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The Federal Reserve Bank of Richmond Econ Focus

The complete Second Quarter 2022 issue will be published at a later date. In the meantime, here is one of the articles from the issue.

Econ Focus

Second Quarter 2022

Policy Update

Responding to Pandemic Learning Loss

The end of this school year marks just over two years since the onset of the COVID-19 pandemic. In that time, students and educators across the country have had to adapt continually to new styles of learning and education delivery. Many students have found success in virtual and hybrid environments, while others have had a more difficult time. This has led to a loss in learning compared to where students would normally have been based on their age and development stage. This loss has the potential to set back these students for years to come, affecting not only their development, but also the economy.

Figuring out the scale of the loss is a challenge in itself.

"We don't currently have a complete idea of the size of the learning loss and may never know the full picture since some students have graduated and others have moved or transitioned out of public schools," says Laura Ullrich, regional economist for the Richmond Fed's Charlotte branch, who has been studying education and learning loss during COVID-19.

In her research, Ullrich has found the data from across the region to be inconsistent as most states didn't conduct traditional standardized testing in 2020 and many offered opt-out options in 2021. Most school systems are back in person and conducting regular testing this year, so educators and researchers should have a more complete idea of the challenge facing students by the fall.

But there are some initial findings from around the country that can give policymakers an idea of where to begin targeting resources to help students catch up.

Ullrich's research has found that students have experienced learning loss across the board, with students from disadvantaged backgrounds and poorer districts experiencing the greatest loss. Overall, she says, the data have shown that the loss was greatest among students learning in virtual settings.

"The loss in math skills appears to be more significant than in reading. But this doesn't capture the whole picture," says Ullrich. "There are reports that kindergarten students are behind on fine motor skills – like how to use a pencil – and on developing their social and behavioral skills. Students who rely on the school system to receive speech therapy and other interventions are also behind. High school dropout rates have risen, and college enrollment is down, meaning that many older students have left the educational system all together."

Governments and school systems have been responding with a variety of tactics. At the federal level, the largest pool of funding that targets this problem came through the American Rescue Plan, a $1.9 trillion pandemic recovery bill signed into law in 2021. In the law, Congress sent approximately $122 billion to states and local governments to help schools safely reopen for in-person instruction and to address the impacts of COVID-19 on students, including dealing with learning loss.

These funds are routed to states through existing formula grants, and states are obligated to send 90 percent of those funds to local educational agencies, which include charter schools in many states. State governments and local school districts are required to spend a portion of this funding, 20 percent for local entities, on mitigating learning loss for students.

School districts and states in the Fifth District have worked to adopt plans that best fit their students' needs. In Louisa County, Va., the school system has ramped up efforts to get students into summer school and is using its federal funds to bring in additional instructors for math and literacy. Some schools in North Carolina are constructing additional facilities to reduce class size and funding teacher bonuses to help retain teachers at a time when many are experiencing burnout and leaving the profession.

South Carolina has launched an effort in partnership with its technical colleges and universities to bring in postsecondary students as summer teaching interns, a plan that state leaders hope will also increase the size of their pipeline for new K-12 teaching talent in the long term. Maryland has launched a flexible grant initiative called "Maryland Leads" to help local schools implement a range of strategies to retain staff, accelerate learning recovery, and provide targeted support for historically underserved student populations.

Education leaders are cautiously optimistic that these resources and efforts will help students make up for lost time. The question remains, however, whether those efforts will be enough. The federal funds from the American Rescue Plan, for example, are only short-term resources. The effects of education loss on the economy are expected to linger for years to come.

"If we can't make a sustained effort to close the learning gaps, it's likely that you'll be able to see the consequences reflected in the lifetime earnings of these students," Ullrich observes. "Overall, if these problems aren't addressed, this will lead to less economic growth. At a macro level it might not be that noticeable, but at the micro and individual levels the negative impacts could be significant.

"The educational consequences of COVID, and the effects of our response, are going to be something that we'll be studying for years to come."

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