The coronavirus pandemic and resulting economic calamity will reshape higher education for decades — together they could land a devastating blow to the sector. Recessions are especially hard on public institutions because states have cut their education appropriations. Enrollments typically swell during recessions, but no one knows for sure how students will respond to the current threat.
According to the National Center for Education Statistics, running the country’s public colleges and universities cost approximately $372 billion in the 2016-17 academic year. The Center on Budget and Policy Priorities found state spending on public colleges in 2017 was nearly $9 billion below its 2008 level, after adjusting for inflation.
Enter the federal government’s Cares Act. About $14 billion is set aside for higher ed, with half going to students and about half going to institutions. Institutional aid in the Cares Act wisely targets minority-serving institutions and colleges and universities that enroll many Pell Grant-eligible students, but funds are well short of the $50 billion that the American Council on Education estimates is needed in the near future. The relief package will not do much for some small regional colleges; the University of Texas of the Permian Basin, with around 4,700 undergraduates, for instance, is expected to receive less than $2 million from the Cares Act. Even large allocations, such as the nearly $55 million estimated for the Pennsylvania State University and the almost $42 million allocated to California State University at Long Beach, are likely insufficient to ease financial strain when spread over tens of thousands of students.
Signs of financial distress are already emerging. Central Washington University has declared financial exigency; New Jersey is poised to slash $122 million in higher-education spending. More bad news will soon follow. Some colleges will close, and others will emerge as shadows of their former selves. With widespread hiring freezes and layoffs looming on the horizon, faculty members worry about further deterioration of academic work.
Amid a dreary new reality, there are still reasons for optimism.
And yet, amid a dreary new reality, there are still reasons for optimism. Prior to the Great Depression, federal funds made up a very small share of all higher-education revenue. Federal spending on higher education edged up during the Great Depression and then rocketed upward during and after the Second World War, thanks in part to the GI Bill. Similar mobilization is needed now.
Simply replacing state funds will not help higher education reach a swell of potential new students. More than $100 billion could be necessary over two years. Just as importantly: An infusion of federal dollars should be used to help institutions serve students without massive tuition hikes, which will be hard to swallow for students who are already pinched and may be tempted by price cuts offered by online colleges. While some campus executives will push against it, federal aid should come with safeguards to prevent fraud and abuse and to encourage student-focused reforms. And ambitious federal reforms may be able to reshape the sector, encouraging cooperation instead of competition between institutions.
Recessions lead to state cuts that are passed on to students through higher tuition. Even as tuition rose, high unemployment made college an attractive choice in the last recession, and total enrollments grew.
But whether surging demand for college credits can be satisfied is an open question. Competition for entry to a few high-status institutions is intense. Most institutions are not as fortunate. On the public side, flagships in smaller states might be hit hard. They recruit many out-of-state students, often with the promise of football seasons that now could be canceled. A recent report supported by the nonpartisan Joyce Foundation identified the University of Alabama as a prime example. According to federal data, only 34 percent of first-time entering students in the fall 2018 semester were classified as in-state. With almost two-thirds of the university’s entering students from out of state, Alabama could lose students to lower-priced options closer to their homes.
Community colleges and some regional public institutions may experience increased demand but, unfortunately, are very likely to be hurt by expected state-budget cuts. Missouri’s governor has already announced large cuts to higher-education spending, which will be painful for Missouri’s small public colleges. Lincoln University and Harris-Stowe State University, two public HBCUs in Missouri that enrolled fewer than 2,500 total students in the fall 2018 semester, operate on tight budgets that do not have much fat to cut. Maine’s public university system has long faced a difficult trade-off between providing geographic access in underserved areas and the high fixed costs of operating regional campuses. The state’s higher-education system now faces at least $20 million in revenue reductions, a blow for institutions that were already financially stressed after a $3-million systemwide shortfall in 2019.
In light of all this, reorganization in public higher ed is likely. Departments, and even institutions, will be merged. Consolidation could achieve administrative economies but would do so at the expense of institutions that are well positioned to respond to society’s rapidly changing needs. Consolidating humanities departments at a time of human crisis seems shortsighted. Closing a regional campus when students fear the possibility of having to shelter in place far from home forces unacceptable choices on students.
But not all reorganization would necessarily be negative. For decades, academic leaders have competed against their peers for students, via rankings, and through performance-based funding. In our research of the 2005-13 period, we found that cuts in state funding prompted public institutions to intensify competition for students who are able to pay tuition. A repeat of this pattern could leave behind the students most in need of financial support while rewarding prestigious institutions and wealthy students.
Collaboration — not competition — offers a better way to serve students. It also offers better odds that public higher education can survive a troubled time.
What would such collaboration look like? Campuses within a state could share administrative functions. Many operating costs that are fixed, from campuswide information systems to vendor relations, could be consolidated across campuses. Savings could be reinvested in education. The Five College Consortium in Massachusetts represents a longstanding example of collaboration among public and private institutions. Similar cooperation on infrastructure, transportation, and even programming should be possible within state systems where institutions already share some administrative functions and, just as importantly, all face the same consequences from the pandemic.
We must also consider a more radical step: allowing students to circulate among affiliated institutions. Rather than enrolling at a single campus, students could be admitted to a network. Students then could meet program requirements from a wider set of options and move from campus to campus, online and in person, without burdensome transfer requirements and credit loss.
These changes may seem extreme, but federal funding — and the strings it can attach — provides an opportunity to explore such collaboration. Campus leaders will never abandon their habits of competition without such powerful incentives. If we as a nation are putting up tens of billions for higher ed, we need the sector — so eager for such an infusion — to use it effectively. And that means thinking radically to best serve students, not climbing a few rungs above a competitor in the rankings.
Brendan Cantwell is an associate professor of higher, adult, and lifelong education at Michigan State University. Barrett J. Taylor is an associate professor of higher education at the University of North Texas.
