Blog (Kelchen on Education)

Federal Financial Aid Will Be Easier to Apply For–And a Bit More Generous

Note: This post that I wrote was initially published at The Conversation. If you’re the type who enjoys reading 5,000+ pages of legislative text, the law that changed federal financial aid is available here.

How is applying for federal student financial aid about to change?

The good news is the Free Application for Federal Student Aid (FAFSA) will go from having 108 questions to 36 questions, and most students will only have to answer a smaller set of questions about family income and household size. The not-so-good news is that this simplified form will not be available to students until October 2022 to determine aid for the 2023-24 academic year.

Also, students with family incomes below 175% or 225% of the federal poverty line (which one depends on their family circumstances) will automatically qualify for the maximum Pell Grant, which is the main federal grant given to students from low- to middle-income families as of 2023.

For example, a high school senior in a family of three led by a single parent would receive the maximum Pell grant if their parent’s income is below about $50,000 per year. Currently, only about one in five students with family incomes around $50,000 per year gets the maximum Pell grant. Currently, most students have to file the FAFSA to know the size of their Pell grant.

Automatic qualification will make it easier for students to know how much federal financial aid they can count on getting well in advance of going to college.

Are any new people eligible who weren’t before?

The new law also gets rid of a 1994 ban on Pell Grants for incarcerated individuals. This change means that people can get financial help to begin to earn college degrees while they are still behind bars instead of having to wait until their release. This change will benefit everyone, as receiving education while in prison helps reduce the chances that someone will return to prison.

Also, Pell Grant eligibility is being reset for students who went to colleges that closed while they attended. This means these students can finish their studies elsewhere. Without this change, anyone who had exhausted their Pell eligibility after 12 semesters would likely struggle to find the money they need to finish up their degree at another college.

Is the ‘expected family contribution’ a thing of the past?

Yes – sort of. Ever since 1992, the FAFSA has generated an “expected family contribution.” This number determines how much money students and their families can receive in federal financial aid. It is based on how much money the federal government expects students and their families to contribute toward the price of their education.

However, families are often unable or unwilling to pay this amount of money. The formula has also been adjusted over the years to decrease the number of students who receive the maximum Pell Grant, requiring families to pay more for college. In reality, the expected family contribution provides a rough ranking of families’ resources to help the federal government and others give out limited aid dollars.

Beginning in October 2022, the government will ditch the term “expected family contribution.” It will instead rely on a “student aid index,” the same term that had been used before 1992, that more accurately reflects how the FAFSA is used to determine financial aid. The index also does not send the message that students have to contribute a certain amount.

But in reality, the student aid index is still the amount that the federal government will expect students and families to pay for college.

In good news for students and their families, the law allows for the student aid index to be as low as -$1,500 instead of being limited to zero. This is something that I have called for in my research because it allows students to get more financial aid and helps colleges and states identify students with the greatest financial need. The change in the student aid index will not give students more financial aid from the federal government, but it will allow them to obtain up to $1,500 more in grants, loans and other financial aid from other sources.

Is the government increasing federal student financial aid in any way?

The government is also increasing the maximum Pell Grant to $6,495, a $150 increase, in the 2021-22 academic year. This is basically enough to keep up with inflation. A bigger change is that more students will qualify for the maximum Pell Grant because of increases to the income limits for receiving the grant. But while more students will receive federal grants, students with the greatest financial need will not see increases in their Pell grants other than to keep up with inflation.The Conversation

Looking Ahead to 2021 in Higher Education

Since 2013, I have concluded the calendar year by writing annual lists of what I see as the top ten and not top ten events of the year in American higher education. I spend time throughout the year saving and compiling clips for potential inclusion later on, and it is something that I have greatly enjoyed putting together every year.

I started down my normal path again this year, but it was clear by the first week of March that one event would dominate everything else going on in American higher education. While my university (along with most other universities) was still operating in-person classes the week of March 9, I was scrambling to get both myself and my department prepared to finish the semester online. I thought at the time that things would be back to something near normal in the fall—and that was wrong.

I have written plenty, both on my blog and for The Chronicle of Higher Education, about the difficulties that higher education has faced this year. But there have also been some bright spots. In spite of incredibly difficult odds, no private nonprofit college has announced a major closure since early July (although Judson College may close at the end of the year if it cannot raise $500,000). Colleges have operated remarkably well on a remote basis this year, and it is clear that being absent from physical campuses has made the heart grow fonder for the traditional experience for many students.

