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World Bank Simulation on potential impacts of COVID-19 school closures

By Opportunity EduFinance

Recent major crisis have informed our expectations around the implications of school closures, though not at a global scale. From the Ebola pandemic in West Africa to the 2005 earthquake in Pakistan, we know prolonged school closures lead to lost learning, higher rates of dropout, and negative consequences for children’s future earnings potential. Thanks to a new study published by the World Bank simulating potential impact of COVID-19 on global education, we now have alarming projections to validate these fears. 

Based on 5-months of school closures, the simulation suggests a student could lose:

  • 0.6 years of schooling adjusted for quality, bringing down years of basic schooling from 7.9 to 7.3 years
  • $872 in yearly earnings, or the equivalent of $16,000 (in present value) over a student’s work life
  • A student is likely to lose even more if she is a girl, a person with disabilities, or from a marginalized group

The simulation also finds ‘close to 7 million students from primary up to secondary education could drop out due to the income shock of the pandemic alone.’ That is in addition to the 263 million children already out-of-school before the pandemic, a devastating loss in such a short period.
The report concludes the simulated effects should be used to “inform mitigation, recovery, and ‘building back better’ strategies.” We believe EduFinance has an important role to play in the collective strategies that will be required if we hope to improve the simulation’s predictions for children’s education.In order to pay school fees and purchase educational materials when schools reopen, many families will need access to financial services. A school fee loan could be the difference between a child returning to school versus never returning again. 

"We believe EduFinance has an important role to play in the collective strategies that will be required if we hope to improve the simulation’s predictions for children’s education." 

A wide body of research1 spanning 25 developing countries tells us each additional year of education generates an increase in earnings for a child in the future. Incorporating studies like this, the World Bank simulation finds a child could lose $872 in yearly earnings due to only 5-months of school closures.

Using similar methodology to previous research, EduFinance applied the findings to data on school fee loans and found $56 million worth of additional future annual income for students has been generated through school fee loans and tertiary tuition loans disbursed by our partners to date. Considering the $120 million borrowed, families can recoup 47% of their investment in their child’s education annually for each year a child attends school.
1Peet, Evan & Fink, Günther & Fawzi, Wafaie. (2015). Returns to education in developing countries: Evidence from the living standards and measurement study surveys. Economics of Education Review.

To read EduFinance’s analysis on future earnings potential for children through school fee loans, see our latest Key Insight piece.

To learn more about the World Bank simulation findings, download the full report here.

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