In my last post, I broke down four key revenue sources that colleges typically rely on to balance their budgets. Each of the sources (tuition dollars, auxiliary revenue, state funding, and endowment/donations) is likely to take a hit during the next academic year. But auxiliary revenue from sources such as housing, dining, and other on-campus events is most at risk. Even if many classes return to campus in the fall, it will be with fewer students on campus at any given point.
These auxiliary revenues are especially important for small, residential private nonprofit colleges. These are the types of colleges that I worry will close if they cannot return as normal in the fall, and colleges that house a larger share of their students on campus are at greater risk than colleges with fewer students living on campus. Some colleges will likely try to get closer to normal housing density by allowing multiple students in a dorm room and treating them as a family unit for health purposes, but this also requires additional testing, tracing, and cleaning expenses.
To get a sense of which private nonprofit colleges rely heavily on auxiliary revenue sources, I pulled data on gross (not net) revenue from the Integrated Postsecondary Education Data System (IPEDS) from Fiscal Year 2018. I created a spreadsheet with total revenue, tuition revenue, auxiliary revenue, and the share of revenue from tuition and auxiliary sources. Please note that there is some ambiguity in the definition of auxiliary revenue, so some of the differences across colleges could be driven by differences in how colleges classify revenue. The figure below shows the distribution of auxiliary revenue reliance among colleges that reported any auxiliary revenue in FY18.
To provide an example, the now-closed Green Mountain College in Vermont earned $15.41 million in total revenue in FY18, with $8.78 million (57%) coming from tuition and $4.69 million (30.5%) coming from auxiliary sources such as housing and dining. Only 40 colleges received more than 30% of their revenue from auxiliary sources, and these tend to be small liberal arts colleges or religious seminaries. Most colleges with on-campus housing received between 10% and 25% of their revenue from auxiliary sources, which is still an important part of the budget but not quite as crucial as smaller colleges.