Let’s finally close the book on a brutal 2020 and look ahead to 2021. There is clearly a light at the end of the tunnel at this point as multiple vaccines will begin to be available to millions of Americans in the next few weeks. I’m incredibly optimistic that society will be back to something near normal by June or July of 2021, with a possibility that normalcy could come sooner if cases do not spike in January and February. Given those bright spots, here are the five questions that I have as I look ahead to 2021:

(1) Can colleges safely welcome students back to campus in January? Hundreds of thousands of coronavirus cases occurred among college students and employees this fall, and research suggests that cases spread from relatively low-risk students to high-risk community members. While some colleges managed to get through the fall semester with cases under control, other colleges were not as lucky. I tracked colleges’ flips to online classes this fall until too many colleges to capture started to send students home in November—in many cases without providing or requiring exit testing.

It seems likely that coronavirus cases in much of the country will be far higher in January than in August or September, making it much more challenging for colleges as they attempt to welcome students back to campus. Colleges feel forced for political and financial reasons to try to have in-person classes, but it will be difficult for many colleges to succeed unless they have strict quarantines and get lucky. I would not be surprised if some colleges postpone in-person classes until March if vaccine distribution is promising, and some may even try to delay the academic calendar into late May or June to take advantage of improving public health conditions.

(2) How will the vaccine affect colleges in 2021? While I hope that the vaccine will return American colleges to normalcy by fall, there are tricky questions regarding the vaccine. The first question is whether certain college employees will be classified as essential workers so they can get the vaccine earlier. Food service employees and student-facing staff members could qualify, but are they more important than K-12 staff? The second is whether colleges will require students and employees to submit proof of vaccination before returning to campus in the fall. Expect a fight over exemptions. Finally, in the shorter term, will employees and their unions require access to the vaccine before agreeing to resume normal campus operations? This fight will certainly play out in K-12 education and may spill over into higher ed.

(3) What will come out of Washington? The Georgia Senate runoff elections in early January will loom large here. If Democrats take control of the Senate and have a (tenuous) grip on both houses of Congress, more money is likely for state and local governments. Democratic control is probably also beneficial for direct funding to colleges, but state and local government funding appears to be a much bigger partisan sticking point. And watch how state support is distributed to higher education. Does it go directly to public colleges in the form of supplemental appropriations, or does it go to student financial aid that can often be used at private colleges?

(4) How deep will program and employee cuts be? The higher education workforce has been decimated since the start of the pandemic, and many colleges have announced program cuts and layoffs. I wrote earlier this fall about how permanent cuts are coming at many colleges that are concerned about the pipeline of future college students. The newest projections going out to the high school graduating class of 2037 are pessimistic, and birth rates are likely to fall over the next few years as a result of the pandemic in spite of my personal effort to counter the trend. Colleges will also be more hesitant to invest in new programs after seeing their liquidity tested this year. Expect more cuts to come, but they may depend on…

(5) What will fall 2021 enrollment look like? Although overall enrollment this summer and fall stayed strong, new student enrollment plummeted this fall at community colleges and private nonprofit universities in particular. Declines were largest among older undergraduate students and men, which suggests that students tried to find employment during the recession instead of going to college like during normal recessions. Childcare issues could also be a concern, but enrollment among women held steady while enrollment among men fell. If students are staying away from college because they wanted an in-person experience, fall 2021 enrollment should be strong. But if students are skeptical about the value of higher education and feel the need to work to support their families, it will be a tough time going forward.

It has been a pleasure and a privilege to interact with so many wonderful people in the higher education field and beyond this year. Please stay safe, be well, and take time off to spend with loved ones to the greatest extent possible. See you in 2021!

Trends in Debt and Earnings for Common Programs of Study

The Department of Education’s updated College Scorecard dataset contains two new features at the program level. (I looked at the new institution-level data in my previous post.) The first feature is information on median Parent PLUS loan debt and the number of students whose parents take on debt. The second is earnings two years after graduation, which added onto last year’s one-year data.

In this post, I constructed a dataset of students who graduated in the 2014-15 and 2015-16 academic years combined with one-year earnings from calendar years 2016 and 2017 and two-year earnings from calendar years 2017 and 2018. (A note to analysts: the most recent data file shows debt for the 2016-17 and 2017-18 graduating cohorts, one-year earnings from the 2015-16 and 2016-17 cohorts, and two-year earnings from the 2014-15 and 2015-16 cohorts. This will result in some funky numbers, so download the big dataset instead and do your own merging.) I then pulled data for fields of study that had data from 50 or more programs at each credential level.

