Colleges across the nation are scrambling to close deep budget holes and some have been pushed to the brink of collapse after the coronavirus outbreak triggered financial losses that could total more than $100 million at some institutions.
Scores of colleges say they’re taking heavy hits as they refund money to students for housing, dining and parking after campuses closed last month. Many schools are losing millions more in ticket sales after athletic seasons were cut short, and some say huge shares of their reserves have been wiped out amid wild swings in the stock market.
Yet college leaders say that’s only the start of their troubles: Even if campuses reopen this fall, many worry large numbers of students won’t return. There’s widespread fear that an economic downturn will leave many Americans unable to afford tuition, and universities are forecasting steep drop-offs among international students who may think twice about studying abroad so soon after a pandemic.
“If you play out the scenarios that are out there, it really makes you nervous,” said Mary Papazian, president of San Jose State University, which estimates it will lose $16 million by the end of May. “We may be looking at cutting academic programs if it comes to it. We may be looking at laying off people. It’s a dire situation if the worst comes to pass.”
Dozens of colleges have instituted hiring freezes, and many are halting construction projects so they have enough money to pay employees. But university presidents say the savings will only stretch so far, and many are asking the federal government for a second stimulus package to avoid deeper cuts.
‘I’m afraid we’re going to lose some private institutions.’
DAVID TANDBERG, State Higher Education Executive Officers Association vice president of policy research and strategic initiatives
The $2 trillion rescue bill signed by President Donald Trump last month provides $14 billion for higher education. The American Council on Education, an association of college presidents, had requested $50 billion and called the package “woefully inadequate.”
“This crisis is causing massive disruption to students, institutional operations and institutional finances. On some campuses, it is creating an existential threat, potentially resulting in closures,” Ted Mitchell, the group’s president, wrote in a letter to Education Secretary Betsy DeVos.
Even colleges with deep reserves are expecting a painful financial blow from the pandemic. Brown University was among the first to announce a hiring freeze, citing “dramatic reductions in revenue.” Brown administrators are also taking salary reductions.
The university said in a letter to the Brown community on April 7 that its losses had topped $20 million due to refunding room and board fees to students, moving and instructional expenses, and waiving “summer earning expectations” for students, covering this with scholarship aid.
The University of California, Berkeley, and the University of Wisconsin, Madison, each expect losses of about $100 million, and that’s assuming campuses reopen by this fall.
It leaves some colleges wondering if they can meet demand for financial aid, which is expected to surge as millions of Americans lose their jobs. Many schools draw from their endowments, but those reserves have taken deep losses as markets tumble.
Bucknell University in Pennsylvania says it has lost $150 million from its endowment after recent investment losses. At the College of the Holy Cross in Massachusetts, the endowment has dropped by 15% and officials fear a similar drop in fundraising.
“Financial aid is going to be a bigger hit this year,” said the Rev. Philip Boroughs, president of Holy Cross. “We’re going to be looking at all current expenditures and going through them with a fine-toothed comb.”
Perhaps the greatest question for colleges is fall enrollment. Recent surveys have found that large shares of high school seniors plan to take a gap year before starting college. At the same time, colleges have been forced to cancel campus visits and other events designed to court students.
It’s a major concern for colleges that have come to rely on international students. At the University of Connecticut, which hosted nearly 3,000 students from China last fall, officials are bracing for international enrollment to drop by 25% to 75%, a loss of up to $70 million next year.
Still, the financial shock is likely to be strongest at smaller private colleges and regional public universities, which hold smaller reserves and run on leaner budgets. Some are adding significant costs to move classes online even as they lose revenue.
“It’s this major double whammy with multiple hits on the revenue side and new hits on the cost side,” said David Tandberg, vice president of policy research and strategic initiatives at the State Higher Education Executive Officers Association. “I’m afraid we’re going to lose some private institutions. I have no idea how many, but many were operating on the margin already.”
At Benedict College, a historically black school in Columbia, S.C., officials expect to lose $2 million in housing refunds out of a $52 million budget.
“We have to think clearly about the future of the institution,” said Roslyn Clark Artis, president of the school of 2,000 students. “The notion of refunding an amount this significant would cripple the institution, there’s no doubt.”
With reports from PBN.
