Rhode Island-based colleges are already feeling the financial strain from the COVID-19 pandemic, with the cancellation of usually profitable events and the loss of tens of millions of dollars in planned refunds for students’ room and board for the last quarter of the academic year.
But an even bigger fiscal challenge may be looming for the next school year. This summer, students and families left jobless by local and national business shutdowns to prevent the spread of the new coronavirus must decide whether they can still afford to attend college in September.
“[Colleges] could be looking at significantly decreased enrollments for the fall, both for new students and returning students,” said Lee Gardner, a senior reporter for The Chronicle of Higher Education. “And that could be financially disastrous.”
Many colleges could be left to decide between the difficult choices of adding to this year’s unexpected losses by trying to boost financial assistance for what could be a significantly larger group of cash-strapped students or, alternatively, cutting salaries and even increasing some fees or curbing financial aid to stay in the black. A handful of local schools, however, have committed to not raising student costs.
But with the pandemic still climbing toward its peak locally, most colleges are in the same predicament as students and families, unsure what they’ll be able to afford to do and searching for answers.
“If there is decreased enrollment and increased aid, that becomes a tough equation for us to manage,” acknowledged University of Rhode Island Provost Donald DeHayes.
ABSORBING HITS
Local schools, including URI, Bryant University, Providence College, Johnson & Wales University, Rhode Island College, Brown University, Salve Regina University, Rhode Island School of Design and Roger Williams University, are processing refunds and credits to students and their families on lost room and board due to campuses closing and the switch to remote learning. The hit these colleges are going to take collectively this year is significant.
‘If I have a job at all, it will be at a reduced load. I can’t live on it; this is barely living.’
LISA MCCLURE, Roger Williams University adjunct professor
Daniel P. Egan, president of the Association of Independent Colleges and Universities of Rhode Island, said Rhode Island-based colleges are expected to lose between $75 million and $100 million due to refunding students’ room and board for 25% of the academic year.
Brown University alone has sustained a $20 million hit thus far, due to crediting room and board fees, moving and instructional expenses, and waiving “summer earning expectations” for all current and admitted students, covering this with scholarship aid, according to an April 7 letter from Provost Richard M. Locke. The losses in revenue and cost increases for the Ivy League university could rise to at least $50 million “over the next several months, and potentially more,” Locke said.
In addition to the university implementing a hiring freeze, Brown administrators, including Locke and President Christina H. Paxson, have taken salary reductions, and all faculty and staff will have their salaries frozen for the new fiscal year starting July 1, Locke said. The university’s Capital Planning Committee, which Locke chairs, is also evaluating current and planned capital projects and will offer Paxson recommendations on which will “be slowed” or “be suspended or postponed” based on “the mission-critical nature of the project and financing structure,” Locke said.
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"If there is decreased enrollment and increased aid, that becomes a tough equation for us to manage,"
says Donald DeHayes, University of Rhode Island provost. / PBN FILE PHOTO/MICHAEL SALERNO[/caption]
At URI, DeHayes said the state university is expected to issue $8 million in refunds on room and board and had to spend approximately $1 million to transition about 1,800 classes online.
Egan said colleges are “most likely” not going to be able to make up such losses on room and board, and suggested that they have to come up with “creatives ways” to trim costs and expenses. One idea Egan raised is for local colleges to work with other schools they have relationships with to have out-of-state students who would normally attend college in Rhode Island take classes closer to their homes.
He said colleges in the Midwest did that when they took in college students from Louisiana who were displaced when Hurricane Katrina hit the Gulf Coast in 2005.
“Everything is on the table,” Egan said. “People have to be really creative in terms of how we deliver quality education on the other side of this pandemic.”
Salve Executive Vice President and Chief Financial Officer William Hall said the university will use funds that would have normally been used to pay for food services on campus and to rent tents for the now-canceled commencement ceremonies to help fill some of a $4.2 million budget gap caused by room-and-board refunds. The Newport-based Catholic school could also receive about $420,000 from the federal stimulus package for assistance.
“We’re not going to get it to zero, but it will help soften the blow,” Hall said, noting that Salve also lost an estimated $450,000 in room revenue from a canceled 12-week summer conference, which impacts the school’s 2021 fiscal budget, Hall said.
Hall said Salve will not raise fees or reduce returning students’ financial aid packages. If a student’s financial situation has changed because of the pandemic, Hall said their financial aid could be increased.
RWU is also reallocating money, in its case because of less energy consumption and canceled spring sporting events and trips, to help bridge its approximately $10 million gap from room-and-board rebates, RWU interim Chief of Staff Brian Williams said. Like Salve, RWU won’t raise its fee structure for students to help cover losses, Williams said.
PC had to renegotiate contracts with its dining and custodial providers to create cost savings and took other steps to build up financial liquidity, according to Senior Vice President and Chief Financial Officer John Sweeney.
That will help compensate for the $10 million hit it took on rebates and credits issued on room and board. Sweeney also said PC will not recoup the loss from students in any way and expects financial aid to increase in the coming year.
Like other schools, PC’s endowment fund was also hit hard when financial markets tanked in late February and March, dropping from $250 million as of the end of December to $210 million. To help restore it, Sweeney said the school will be looking for buying opportunities in the markets.