You can download my summary dataset here, and some key findings are below.

Undergraduate certificate

Both earnings and debt burdens are typically fairly low, and two-year earnings were always higher than one-year earnings (which was true across all programs and credential levels). The median cosmetology graduate had (reported) earnings of just $17,821 two years after graduation, but median student debt was $12,851, only about 14% of student borrowers had their parents take on Parent PLUS loans, and median PLUS debt was just $7,397. Vehicle maintenance and repair had the second-highest two-year earnings ($33,632, just behind nursing at $34,108), but about 34% of borrowers had Parent PLUS loans of nearly $15,000.

Associate degree

Parent PLUS loans were relatively uncommon at this level, with the exception of culinary arts (about 20% of students had parents with PLUS debt). Registered nurses earned $57,247 per year, far higher than any other field. Liberal arts/general studies graduates had modest earnings ($26,159), but their student debt burdens of $13,452 were at least $10,000 below all other fields of study.

Bachelor’s degree

Earnings two years after graduation ranged from $25,243 in fine arts to $66,218 in mechanical engineering. A large number of majors clustered between $30,000 and $35,000 in earnings, while student debt was typically between $25,000 and $31,000.  Fields dominated by adults, such as health/medical administration, had much higher student debt burdens due to their ability to access higher independent loan limits. PLUS loan amounts typically ranged between $20,000 and $30,000, but human resources ($13,637), liberal arts (16,450), design ($40,231) and film ($46,006) stood out as outliers. Film was also a concern in that about 41% of student borrowers also had Parent PLUS loans. This compares to fields like business and nursing, where 10%-15% of students had their parents take on loans.

Master’s degree

The variation in debt (from that institution only) and earnings was much larger for master’s degrees. Two-year earnings ranged from $27,941 in music to $102,895 in earnings, and debt ranged from $27,492 in curriculum and instruction to $95,823 in allied health. Only six programs had debt burdens larger than second-year earnings, led by mental health services at 1.43. Surprisingly, theology graduates (at $44,485) earned nearly as much as criminal justice graduates (at $46,269).

Doctoral degrees

Based on these data alone, going to medical school looks like a terrible life choice as two-year earnings were $58,056 compared to debt of $167,169. However, most new medical doctors do a residency of three years or so before launching into a well-paid career. Pharmacy and nursing graduates see six-figure salaries from the start and have less debt. And I have to give a shout-out to educational administration programs. The overall numbers are solid (earnings of $79,713 compared to debt of $68,877). Graduates of the department that I chair at Seton Hall earned $111,435 with debt of $62,841. Time to hit people up for donations???

A First Look at Parent PLUS Loan Burdens of Graduates

Earlier this week, the U.S. Department of Education released its long-awaited updates to the College Scorecard website and dataset. The updated institution-level dataset has two glaring omissions that carried over from last year’s update. The first is that student loan repayment rates are no longer tracked, which is frustrating given the size of the federal government’s student loan portfolio. Taxpayers and students have the right to know whether students can manage their loans without heavy reliance on income-driven repayment. The second is that post-college earnings are excluded once again at the institution level. The program-level dataset (which I will discuss in a future post) has data, but just for graduates. That’s really useful for colleges with low graduation rates!

But in good news, this year’s Scorecard includes data on Parent PLUS loans. There are currently $101 billion in Parent PLUS Loans outstanding, $10 billion more than just two years ago. Parent PLUS loans do not count in the current cohort default rate measure, but the few studies that have gained access to PLUS data suggest that default and repayment are concerns. Because the older parents of students are expected to pay off these loans as they approach retirement, Parent PLUS loans also raise concerns about the intergenerational transmission of wealth and the growing racial wealth gap in America.

In this blog post, I dig into new Scorecard data on median Parent PLUS loan debt among 2017-18 and 2018-19 graduates, focusing on bachelor’s degree recipients attending 1,103 public and private nonprofit colleges (excluding special-focus institutions) that had sufficient data on student debt and other institutional characteristics.

First of all, the median institution had median Parent PLUS debt among borrowers of $24,399 and median student debt among borrowers of $24,250. The first graph below show that median student debt and median parent debt are only weakly correlated. This is not surprising due to the presence of loan limits for undergraduate students (a maximum of $31,000 for dependent students). But it does seem like some students turn to parent loans after hitting the cap on student loans.

