How to Make Higher Education Loans More Equitable


The Education Trust, a nonprofit education think tank, published a report in December detailing how students of color can be left behind in the application process for federal loan assistance. For many underrepresented students, these loans are a critical necessity to access a college education. The true percentage of just how many students are affected remains a mystery because the U.S. Department of Education doesn’t collect data on race.

An independent Brookings Institute study found that 48% of Black graduates owed “more on their federal undergraduate loans after four years than they did at graduation, compared to just 17 percent of white graduates.”  

The loans in question are called the Free Application for Federal Student Aid (FAFSA). Students and/or their parents must fill out the application to get government grants, scholarships and loans for college. According to a recent Chronicle of Higher Education article about the FAFSA report, research analysts show that the current system can “discriminate against first-generation low-income and minority students,” because they don’t know how to leverage the tools and resources available.

The Chronicle lists systemic challenges and suggestions presented in the report titled, “Using Professional Judgment in Financial Aid to Advance Racial Justice & Equity.” The issues that would-be FAFSA applicants face include  transparency, inflexibility and education outreach.

Helping First-Generation Students Understand the System

The New York Lotto uses the catchphrase, “You can’t win if you don’t play.” But you can’t play any game if you don’t know the rules or where to get your ticket. That’s the predicament many students face who are the first in their families to try to get a college education. There may be signs hanging in the guidance office or a banner ad on a free online SAT prep webpage telling students to sign up for the FAFSA, but how to navigate a myriad of financial aid options is on another level, and often far beyond common understanding. This creates an extra barrier for students with fewer resources, such as a parent to interpret financial paperwork and answer application questions or the ability to pay someone to do this for them.

The report’s lead researcher, a first generation college student, did not know as an undergraduate that FAFSA’s financial-aid decisions could be appealed. The application requests that students submit are vetted by and decided by FAFSA  staff who can use their “professional judgement,” according to the report, to analyse a student’s claim and adjust their decision to account for job losses or personal tragedies.

Professional judgement appeals are especially relevant this year. Because FAFSA staff will be looking at tax data filed last January, for the previous year, 2018. This will not take into account the historic job losses of 2020, an extremely tumultuous year with students of color and their families bearing the brunt of health and economic hardships.

FAFSA application checklists and tips to explain the process are available for applicants at Two things to remember: 

  1. After you apply, check on your application to be sure it gets processed
  2. Final judgements are not always final. You can appeal the decision; this is your opportunity to explain your current financial situation.

Helping Students Help Themselves

The report offers college administrators solutions which include greater transparency and communication outreach. For example, if demographics data were recorded or logged regarding FAFSA judgments, the college or university would know which students make judgment requests and which do not. As a result, schools would know where information gaps exist and begin to target them. And, this need not burden administration. The report states that peer mentoring — students mentoring fellow students — could be a program feature to help break down communication barriers.

The Education Trust report also recommended representative student advisory groups to help administrators understand students’ needs and how best to reach out to them. The students who could benefit most from challenging FAFSA judgements are those least likely to know they don’t necessarily have to take no for an answer.

Loan Alternatives to Reverse the Minority Debt Gap

Where research leaves off innovators like Robert F. Smith are stepping up. The systemic inequities that stem from historic discrimination and play out in the student loan system are part of a cycle Smith and others are attempting to dismantle. Closing the racial debt gap brought about by the lack of generational wealth in Black and minority communities has played a significant part in Smith’s recent philanthropic plans.

The Student Freedom Initiative, a new nonprofit program Smith helped launch with a personal gift of $50 million, will begin helping STEM juniors and seniors at a number of HBUCs this fall. The program is a loan alternative, designed to keep Black students on track to fulfill career and personal goals without the debt burdens that often hold them back.

Learn more about the ongoing work for equity and improved representation: