The coronavirus pandemic is threatening every industry in the world, and the higher education system is no exception.
“Everybody’s worried,” says Kevin Cavanagh, vice president for enrollment management at Bloomfield College outside Newark, N.J. The school attracts nearly 1,700 students, mostly black and Hispanic. “You don’t know what the variables will be.”
The most immediate challenge that colleges face is the struggle to sign up students for this fall freshman class when families are unable to visit campuses. And, while most international students are not allowed to enter the U.S. at this time, there is also a falling demand altogether from international students, who often pay higher tuition. They account for about 5% of total college and university enrollment, according to Moody’s Investors Service.
The current lockdown poses other issues such as class sizes, how much aid will need to be offered to fill seats, as well as the tuition revenue, which keeps them afloat.
Some colleges are now forced to issue refunds for room and board since their students were ordered to evacuate campuses. Fundraising is also at risk, considering that reunions, crucial for tapping alumni, are being cancelled. To encourage this fall’s potential freshmen to sign up, some colleges such as Bloomfield are reducing the deposit fee for students planning to live on campus and waiving it completely for commuters. They have also waived application fees. The school, which has a $14 million endowment, needs approximately 400 to 450 first-year students in the next class.
Even wealthy institutions with heightened demand face challenges. Their endowments, which had recently been at record-high values, are in jeopardy as markets go into free fall, according to Bloomberg. Since most endowments don’t report annual returns until autumn, it’s unclear how steep those losses will be. As a result of the 2008 financial crisis, which bears striking similarities to the current state of the economy, two of the nation’s most prestigious colleges, Harvard and Yale’s endowments lost around 25% over 12 months. That number could sharply increase with this latest financial crisis in the country.
Last month, Moody’s Investors Service downgraded the credit outlook for the higher education sector to negative. Along with disruptions in enrollment and philanthropy, schools may also see a drop-off in research grants and contracts.
Richard Ekman, president of the Council of Independent Colleges, a trade group for small schools, says that many colleges are already under the assumption that if they do open in September, they’ll have much fewer students. However, if they do not reopen in fall and classes remain online, they could lose a lot of their appeal to students, who may view online learning as more convenient and cost-efficient.
“We don’t know how much of the campus experience is related to the classroom,” Ekman said.
Even before the current coronavirus outbreak, Ekman’s group estimated that 2% of its roughly 650 members were struggling financially. With the pandemic gripping the world, there is a growing possibility that more institutions will face hardships, even closures.
“For some colleges that have very meager reserves, that could be the end,” he revealed.