The Scorecard also provides an estimate of the percentage of students whose parents took PLUS loans, and the upper bound of the estimate is 15%. The next graph shows the relationship between the percentage of students whose parents take on loans and median parent debt. There is a positive relationship here, although this is driven in part by the small number of colleges with high borrowing rates. Very few colleges have more than 30% of parents taking on PLUS loans.

The next graph examines the relationship between Parent PLUS debt and the percentage of students who received Pell Grants in 2013-14 (the likely entry year for many of these graduates). There is a strong negative relationship, which could be due to expensive private colleges being more likely to have fewer Pell recipients. The parents of Pell recipients may also seek to borrow less money than non-Pell parents, which is strongly hinted at in Scorecard data that separates borrowing by Pell status.

Historically black colleges get a lot of attention for high Parent PLUS loan burdens, but this did not hold in my sample. The 50 HBCUs with complete data had median PLUS debt of $16,531 and median student debt of $29,502. This compared to $24,540 in PLUS debt and $24,000 in student debt for non-HBCUs. HBCU graduates likely have more in student debt because students can borrow more under their own name if their parents do not qualify for PLUS loans. The two graphs below show no consistent relationship between parent debt and the share of Black or White students.

Finally, I peeked at institutional selectivity (proxied here by ACT composite scores). As median ACT scores rose, parent debt also rose. This is likely due to selective colleges being much more expensive and parents being willing to spend lots of money to send their children there.

My next post will dive into the new program-level data, but I’m happy to take requests for additional institution-level factors to consider that could affect parent debt. This could turn into an interesting short journal article!

How Big-Time College Football Lost a Fan

I grew up watching big-time college football. It was the stereotypical American college experience to me, especially growing up in a community in which few people went away to college. I went to a NCAA Division II college (Truman State), and I attended as many games as possible even though my team got blown out on a regular basis. In graduate school at Wisconsin, my wife and I got student season tickets for football and lined up early so we could be in the front row for every home game. (Ah, the one year of Russell Wilson!)

As I have gotten into a career studying higher education finance, I have learned a lot about the role that intercollegiate athletics plays in colleges’ budgets. From the top-tier programs that are on TV every fall Saturday to small private colleges that get a large share of their enrollment from student-athletes, the intertwining of athletics into colleges’ operations is a unique feature of the American higher education system.

While I love the camaraderie and pageantry of college athletics, I have had my concerns for years about how big-time college football and basketball in particular are separated from the rest of their colleges—and from true oversight from institutional leaders. I do feel that colleges are taking athletes’ health more seriously in the past, but I worry about the athletes’ ability to speak freely and follow their academic pursuit of choice. And I am deeply concerned by rising coaches’ salaries while many programs are supported by heavy student subsidies.

I began 2020 the same as most years—by cheering for the Big Ten team to win the Rose Bowl. I applauded the Big Ten back in August for wisely suspending the fall football season due to concerns about player—and student—health and safety. This decision looked better by the day as serious outbreaks occurred at nearly every Big Ten university while Rutgers and Michigan State moved nearly all classes online for the semester.

But then politics happened. President Trump was quite vocal about getting Big Ten football back on the field (while ignoring the Pac-12 conference, which is largely not in battleground states). State governors and legislators stepped in with pressure, while alumni and sports TV commentators also weighed in. Even Michigan governor Gretchen Whitmer, who initially supported postponing the season, now supports playing football. Finances also played a major role in the flip back to football. Athletic departments were already expecting massive losses with playing football, but fully cancelling the season may have cost another $40 million or so per program.

The player protection protocols laid out by the Big Ten seem quite strong. Everyone involved in athletics will be tested every day (with tests provided by the conference), and there are clear thresholds for suspending play. So let’s play football, right?

My response: Yes—as soon as everyone on campus has access to the same level of testing, which could allow for the return of in-person classes. The University of Illinois is the only Big Ten institution close to that testing threshold, but most universities are nowhere near that level. My colleague Scott Imberman at Michigan State has it absolutely right.

At colleges and universities, academics need to be the top priority. Think of what hundreds of additional daily tests would do. They would allow students who need in-person classes to have a much higher chance of safely going to class and living on or near campus. If there was a testing threshold set for the rest of the community that had to be reached before football resumed, I would imagine that colleges would up their testing games quickly. My threshold is straightforward: everyone who is on a college campus needs to have access to the same level of testing as those participating in an extracurricular activity.

