jump in enrollments due to the Great Recession. This pattern has held true for every recession going back to the 1960s. But the COVID-19 recession may be different—many families and individuals are prioritizing their household budgets, and for low-income students, taking out student loans to prepare for an uncertain job market isn’t practical.
Among the many existing structural problems in our economy that the pandemic has exposed and heightened are the barriers that curb college degree attainment among disenfranchised groups. One of those is student debt.
A new Brookings report shows student debt cancellation could be a powerful tool in the Biden’s administration’s effort to address racial inequality in the country. We found that debt cancellation has the broad effect of reducing the racial wealth gap, and that the more debt is cancelled, the greater the racial wealth gap is reduced.
In lieu of a comprehensive federal policy, regions and cities should strongly consider debt cancellation as a way to increase college degree attainment rates for Black students and remove the albatross of student loans.
Read the full article about college attainment by Andre M. Perry and Anthony Barr at Brookings.