Over the past few weeks, colleges have started revealing their plans for the fall. According to a tracker from The Chronicle, the most popular option is to have as many classes as possible in person.
Another group of colleges, including the California State University system and a number of community colleges, has announced plans to mainly operate online. The final group either is waiting to make an announcement or has said that updates will come in the next few weeks.
As I made clear in an earlier essay, 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 so many colleges (including my own) are determined at this point to operate in person, it is worth looking at the landscape of higher-education finance across a range of scenarios.
Revenues
Colleges typically rely on a combination of four revenue sources to finance 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.
Donors may shy away from giving if their alma mater stays online in the fall.
Tuition revenue. Basically all colleges have canceled tuition increases for next year and are budgeting to provide additional scholarships to 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 many large research universities — will take a large hit 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, have announced cuts in their current fiscal year’s budget — an especially painful step 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 will impose additional cuts on colleges that remain online in the fall, as political pressure to reopen campuses 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 pandemic 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 shied away from giving if their alma mater stayed 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 those revenue categories in mind when reading colleges’ preliminary plans for the fall, as they are likely to be driving the announcements.
Expenses
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, a synchronous approach that allows some students to attend in person and some to attend online at the same time. The model is not necessarily new, but the technological needs are greater when only a portion of a 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 members who are quarantined or are 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 instructors happy.
Cleaning costs and facilities changes. In-person classes will require a lot of face masks, plexiglass, masking tape, hand sanitizer, and disinfectants. Housing and dining facilities, classrooms, libraries, and other campus spaces will require significant modifications and regular cleaning. That all assumes that colleges will be able to obtain all of the supplies that they need.
Testing and tracing. In a recent essay, Sen. Lamar Alexander expressed optimism about getting 70 million elementary, secondary, and college students back to school in the fall. Part of that optimism is driven by the expectation that 40 million to 50 million coronavirus tests will be available every month come September. But that is not enough for frequent tests of everyone on campuses. Something like 10 million college students could be attending classes in person in the fall, and let’s say there are three million employees (don’t forget about adjunct faculty and cleaning staff members). If colleges follow the University of California at San Diego’s plans to test everyone on campus once a month, that is about 13 million tests. Can higher education take one-third to one-fourth of America’s test capacity when getting pre-college students back to the classroom is arguably more important? And can colleges afford to buy and administer that many tests along with contact tracing? How can colleges make time to test everyone rapidly? These will be extremely difficult challenges to overcome.
Housing and dining facilities, classrooms, libraries, and other campus spaces will require significant modifications.
Legal liability. Colleges have been hit with plenty of lawsuits from students and parents who are unhappy about paying regular tuition rates for online courses. So far, those lawsuits have been a nuisance, but colleges are deathly afraid of being sued 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 imagine many colleges will reopen their campuses without such protection.
Colleges are in a very tough spot right now, as they have to do their best to secure their own financial health while keeping their students, employees, and local community reasonably safe. College administrators across the country are weighing the costs and 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.
I’m not convinced that many colleges will be able to crack the testing nut in time to allow many students and employees on campus. I would love to be wrong, but the sheer cost of following safety procedures — amid hesitance from many students and employees to return — will mean that most courses this fall will be online while a limited number, which cannot be done as well online, will be held on campus.
A version of this essay originally appeared on Robert Kelchen’s blog.