If Big Ten football does return to campuses around the Midwest (and in Pennsylvania and New Jersey) in late October, I just hope that the players stay safe and playing football doesn’t spread the virus further into vulnerable local communities. But big-time college football has lost this former fan as a result of universities putting athletics before academics and I have no plans to watch or support college football until major changes are made. I encourage people to tune out college football this fall until some of the world’s leading research universities get their priorities straight.

Seven Thoughts from the Fall Semester

As I write this post on the first Friday in September, much of American higher education has either already returned to fall courses or will do so in the coming week. My calendar is completely out of whack right now on account of being out of the classroom this year due to department chair duties. Thankfully, I still have my small army of dissertation students and questions from other students in my department to keep that connection with students strong.

I returned to campus last month for the first time since March and things looked a little different, as the pictures below show. College campuses around the country have similar features, yet the number of coronavirus cases has spiked at a number of institutions. My running Twitter thread has kept track of colleges flipping online, and the College Crisis Initiative at Davidson College and Middlebury College student Benjy Renton have done great jobs doing more systematic tracking.

I did Twitter threads to start July and August to share some of my real-time thoughts about the coronavirus pandemic and what I expected to see in higher education in the coming months. In that spirit, here are seven thoughts as September and a new academic year both begin.

(1) Colleges may flip classes fully online, but it will be hard to get students out of college towns. One of the scariest data points from the last month was at Illinois State University, which was forced to move most of its fall classes online back in early August after the federal government took away its testing supplies. But students still returned to the community (off-campus leases are often signed well before the new academic year begins) and now nearly 1,200 students have tested positive for the virus. Colleges can do little to change the behavior of off-campus students.

It’s also not easy to send on-campus students back home at this point. While some universities that switched to online fall semesters after bringing students back have sent the majority of students back home, that raises serious concerns about spreading the virus all over the surrounding area. The University of Iowa and Iowa State University have two of the highest numbers of positive cases right now, so emptying out residence halls would spread the virus all over Iowa and well into the Chicago suburbs. Dr. Fauci recommends that colleges not send students back home, and that makes a lot of sense. But are colleges well set up for quarantines that definitely resemble a cross between a minimum-security prison and a monastery?

(2) This weekend is key for colleges hoping to have in-person instruction. Labor Day weekend has traditionally served as an opportunity for college students living away from home to return home and see their families and friends. And other students can use the weekend to socialize and take a quick vacation. I’m really concerned about this weekend being a series of superspreader events, both among students spreading the virus in other communities and students catching the virus from each other on campus. Some colleges have responded by holding classes on Labor Day, but will students show up? The week or two of cases after Labor Day will say a lot about what the rest of the fall semester looks like.

(3) Enrollment as a whole looks okay, but stay tuned for the full story. I see a lot of press releases from colleges advertising record enrollment, and I also see news articles about colleges being well below expectations. The National Student Clearinghouse reported that summer enrollment was largely flat, but with big differences across student and institutional types. I would be cautious about colleges claiming large enrollment increases right now, since net tuition revenue is the real name of the game. And with withdrawals quite likely this fall, current numbers may still differ from end-of-fall numbers.

(4) Will hyflex courses stay the course? Colleges around the country made large bets on hybrid flexible courses, in which some students attend in person and others attend online to accommodate different student preferences and to maintain social distancing. Teaching in a mask and behind Plexiglas is enough of a transition, and adding a new teaching method to this could be a challenge. Will students (especially those living off campus) want to come to campus half of the time for this experience, or will they push for fully online classes? And what will faculty want? I hope that the inevitable bugs get worked out quickly, but a compressed semester makes that tougher.

(5) Budget cuts keep coming. Seemingly every day brings a slow drip of announced budget cuts, furloughs, and layoffs in higher education, ranging from the NCAA to New Jersey’s community colleges and everywhere in between. My skeptical self expects a number of these announcements on this Friday before a long holiday weekend, but they will continue to come as COVID-related expenses rise and students withdraw from courses during the semester. As colleges have to ramp up testing and safety procedures to keep students safe, at what point do they save money by trying to keep as many students as possible off campus?

