This Will Be One of the Worst Months in the History of Higher Education
Layoffs, declarations of financial exigency, and closures are imminent. Here’s who’s most at risk.
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Most colleges have been optimistically pitching a return to campus for students, even if they acknowledge the experience will be much different than normal. The Chronicle’s tracker of colleges’ fall plans currently shows that about 60 percent of colleges are planning for an in-person fall, while less than 10 percent are planning for a mainly online fall.
I wrote an essay in May about how I expected colleges to have most of their classes online in the fall. Since then, two developments have made widespread returns to campus even less likely. The first is that both the number of confirmed coronavirus cases and the percentage of people testing positive for the virus have increased in recent weeks, indicating further spread of Covid-19 in much of the country. Large off-campus parties have fueled the contagion even more in college towns. The second is that federal support for reopening campuses does not appear to be on the horizon. While Senate Republicans are open to providing some funds for testing, their next relief bill is not due to be unveiled for at least a month. That is far too late to help colleges in August.
Following the lead of a number of community colleges and the California State University system, a few elite private institutions, such as Bowdoin College and Harvard, have announced plans for a primarily online fall semester. In a likely sign of things to come, the University of Southern California, which had previously announced it would use a hybrid model, recently reversed course. It now says almost all of its classes will be online. Once a few more colleges start to make these announcements — and especially when it becomes obvious that college football will not happen — expect the dam holding back further announcements to break.
By the end of July, most colleges will have announced plans for a primarily online fall term, with only critical classes being held in person and limited residence-hall capacity for students who do not have other safe options. The need to prepare for the fall is beginning to outweigh any potential benefits of outwaiting competitors, especially as students expect a better online experience this fall than what they received under emergency conditions in the spring. Wealthy liberal-arts colleges in rural areas that can afford frequent virus testing and cash-strapped colleges desperate for survival are likely to be the main holdouts.
To get a sense of which private nonprofit colleges rely heavily on auxiliary revenue sources (and thus which might be in for a particularly painful couple of months), I pulled data on gross revenue from the Integrated Postsecondary Education Data System from the 2018 fiscal year. Below is a list of the 320 colleges whose auxiliary revenue made up 20 percent or more of their total revenue. Only 40 colleges received more than 30 percent of their revenue from auxiliary sources, and these tended to be small liberal-arts colleges or religious seminaries. (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.)
As for tuition revenue, it will decline for most colleges, even though it may not be as bad as many think. But colleges will face complaints and lawsuits about charging the same price for online instruction as in-person classes. And as some donors and politicians will not be happy with closed campuses, state funding and major gifts could be at risk in some cases.
By the end of July, most colleges will have announced plans for a primarily online fall term.
With major declines in revenue for another semester, major budget cuts are coming at most colleges. Back in March, colleges froze hiring, professional-development expenses, and any spending deemed to be not absolutely necessary, and those policies generally remain in place. Furloughs, especially of staff members, and nonrenewal of term contracts came next. Now the layoffs and pay cuts are starting. Some colleges have already announced their cuts, and more will undoubtedly be announced in the next few weeks as the financial picture becomes clearer.
Some colleges will be forced to take more drastic measures. Declaring financial exigency — essentially a state of fiscal emergency — will become more common over the coming weeks in an effort to give college leaders a way to eliminate academic departments and lay off tenured faculty members. Central Washington University, Lincoln University (Mo.), and Missouri Western State University have all declared exigency already. This is the most extreme option available to public-college leaders when legislators will not let them close.
I fear that the next month will see the closure of dozens of small private nonprofit colleges that simply do not have the money to pull through this crisis. About five to 10 colleges close each year. We may see five years’ worth of closures within five weeks. This will be one of the worst months in the recent history of higher education. A silver lining, for students, is that other colleges will rush in to accommodate them in an effort to support their own bottom lines and to do the right thing.
But closures right before the start of the academic year will be brutal for staff and faculty members as well as the broader rural communities in which many of these colleges are located. These closures threaten to heighten already large divides in support for higher education based on urban vs. rural location and partisan affiliation.
My plea to college presidents and boards is to announce the inevitable decision to hold most of the fall semester online immediately rather than trying to wait out competitors. This is the right thing to do for everyone in higher education. Students can get a higher-quality education if faculty members have more time to prepare classes. Colleges can devote resources to improving online education and making sure that all remaining in-person classes are as safe as possible. Local communities may see fewer out-of-town students who could spread the virus and tax local health-care systems. Finally, governments and public-health agencies can focus their efforts on safely reopening child-care centers and elementary schools that are essential to an economic recovery and cannot be easily replicated online.
College leaders have difficult decisions to make over the coming weeks as they try to navigate uncharted waters. To best protect their institutions and broader communities, it is time to batten down the hatches and prepare for the storm instead of hoping that it miraculously blows over.