Some Thoughts on the Coronavirus Crisis and Higher Education

Today marks my 41st day of social distancing, and I have settled into a new normal of lots of phone and video meetings with students and colleagues, teaching via Zoom, and taking questions from a whole bunch of people about what the coronavirus crisis means for higher education. (Finishing this paragraph got put on hold to respond to some questions, but that’s the way things go right now. It’s an important part of my job!)

In my last blog post five weeks ago, I tossed out the idea of suspending federal student loan payments for a period of time. Since then, the CARES Act gave most federal borrowers a reprieve on their payments through September 30 along with providing emergency aid to students and colleges. The formula heavily favors full-time students and the Department of Education’s follow-up guidance excludes international students and makes it hard for students who did not file the FAFSA to get funds right now, but it at least helps many students and colleges in the short run.

Here are some of my thoughts about what the coronavirus crisis means for higher education, based in part by some of the frequently asked questions that I receive.

(1) When will higher ed reopen? I’m not that kind of doctor. Most colleges are planning for summer classes to be held online, and a number of colleges have started to announce plans for the fall semester. But behind all of the public announcements, colleges are preparing for situations ranging from business as usual in September to a fully remote 2020-21 academic year. Colleges will not be able to operate in person without the approval of public health officials and/or governors, but I expect colleges to be cautious in their actions. It’s easy to say they will operate in person now, but the first college to announce firm fall 2020 plans will face additional scrutiny.

(2) What does this mean for institutional finances? As I told NPR earlier this week, “the math is not pretty.” Colleges rely on four main buckets of revenue: tuition revenue, state funding (public colleges), auxiliary enterprises such as food service and facilities rentals, and gifts/endowment disbursements (which are small at most colleges). Each of these buckets is at significant risk, and colleges are planning for reductions in revenue of at least 10% and potentially as much as 50% for the next academic year. Colleges have already brought hiring to a near-halt and many are implementing pay freezes and furloughs. I think that all employees should be bracing for a 10%-15% pay cut for the next two years, and colleges are thinking about how to maintain financial liquidity during these difficult times.

(3) Will students attend college? This is the big question right now. There is a lot of conversation about students taking ‘gap years’ to do something other than attend college online, but I’m skeptical that most students will follow through. Think about what the alternative is to attending college—it’s trying to get a job without having a college credential in a lousy labor market. This may be a popular thing to talk about in the New York Times, but the lack of better alternatives will lead many people to decide to attend college.

(4) What types of colleges deserve more attention right now? Not Harvard or anyone else with a multi-billion dollar endowment, please. It’s nice that they decided to give back their CARES Act allotment along with some other super-wealthy colleges, but let’s focus on where most students actually attend. Community colleges and online-focused institutions are probably best positioned to enroll more students, especially returning adult students that don’t even get mentioned in media coverage. I worry the most about expensive private colleges in rural areas and historically black colleges, as they face the double whammy of price-sensitive students and concerns about traveling far away from home. Public universities that rely heavily on out-of-state and international students also face a financial reckoning (the University of Michigan system anticipates a loss of up to one billion dollars), but they will end up surviving.

Finally, let’s not forget about certificate-granting institutions right now. Inside Higher Ed ran a piece today on beauty schools and barber colleges today, and based on reader comments, it seems like some people just learned that these are actual postsecondary institutions that can receive federal financial aid. (While I’m grateful for my wife giving me an acceptable quaran-cut, I miss my barber!) I have also had the pleasure of visiting certificate programs in fields such as culinary arts and truck repair, and these programs will be important to upskill people in a short period of time. Earnings from some of these programs are not great, but they are likely better than the alternative during a deep recession.

Author: Robert

I am an a professor at the University of Tennessee, Knoxville who studies higher education finance, accountability policies and practices, and student financial aid. All opinions expressed here are my own.

2 thoughts on “Some Thoughts on the Coronavirus Crisis and Higher Education”

  1. We need to focus on for-profits a little bit.
    You made the following statement : “Another set of winners will be colleges that already had large online programs. The ones you see advertising on TV right now will probably end up being okay.”
    What is your evidence for this statement?
    See Figures 1a and 1b, and Table 2. For profits are cratering.

    ” The top spender, the University of Phoenix outspends its competitors by nearly $25 million. At $76 million spent in 2017, its ad spending has declined considerably since a peak of $142 million in 2013. The two nonprofit colleges in the top 10, Southern New Hampshire University and Western Governors University, are large online colleges that cater to working students and are well-known as competitors of the large for-profit chains. Grand Canyon University, DeVry University, Capella University, Kaplan University (since acquired by Purdue University), and Strayer University represent some of the largest and most well-known for-profits with a large online presence.”
    Can these schools survive with lower advertising? It’s a feed-back loop that’s driven by the rapidity of decline. What we’ll soon learn is that they have all been over-spending to chase a rapidly shrinking pool of students.
    The other data from surveys that we have indicates students and new high school graduates are rethinking their plans. When you present misleading information, this hurts students. It’s better not to say anything, I think. Glen

    1. I don’t know about you, but most of the ads that I see now are for SNHU, WGU, Maryville, and Grand Canyon. My point is that big online universities are in a better position to weather this crisis when most classes will be online for the next few months. Residential colleges will have a hard time when few or no students can live on campus, and some of those students will look to go online or to a local college for a while.

      I don’t see how anything I said last month was misleading (and yes, I read that great Brookings paper). Have a great weekend!

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