(6) Closures are still a concern. I’m frankly amazed that July and August did not bring at least several closures of small private nonprofit colleges. It’s clear that they are trying to stay the course with in-person classes and students in the residence halls, but I also worry about their ability to afford the safety measures and testing needed to keep students safe. (A really cool test of wastewater for the virus costs about $1,200, and I don’t even want to know about hand sanitizer budgets.) My biggest concern is that a small college has an outbreak, runs out of money, and has to send students home instead of allowing them to quarantine.

(7) The spring semester will eventually come, but nobody knows what it will look like. I’m still hopeful that a vaccine will come sometime in early 2021, but that is far from a guarantee. (And will people be willing to take the vaccine?) Colleges are spending nearly all of their time and energy getting through the fall, but planning for spring will start to occur later in the month. Expect colleges to plan for a later start to allow for more time for a vaccine or for the flu season to pass, but that will wreak havoc with student schedules, faculty and staff contracts, and could be an issue at colleges without much air conditioning. For right now, the name of the game is TBD.

My goal for the fall semester is to take care of my students, staff, and faculty as well as possible while focusing on the most important elements of my job. It’s impossible to do everything right now, and we all need to recognize that (especially those of us who evaluate others). On that note, blogging will likely be quite limited this fall. But I will do my best to jump in if something important happens. Stay healthy and safe, everyone!

Who Takes the Blame for an Online Fall?

An academic summer unlike any other is rapidly drawing to a close as students and colleges prepare for the start of fall classes in just a few weeks. Not surprisingly, the number of colleges abandoning their plans for a mainly in-person term is continuing to increase as coronavirus cases also increase in much of the country. These colleges are still allowing the most vulnerable students to live on campus and offer hands-on courses in person, but shifting everything else online.

While a growing number of college students were already taking at least some online classes prior to March 2020, few colleges want to voluntarily move entirely online. The financial hit of having no students on campus can be massive; as an example, the University System of Georgia is projecting a loss of nearly half a billion dollars if campuses cannot reopen to students this fall. Colleges also have to worry about political pushback from donors, alumni, conservative state legislators, and the Trump administration as they make their decision.

In the past week, at least a dozen four-year colleges shifted away from their plans earlier this summer for in-person classes to the new reality of a mainly online fall. As I have been processing everything that has been going on (I probably refresh this Google search more than I should), I have been fascinated by how colleges are messaging their closures and in some cases trying to shift the blame to others. Let’s dive into some strategies that colleges are taking.

Blame the Virus

Most of these announcements mentioned an increase in the prevalence of the virus, which is the reason that I expected colleges to use when they were forced to change plans. Below are two good examples of this type of announcement—Morehouse College (top) and Rhode Island College (bottom). This strategy works well for early announcements, and I have no objections to colleges saying that public health conditions will not allow an opening with enough time for a proper online pivot. But given how hard it is to bend the infection curve, blaming the virus looks silly if a college waits until two weeks before the fall semester to make its plans.

Blame the Government

Other colleges have tried to shift the blame to state and federal officials. Lyon College took a subtle shot at state and federal agencies’ unwillingness to set out detailed plans for colleges to follow in their announcement.

In a pair of Friday afternoon announcements, Claremont McKenna College and Fresno Pacific University took clear shots at the governor of California for not approving colleges to resume in-person operations by this point in time. Claremont even felt it suitable to italicize the word “absence” in their announcement.

Fresno Pacific’s announcement is less pugnacious, but still emphasizes that they spent millions of dollars in a failed effort to reopen—and are spending less than that on improving online classes.

College leaders may be publicly blaming governors or public health officials for not allowing students to return to campus, but they are likely secretly happy to blame someone else for making a difficult decision. However, governors also don’t want to be blamed for blocking the reopening of campuses. If governors delay approval long enough without officially closing campuses, colleges will have to make the decision on their own. The governor could then grant approval to reopen right before the start of the fall term, but that would be too late for many colleges to shift plans. Nobody wants to take the blame for the inevitable decision.

Blame Other Colleges??

And just for fun, here is a snippet of Harrisburg University’s announcement. Community colleges and HBCUs have been leading the way all along in making timely decisions, but other colleges clearly want to wait to follow the pack. There is a lot of comfort in that approach, but it threatens colleges’ ability to offer high-quality online classes by waiting too long to make the decision.

I still expect a whole bunch of colleges to switch to a mainly online fall in the next week to ten days. Red-state public universities and moderately selective private colleges will be the last to announce their actual fall plans due to concerns about retribution from public officials and the possibility of losing students to other colleges that wait a few days longer to tip their hands. But the trend of the virus in much of the country and a rapidly approaching fall semester will force many colleges to issue statements like the ones that I shared above.

