This week Brendan Bell and Cody Christensen take over Straight Up to share some reflections on what it’s like to be starting graduate school this coronavirus fall. Both have just stepped away from hugely successful turns on my AEI Education team. Brendan was a high school social studies teacher before serving as my program manager and is now starting up as a law student at the University of Pennsylvania. After three years with AEI’s Center on Higher Education Reform, Cody is entering the Ph.D. program in education policy at Vanderbilt. Drawing on their experience in ed. policy, Cody and Brendan will talk about returning to school amidst a global pandemic and the various issues it raises.
For all of the negative ramifications the pandemic has had on America’s higher education system, there is at least one piece of good news for college students: Lawmakers have greatly expanded federal student-aid programs. And in the years ahead, it seems likely that such generosity will increase. In fact, from a financial standpoint, now might be the best possible time for students to go to college.
Consider the sequence of events that have transpired since the beginning of the pandemic. In late-March, Congress passed the CARES Act that suspended payments on federal student loans and waived all interest through the end of September. Earlier this month, President Trump signed an executive order to extend these policies through at least the end of the year. Some observers have speculated that policymakers will continue to kick the can down the road using executive action, potentially waiving interest indefinitely.
How much will this save borrowers? Our back-of-the-envelope calculation using data from the Department of Education shows that first-year undergraduate borrowers can expect to save an average of $500 if interest is waived for an entire year. A typical fourth-year undergraduate borrower can expect to save more—approximately $2,000, on average—from a year of waived interest.
But interest waivers are far from the only new financial benefit available this fall. A number of elite universities—including Johns Hopkins, Georgetown, Princeton, and others— modified their fall plans to limit in-person learning but offered tuition discounts to students in return. These discounts typically ranged from 10 percent to 15 percent off the overall price, but some universities (including less-selective colleges) offered tuition discounts in excess of 30 percent or more. Other colleges waived or refunded student-activity fees, which currently average $1,885 per year at public four-year colleges.
That’s not all. Policymakers recently raised the maximum Pell Grant, expanded the generosity of 529 college-savings accounts, and increased emergency financial aid to students. While colleges face extreme budget crunches due to cuts in state funding, reduced tuition revenue, and stalled auxiliary services, students themselves have access to many federal financial-aid programs that collectively aim to keep college affordability in reach.
Of course, none of this suggests that all students will be financially better off attending college this year. The economic downturn from COVID-19 means some families have fewer resources to pay for higher education. Students who have lost their jobs or are struggling to find work will clearly need extra supports. Individuals with pre-existing medical conditions (or those that have family members with pre-existing conditions) may experience greater difficulties financing their studies. And some students attend institutions that actually increased tuition prices this year.
But even for these individuals, things appear to be looking up. Trump has demonstrated a clear willingness to use executive orders to expand federal student-aid programs—even without the support of Congress. Joe Biden has proposed cutting student-loan payments in half through the federal government’s income-based repayment program. Biden also supports progressive plans to cancel $10,000 in federal student debt for every borrower. Regardless of who is president next year, it seems likely that students should expect more support from the federal government in 2021.
Setting aside questions of whether these are wise or well-targeted policies, one this is clear: Students have reason for optimism. Students now have access to expanded federal financial-aid programs that will make college more affordable than it otherwise would be under normal circumstances. While the online format of the fall might leave much to be desired, the expansion in federal-aid policies does not.
— Cody & Brendan
The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.