Campuses facing changes
When the coronavirus pandemic ends, US colleges wonder if students will come back — and what happens if they do not
Across the country, students are rethinking their choices in a world altered by the pandemic. And universities, concerned about the potential for shrinking enrollment and lost revenue, are making decisions that could profoundly alter the landscape of higher education for years to come.
Lucrative spring sports seasons have been canceled, room and board payments have been refunded, and students at some schools are demanding hefty tuition discounts for what they see as a lost spring term. Other revenue sources like study abroad programs and campus bookstores have dried up, and federal research funding is threatened.
Already, colleges have seen their endowments weakened and worry that fundraising efforts will founder even as many families need more financial aid. They also expect to lose international students, especially from Asia, because of travel restrictions and concerns about studying abroad. Foreign students, usually paying full tuition, represent a significant revenue source from the Ivy League to community colleges.
Some institutions are projecting nine-figure losses for the spring, and many are bracing for an even bigger financial hit in the fall, when some are planning for the possibility of having to continue remote classes.
Administrators anticipate that students grappling with the financial and psychological impacts of the virus could choose to stay closer to home, go to less expensive schools, take a year off or not go to college at all. A higher education trade group has predicted a 15% drop in enrollment nationwide, amounting to a $23 billion revenue loss.
“The combination of fear for health and safety and the economic impact at the same time is one that I haven’t experienced, and I don’t think most university leaders have,” said Kent Syverud, the chancellor of Syracuse University.
“Will families choose to send their kids to college?” he wondered. “Will they choose to not send them or delay them? I just haven’t found anybody who has the best crystal ball to answer it.”
In mid-March, Moody’s Investors Service downgraded the outlook for higher education from stable to negative, predicting that institutions with strong endowments and cash flow, like Harvard or Stanford, would weather the virus, while smaller ones would not.
But even wealthy universities have begun announcing austerity measures. Robert Zimmer, president of the University of Chicago, said in an April 7 email to staff that to buffer its losses, the university would freeze salaries, slow academic hiring, suspend discretionary spending and look for other budget cuts. The University of Pennsylvania announced similar measures, including a hiring freeze and a pause in new capital projects, on Monday.
“I think it’s a greater systemic shock” than either the financial crisis of 2008 or the terrorist attacks of 2001, said Susan Fitzgerald, a Moody’s analyst. “We don’t know how long it’s going to go on or the multiple impacts.”
Colby College, a liberal arts school in Maine, has taken a typical blow. Its endowment, a rainy-day fund that can also serve as a proxy for a college’s financial health, dropped to $770 million earlier this month from $900 million at the end of last year. (It has since partially rebounded to $803 million.) And like many colleges, Colby has had to refund room and board for students asked to leave campus.
It has been able to balance its budget through a hiring freeze and savings on travel and events. But, said David Greene, Colby’s president, “in the long run, that is not a winning strategy.”
Like other administrators, Greene is hoping to reopen with classes on campus, rather than online, even if it means deferring the start of the fall semester.
“Our whole model of education and all of its power comes from close human interaction,” he said.
But he can only delay so long.
“If we had to start in October instead of September, that is not a real problem for us,” he said. “If we had to start in November instead of September, that’s probably not a real problem. What if we started in January and went through August? That would be a very different kind of problem.”
The rest of the bailout amounts to 1% of total university expenses. College presidents say that won’t be enough to protect some institutions from slashing staff and programs, cutting back scholarships or perhaps even going under. They are asking for at least $46.6 billion in aid, to be divided equally between institutions and students, in the next stimulus package.
There are some 4,000 two-year and four-year public and private colleges and universities in the United States, educating roughly 20 million students. They generated about $650 billion in revenues in 2016-17, and in some states, like California, Iowa and Maryland, they are the largest employers, according to the American Council on Education, a trade group.
The council predicted in an April 9 letter to House Speaker Nancy Pelosi, D-Calif., that college enrollment for the next academic year would drop by 15%, including 25% for international students from countries like China who often pay full tuition, helping universities meet their budgets and afford financial aid for Americans.
“The pandemic is striking during the height of the admissions process,” the letter said. “College and university leaders are fully expecting significant, potentially unparalleled, declines in enrollment, both from students who do not come back, and those who will never start.”