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.

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.

It’s Time to Suspend Federal Student Loan Payments

It is hard to believe that higher education was essentially functioning normally just two weeks ago. Then the novel coronavirus started to make itself known, with travel being suspended, in-person classes being suspended and then moved completely online, and now all on-campus operations are quickly grinding to a complete halt. Much of the American economy is also grinding to a halt thanks to social distancing practices and restrictions on certain sectors of the economy.

This sudden recession (depression?) has placed higher education under an incredible amount of strain, although our industry is far better off in the short term than many other service industries. This has also resulted in a number of proposed economic stimulus packages and other ideas to keep the economy moving. President Trump’s current higher education-related proposal is to unilaterally waive interest on student loan payments. But since this does not actually reduce payments (instead just allowing people to pay down more principal), the economic benefits of the proposal are likely to be zero if this plan survives potential legal challenges.

If the federal government wants to provide economic relief for millions of Americans who will likely be struggling with their student loan payments (or getting into income-driven repayment) over the next several months, my recommendation is relatively straightforward. Congress should seriously consider passing legislation to suspend all federal student loan payments for a period of six to twelve months. Just like the coronavirus is freezing the economy, freezing student loan payments would give Americans a chance to recover before either resuming normal payments or going onto income-driven repayment plans. A six-month halt would also give people time to navigate the complicated income-driven repayment system, which is likely to be overwhelmed in the short term.

To explain how this would work, consider a student with $15,000 in debt and six years of payments remaining. In the case of a six-month pause, the student would still have $15,000 in debt and six years of payments six months from now. Since this plan would not directly forgive any student loans, the taxpayer burden would be relatively small in the long term. The only cost would be that more struggling borrowers would enroll in income-driven repayment plans. I also would not count this six-month pause toward the required number of payments for Public Service Loan Forgiveness, as no payments would be made.

Hitting the pause button on student loans could be a good way to get more money in the hands of Americans in the short term while not resulting in a massive forgiveness of student debt. It is an idea worth serious consideration at this point.

A Few Thoughts after Teaching Online

On a typical Sunday evening in the middle of March, I am putting the finishing touches on my annual Net Price Madness bracket based on the NCAA men’s basketball tournament. Needless to say, that went out the window last week after the tournament was cancelled due to the ongoing coronavirus crisis. The virus has had a major impact on higher education, with seemingly most colleges suspending in-person operations on short notice. I’m also increasingly concerned about the financial implications of these closures for colleges, students, and employees alike.

As a department chair for this academic year, the resulting chaos in helping to make sure all classes can continue to operate while also taking care of a regular schedule of meetings and dissertation defenses made this the craziest week in my seven years as a faculty member. I also had to take my own seminar on dissertation writing online on both Saturday and Sunday on short notice. I have taught a few days of class online in the past, usually if there is bad weather or I am out of town for a meeting. But taking two full days of a class online in a synchronous format is something that I had not done before, so here are a few thoughts after teaching.

(1) I am glad that I bought a Zoom license. While my university provides two free options for video courses (Microsoft Teams and Blackboard Collaborate), they simply don’t match the ease of use of Zoom. We were able to easily share screens throughout the weekend, and nobody had any problems with connectivity. It felt more like a coherent experience as a result, which is important given that I had not had any of the students in a previous class.

(2) Lecture notes become an even more important resource. I always put copies of my lecture notes on Blackboard before I teach, but that was crucial for a class held live via video. This way, I could share the notes on the screen and students could follow along easily. It also saved them from having to see my oversized face for most of the weekend, which is an enormous benefit.

(3) Flexibility is crucial. I taught a class of K-12 school and district leaders over a weekend, so I did not have to worry about anyone not having access to a computer with a webcam. (That puts me in a privileged position.) But my students kept getting calls from their districts about contingency plans while I was also getting communication from my university about next steps. Attendance policies should be out the window at this point as we do whatever we can to help students learn. I ended up changing the timing and delivery mode of the final presentation to better meet students’ needs.

(4) There will be trial and error in teaching online. I think this weekend went pretty well given everything else that went on, but I’m still pondering what types of changes to make when I teach my next eight-hour class in two weeks. If you have any recommendations on what to do, I’m all ears at this point.

(5) Take care of yourself. I know that I can’t keep up this week’s pace of work for too many weeks, as this was legitimately a 75-hour work week. So as soon as I could after classes ended, I went out for a long run (a social distance run?) on my local trails—keeping far away from any other people. I am able to mostly—if not entirely—work from home over the next few weeks, so that should help me sleep well, eat well, and be outside while maintaining plenty of social distancing.