The type of tough decision playing out now in Vermont is bound to happen in other places. Around the country, higher education is being buffeted from all directions. Nearly all the major revenue sources — tuition, room and board, activity fees, charitable giving — are under severe pressure. The problems will grow decidedly worse if campuses aren’t able to open up again in the fall, a scenario that looks increasingly likely.
Public colleges and universities are certain to see cuts in aid from financially strapped states. “States will miss hundreds of billions, if not more, in revenue that will never be recovered,” said Dan Malloy, chancellor of the University of Maine System. “This is the downturn of 2008 on steroids.”
The entire field of higher education is entering a period when it may face fundamental disruptions.
Even the wealthiest institutions, such as Harvard and Princeton, are announcing hiring freezes and other spending reductions. The situation naturally is worse at most institutions, which don’t rest on the same financial cushions.
There were already real questions about whether regional universities, which have been struggling to attract students, could survive. The same is true even for small private colleges, which offer heavy tuition discounts but don’t have large endowments to back them up. “We were aware of these trends prior to this,” says Aims McGuinness, a senior fellow with the National Center for Higher Education Management Systems (NCHEMS). “What this is going to do is make them horrifyingly graphic.”
But higher ed always presents a tempting target when states are hurting, since such spending is discretionary and institutions have their own sources of revenue, such as tuition. That’s how student debt became a trillion-dollar-plus problem and a top political issue. Depression-level unemployment will make it harder for students and their families to pay. “We know almost all the state aid programs were already oversubscribed, even in a healthy economy,” said Brian Sponsler, vice president for policy at the Education Commission of the States.
If students don’t return in the fall, colleges and universities will be in a world of hurt. Already, the American Council on Education, an advocacy group, predicts that enrollment is set to drop by 15 percent in the fall, including a 25 percent reduction in the number of international students, who have been a cash cow for many campuses in recent years. Some schools are crafting contingency plans that forecast much sharper drops.
Last month’s federal stimulus package, known as the CARES Act, included $14 billion for higher education. The American Council on Education and other higher ed groups are asking Congress for a lot more — $46.6 billion, divided evenly between students and institutions. Given the current challenges, Malloy isn’t convinced that amount will be enough. “We’re talking about a loss of money in the $100 billion range, not the $46 billion range,” he said.
Right now, state policymakers are dealing with the immediate public health and economic emergencies created by the coronavirus. At some point, they’ll have to decide what they want from higher ed — and what they’re willing to pay for — or they could wake up to find that the system is damaged almost beyond recognition. “Unless there’s some understanding of the shifts underway,” McGuinness says, “what will be left at the end of the day will be the few places that can survive.”
Fall Reopening Not Likely
Like everyone else, higher ed officials have had to adjust their responses to coronavirus repeatedly in recent weeks. First, there was the scramble to close campuses and move courses online. Soon after, there was a recognition that summer sessions would have to be canceled. Now, there’s a growing realization that terms might not open normally in the fall.Surveys of university presidents released at the beginning of the month found that about 40 percent of them believed fall courses would have to be held online, at least to start. That share has likely grown.
A Cornell working paper released on April 11 found that campuses are “small world” networks, with lots of interaction among students in close quarters. How much? At Cornell, the average student sits in classes with more than 500 other students per week. “The average student can ‘reach’ only about 4 percent of other students by virtue of sharing a course together, but 87 percent of students can reach each other in two steps, via a shared classmate,” according to Cornell sociologist Kim Weeden, co-author of the working paper. “By three steps, it’s 98 percent.”
No institution will want its dorms to be the next facility with close living arrangements -- like cruise ships, nursing homes and prisons -- to experience a serious outbreak.
“The idea that we will have the traditional fall opening is probably fantasy,” said Sponsler, of the Education Commission of the States.
If campuses don't reopen, a lot of students will decide it’s a good time for a gap year. No one wants to pay $60,000 to take Zoom classes. Enrollment declines will be steep, but will vary by region, said Mildred García, president of the American Association of State Colleges and Universities.
“If you look at the West Coast, it should be pretty stable — they’re looking at a 10 to 20 percent drop,” she said. “In the Northeast and rural areas, which were already having enrollment challenges, some of them are looking at even a 30 to 40 percent decrease in enrollment.”
Death by Thousands of Cuts
Plunging enrollment will present all kinds of problems for higher education systems. Obviously, students who aren’t enrolled won’t be paying tuition. Lots of funding at both the state and federal levels is based on the number of students who show up and occupy seats.Even if students are enrolled but learning online, they won’t be occupying dorms or purchasing meal plans. Those are major sources of revenue. In fact, campuses could struggle to pay off construction bonds that were financed based on dorm occupancy.
It’s possible that more students will opt to attend community colleges, because they’re inexpensive and may be closer to home. “Once they go back, parents are not going to want to send their children far away,” García said. “It’s a scary time.”
