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New CRL Report: Higher Education Needs a System Reboot in the States to Confront Dual Crises of COVID and Economic Collapse

Thursday, November 12, 2020
Whitney Barkley-Denney

DURHAM, N.C. – Today, the Center for Responsible Lending released a report outlining higher education policy recommendations that states should enact to avoid repeating the unequal recovery of 2010, as our nation deals with the dual crises of an out-of-control pandemic and the resulting economic collapse.

The CRL report, “System Reboot: Challenges & Opportunities at the State Level for Higher Education During COVID-19 & Beyond,” recommends states take steps in the following areas to protect students most impacted by disruptions to their college education and the burdens of unmanageable debt:

  • States should ensure student loan borrowers can successfully repay their debt by reforming the student loan servicing practices that have misled or defrauded borrowers.
  • States should increase oversight of unscrupulous for-profit colleges as enrollment increases for schools that provide no value and add to debt burdens.
  • States should protect students whose schools close by ensuring close-out plans, requiring refunds, and facilitating the ability of students to obtain transcripts.

“The decisions made by state governments in this moment will have long-lasting impacts, especially on low-income communities and communities of color,” said CRL Senior Policy Counsel Whitney Barkley-Denney, who co-authored the report. “We need a major reboot of our systems to ensure we come out of this with a clear path to leaving a legacy of justice, growth and long-term prosperity.”

The report also recommends that states monitor the quality of online education as COVID-19 upends brick-and-mortar higher education, and that policymakers be wary of alternative education financing proposed by entities that may wish to avoid the robust consumer protections that are essential to addressing the student debt crisis.

At the federal level, student debt cancellation could jumpstart the economy and expand access to wealth-building, homeownership, and family formation. It is imperative that President-elect Biden deliver on his campaign promise and immediately change the lives of millions of American families via an executive order to cancel student loan debt.

“States should make higher education funding a priority, and should protect students and borrowers by monitoring bad actors and avoiding alternatives that offer false promise,” said CRL Senior Policy and Government Affairs Associate Cheye-Ann Corona, who co-authored the report. “In this time of racial reckoning, the burdens of student debt on communities of color must be part of the equation as we take on systemic injustice. As a nation, we must make these necessary and achievable steps to create a healthy and equitable system that makes real the promise of higher education as a pathway to the American dream.”

States drastically cut support for higher education after the 2008 recession, which caused sharp tuition increases that have never returned to normal. Decreases in state aid, foreclosures, job loss, and explosive enrollment in for-profit colleges have created a debt burden that continues to suppress economic activity, as families are unable to keep up with student debt payments, purchase homes or start businesses.

Further budget cuts and disruption in higher education during COVID-19 are exacerbating the problems. The burdens weigh most heavily on students whose families do not have college savings, and must either take on heavy debt or forego a college education. Black students tend to have to borrow more, and have more trouble managing that debt later.


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