Colleges Must Set Coronavirus Thresholds for the Fall

“Data determines dates.”—New Jersey Governor Phil Murphy, seemingly every day since April.

As a New Jersey resident, I have grown accustomed to the governor making this point during most of his coronavirus press conferences. While I am happy that New Jersey is one of the few states in the country that has the virus under reasonable control at the moment (it was wonderful to get a professional haircut this week!), many state residents are frustrated that the governor has been less than transparent regarding the data points used to support reopening.

This finally changed yesterday when the governors of New York and Connecticut joined New Jersey in putting a 14-day (voluntary) quarantine in place for travelers from states where the coronavirus is deemed to be out of control. This is based on two data points: 10 positive tests per 100,000 residents and a 10% test positivity rate averaged over the last seven days. The governors have promised to update this list as conditions change across the country (assuming that states actually continue testing), and currently eight states are subject to the quarantine. If this continues, this creates more havoc for colleges looking to bring back students from other parts of the country.

Colleges desperately need to adopt this type of data-driven approach when planning for the fall. Most colleges are committed to having at least some classes on campus come August or September, and cases are spiking on some campuses during the summer. Nearly all colleges shut down on-campus operations in the spring before they even had a confirmed case on campus, and it is clear that many colleges at this point are comfortable tolerating at least some cases on campus. (The level of comfort in the fall will likely depend on whether colleges can get liability waivers from the state or federal governments, and colleges are pushing hard for that protection.)

If I was a college president, I would be crafting a plan that tied on-campus operations to data on coronavirus cases among the college community and in the surrounding area. Some of the metrics would include:

  • Number of known cases among students and employees
  • Number of known cases in the county
  • Capacity to quarantine on-campus students
  • Available space in local hospitals (beds, ICU space, and ventilators)
  • Fatalities could be a measure, but it is probably too gruesome to include even though all deaths may be impossible to avoid

This plan needs to be worked out in conjunction with the campus community and local health authorities and the numbers must be made available to the public. For example, a college could create a plan stating that if the surrounding area has 50% of ICU beds available, campus operations will continue as planned with social distancing. If 25% of beds are available, only the most essential courses could be on campus and residence halls would be emptied. And if just 10% of beds are available, the physical campus would be closed like what happened this spring.

By publicly releasing their plans, students can make more informed decisions about their fall plans among colleges that all promising the same experience at the moment. People who are more risk tolerant and want the traditional college experience could choose colleges that are more likely to remain open in spite of a higher number of virus cases. On the other hand, people who are more concerned about their health or their family’s health could choose a college that has pledged to move online more quickly.

Allowing data to determine plans may also provide colleges with some protection against calls to close as soon as the first few cases come to campus in the fall. If the agreed-upon plan focuses on hospital capacity or serious cases, a modest number of less severe cases may not be a reason to shift all operations online.

How Much Do Private Colleges Rely on Auxiliary Revenue Sources?

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.

You can download the spreadsheet here.

Higher Education Finance and the Fall Semester

Over the last few weeks, colleges have taken three different tracks regarding their plans for fall operations. According to a helpful tracker from The Chronicle of Higher Education, the most popular plan is to have as many classes as possible in person in the fall. Another group of colleges, including the California State University system and a number of leading community colleges, have announced plans to mainly operate online in the fall. The final group is either waiting to make any announcement or they have said that updates will come in the next few weeks.

I made my expectations regarding the fall clear last week in a Chronicle essay, as I have a very hard time seeing more than the most essential classes operating in person in the fall due to public health and logistical concerns. But since colleges (including my own employer) are determined at this point to operate in person, I am taking a look at the landscape of higher education finance across a range of scenarios in this post.

Revenues

Colleges typically rely on a combination of four revenue sources to fund most of their operations. Some colleges also rely on research funding (which probably will be stable next year) and hospital revenues (a major concern for a small group of universities), but I am focusing on the most common sources here.

Tuition revenue: Basically all colleges have cancelled tuition increases for next year and are budgeting for providing additional scholarships for students to induce them to attend. But I’m more optimistic than many people about enrollment for the fall semester even if classes are online. When the economy is terrible, what else will students do? I do expect students to take fewer courses if classes are primarily online and shift to established online providers or local colleges, but tuition revenue may be less affected than other categories. International student enrollment—a key source of tuition dollars for large research universities like Purdue—will be disproportionately affected if colleges stay online.