It’s not just students who will go missing from campus. Renting out space during the summer to conferences, sports programs and camps are also a big source of ancillary revenue for institutions. There’s a fair chance that college football and other sports will be canceled, or played in front of empty stands, eradicating ticket revenue and possibly broadcast licensing fees.
Universities that rely on generous alumni for financial support will be competing for donations with food banks, community assistance programs and – well, just about everybody. Donors may feel less generous anyway, with the stock market still down from its February highs. Universities that have endowments have also watched their own portfolios take a hit.
Systems that have medical centers are losing money, due to the lack of elective procedures. On Monday, Washington University in St. Louis announced a plan to furlough 1,300 employees for 90 days, primarily at its medical campus, although it says some furloughs will be voluntary.
Enrollment usually goes up during recessions, as individuals seek safe harbor during a time of high unemployment or look to sharpen their job skills. That could still happen, but university officials are nervous that families whose personal finances have taken a plunge ever since they filled out financial-aid forms just a couple of months ago may decide college has become an unaffordable investment. “I don’t think families will be interested in taking on additional debt,” Sponsler said.
Changing Students, Changing Campuses
This is the time of year when high school seniors should be making their commitments. Colleges and universities are doing what they can to increase their numbers — waiving application fees and testing requirements, hosting virtual tours and pushing back deadlines.Student bodies look a lot different than they did a generation ago. Already, so-called non-traditional students (those 25 and older who often attend part-time) make up 40 percent of the population. About half of today’s students are non-white. Higher numbers of minority students have translated into more first-generation college students, who are often low-income and may lack as much preparation or technological savvy as prior cohorts.
Many campus observers believe that the shift to online instruction is here to stay, although it won’t necessarily become the dominant approach. Most likely, more programs will become blends, with perhaps a year of online or experiential learning to supplement classroom learning. “We’re going to become, universally, a hybrid system over time — every system,” said Malloy, the Maine chancellor.
Redesigning courses to be successful virtually will take a lot more effort than the week’s worth of prep time many professors received last month. And getting students ready — or even universally equipped with laptops and broadband — also presents a challenge.
“States have made real progress in recent years in their education attainment goals,” said Tom Harnisch, vice president for government relations at the State Higher Education Executive Officers Association. “If resources aren’t available and deep cuts take root, this could be a real step back for states in their progress on their workforce goals and closing equity gaps.”
Statewide Strategies
There’s already evidence that states, given dire budgets, will once again cut higher ed first. When Missouri Gov. Mike Parson froze $180 million in state spending earlier this month, $73 million came out of higher ed.Cuts are inevitable, but states will need to think about managing their entire higher education systems and deciding what they need them to accomplish. It won’t be enough to keep the flagships healthy. Community colleges may not have the capacity to handle an influx of students without more help. Smaller regional universities, some already on the brink, provide lifelines to local economies and help to prepare workers, including adults who would no sooner leave town to go live on campus than they would ride a rocket to the moon. Ad hoc cuts decisions will leave higher ed as a whole unable to respond to student priorities or the economic and workforce needs of the state.
That’s why Malloy is trying something new. Heading into the crisis, the University of Maine System has already seen state support as a share of revenues has dropped by half in recent years, from two-thirds to one-third. Enrollment keeps dropping as Maine, which has the oldest median age population of any state, runs low of 18-year-olds.
The University of Maine has seven campuses. To cut costs, Malloy wants them to collaborate more, combining programs and sharing administrative overhead. Accrediting agencies generally won’t bless campuses that don’t have their own enrollment managers or deans of students. That’s why Malloy wants his system to receive a single, unified accreditation, so they can share positions and instruction.
Already, the campuses at Presque Isle and Fort Kent, which are about an hour apart, have shared programs in areas such as nursing and education. Malloy thinks a lot more can be done and will need to be done. “We hope to have our unified accreditation recognized in time for it being one of our tools for dealing with the environment we find ourselves facing now,” he said.
He’s not alone in thinking this way. Last year, the University of Alaska sought to merge its three campuses under a single accreditation, but the plan was rejected. The three University of South Florida campuses are pursuing a similar strategy. Connecticut wants to consolidate its two-year institutions, while Georgia has cut the number of its standalone universities in half through a set of mergers over the last seven years.
Consolidating administration won’t solve all the problems higher education now faces, but it would be smart for states to think strategically about what they hope to preserve. Left to their own devices, different campuses will have different priorities, as well as different levels of success in preserving them.
Systems like Vermont State Colleges and the University of Maine that were already struggling with declining enrollment and state budget cuts are now the canaries in the coal mine for higher ed everywhere.
“States need to develop a framework to make sure the basic capacity on critical workforce needs is sustainable,” said McGuinness, the NCHEMS senior fellow. “What’s really important to the state looking out two to three years? Without that, a lot of it’s going to die.”