Auxiliary revenue: This includes categories such as room and board, athletics, and facilities rentals. Going fully online for the fall brings this category down to zero, and even on-campus models with reduced residence hall capacity could cut auxiliary revenue in half. Big-time athletics programs may find a way to play football with no fans to salvage some revenue, but smaller colleges that rely on athletics to drive enrollment are in trouble.

State funding: A number of states, such as Missouri and New Jersey, announced cuts to the current fiscal year’s budget—which are especially painful near the end of the fiscal year. The magnitude of state budget cuts will depend on how much support the federal government provides to states, but cuts are likely to be painful nonetheless. It is also possible that some states levy additional cuts to colleges that remain online in the fall, as political pressure to reopen the campus is driving some of the current announcements.

Endowment and donations: So far, the stock market has stayed relatively strong, which is good news for endowments. But predicting endowment values six months from now is a fool’s errand with uncertainty about the future of the coronavirus as well as an impending presidential election (remember that?). Donations are likely to be driven by the economy, and I wouldn’t be surprised if some donors shy away from giving if their alma mater stays online in the fall.

All of the key revenue categories that colleges rely upon will almost certainly take a substantial hit. Four-year colleges are likely to be affected the most by the loss of housing and dining revenue, while community colleges will take the biggest hit from state funding. Keep these revenue categories in mind when reading colleges’ preliminary plans for fall, as they are likely driving the announcements.

Expenses

And at the same time, expenses will increase in some key areas. Here are four main categories to consider.

Technology: Get ready to hear a lot about the hyflex course model, folks. This is a synchronous course model that allows some students to attend in person and some to attend online in a synchronous manner. It’s not necessarily a new model (I have used it in my classes on an as-needed basis for years), but the technological needs are greater when only a portion of the class is allowed to attend in person on any given day. Classrooms need cameras, perfect Internet connections, and microphones everywhere. Colleges will also need to provide home studio equipment for faculty who are quarantined or at high risk of serious harm from the virus, and those costs will add up. Computer viruses are also a major concern since technology has to work perfectly to keep students and faculty happy.

Cleaning costs and facilities changes: In-person classes will require a lot of face masks, Plexiglas, masking tape, hand sanitizer, and disinfectants. Housing and dining facilities, classrooms, libraries, and other campus spaces will require significant modifications this summer and regular cleaning. (What happens to bathrooms in residence halls?) I assume that colleges will be able to get all of the supplies that they need, but those are costs to budget for.

Testing and tracing: In a thoughtful essay in today’s Inside Higher Ed, Sen. Lamar Alexander expressed his optimism in getting 70 million K-12 and higher ed students back to school in the fall. Part of that optimism is driven by the expectation of 40 million to 50 million coronavirus tests being available every month come September. But this is not enough for frequent tests of everyone on campuses. Something like ten million students could potentially be attending classes in person in the fall, and let’s say that there are three million employees (don’t forget about adjunct faculty and cleaning staff). If colleges follow UC-San Diego’s plans to test everyone on campus once a month, that is about 13 million tests. Can higher ed get one-third to one-fourth of America’s test capacity when getting K-12 students back to the classroom is arguably more important? And can they afford to buy and administer this many tests along with contact tracing? How can colleges make time to test everyone in a rapid manner? These will be extremely difficult challenges to overcome.

Legal liability: Colleges have been hit with plenty of lawsuits from students who are unhappy about paying regular tuition rates for online courses. These lawsuits have been a nuisance at this point, but colleges are deathly afraid of lawsuits against them if someone catches the virus and becomes sick on campus. College leaders across the country have been asking for liability protection from state legislators and Washington, and it’s hard to see many colleges reopening campuses without this protection.

Colleges are in a very tough spot right now, as they have to do their best to secure their own financial health while also keeping their students, employees, and local community reasonably safe. College administrators across the country are weighing the costs of benefits of various operating scenarios under various levels of the virus. The worst-case scenario for colleges is to reopen in person in August and then have to close in September or October due to a local outbreak, but some colleges may take the chance if staying online in the fall would result in permanent closure.

Ultimately, I’m still not convinced that many colleges will be able to crack the testing nut in time to allow large numbers of students and employees on campus. I would love to be wrong, but the sheer costs of following safety procedures amid hesitance from many students and employees to return will result in most courses being online in the fall while trying to get a limited number of classes on campus that cannot be done as well online.