“The trick is having managers that can find the opportunities at the right time,” Sweeney said.
Lost funds and inactivity on campus forced many colleges to make staffing changes, particularly with food and service.
Sodexo Campus Services, which handles Salve’s food operations, had to lay off 74 of the 75 hourly employees due to no one being on campus, Sodexo General Manager Mark Rodriguez said.
RWU laid off 170 dining-service workers and 12 shuttle personnel to help cover some of the costs tied to moving to online learning and refunding room and board, according to a letter to staff and students from RWU President Ioannis N. Mioaoulis.
TROUBLING TREND
Many colleges were already worried about the national trend toward declining enrollment even before the COVID-19 pandemic gripped the world, said Edinaldo Tebaldi, a professor of economics at Bryant.
Based on U.S. census data, it is expected that there will be fewer high school graduates in New England over the next few years. There has already been a downward trend in the number of high school students enrolled across the six states. According to census data, estimated high school enrollment in New England dropped from 779,494 in 2011 to 732,092 in 2018.
In Rhode Island, high school enrollment was estimated at 49,786 in 2018, down from 55,145 in 2011, census data shows.
“Now, we have a situation [the virus pandemic] that would cause many people to lose jobs, lose income and families may not be able to send their children to colleges, where tuitions have been increasing faster than the pace of inflation,” Tebaldi said.
Baltimore-based consulting firm Art & Science Group LLC recently polled high school students across the country on their thoughts about attending college next year, and the results are troubling for higher education.
Approximately 1 in 6 of survey respondents said they “appear to be near the point of giving up” on the idea of attending a four-year college in the fall. Additionally, the survey found that two-thirds of graduating seniors “may have to change their first-choice school” due to the virus pandemic.
Salve has seen enrollment declines before. Hall said along with the 2008 recession, which saw Salve’s enrollment decrease by about 15% in the fall of 2009, the attacks on 9/11 caused the student population at the Newport campus to decrease. Hall said Salve’s enrollment dropped about 5% in the fall of 2002 due to 9/11, mainly due to fewer students enrolling from New York and New Jersey.
“There was a feeling that some kids were looking to stay home because of a little bit of a fear factor from 9/11,” Hall said. “That is a legitimate concern [now].”
If there is an enrollment drop, Hall said, Salve will look at ways to further reduce expenses, such as holding off on raises for faculty and staff and reducing the university’s contribution to retirement plans. There may also be temporary pay reductions for staffers, in addition to minimizing normal expenses such as food and utility costs, Hall said.
Sweeney said PC’s admission numbers for the fall semester are “strong,” but acknowledges the full extent of the hardships some families may face after the pandemic is “not yet clear.”
He also said the college would need to find savings in areas, including regular maintenance spending, utilities and dining, and possibly implement a hiring freeze or eliminate temporary and seasonal staff, if enrollment drops next year.
DeHayes worries the spread of the new coronavirus could hurt enrollment if too many students or family members become infected.
Plus, travel restrictions – if they are still in place – could pose problems. DeHayes said URI has about 650 students who live internationally.
DeHayes said URI will still look to “lighten the [financial] load a little bit” for students whose finances have been hurt by COVID-19.
But state schools such as URI are “particularly vulnerable” right now because they are dependent on state budgets, according to David Tandberg, vice president of policy research and strategic initiatives for the Colorado-based State Higher Education Executive Officers Association. He feels the hit state colleges may receive from this pandemic could be “pretty dramatic” because states will face new costs around health care and its response to the pandemic, in addition to seeing decreased tax revenue.
Eighty-three percent of URI’s operating budget is based on tuition revenue, with the rest coming from state aid, DeHayes said. He acknowledged Rhode Island is in a “precarious situation,” with businesses temporarily closed. If URI’s enrollment decreases next year, its operating budget will also dip, DeHayes said.
JWU declined an interview request from Providence Business News. In a statement, the school said it does anticipate the pandemic will “have some impact” on enrollment, but it’s “too early to project what it would look like.” JWU added that it has taken “proactive steps” to manage student debt by increasing institutional aid for the last five years, and it anticipates that trend will continue.
Officials from Bryant, RIC, Brown and the University of Massachusetts Dartmouth were not immediately available for comment on how they plan to handle the fiscal challenges and uncertainties.
‘I’M TERRIFIED’
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FROZEN: Brown University Provost Richard M. Locke says all faculty and staff will have their salaries frozen for the new fiscal year starting July 1. / COURTESY BROWN UNIVERSITY[/caption]
Though many of the schools aren’t talking about their financial plans, some adjunct professors and students are clearly anxious about what the future holds for them.
Dan Carrigg, a visiting English professor at Brown University who had also taught on an adjunct basis at URI, Salve and RWU, said certain courses are not held if there aren’t enough students enrolled in them. When asked if he worries about being at risk of not having a job, Carrigg said, “That’s absolutely possible.”
Lisa McClure, an RWU adjunct professor who teaches public speaking, is more than worried.
“I’m terrified,” she said. “If I have a job at all, it will be at a reduced load. I can’t live on it; this is barely living.”
Hall acknowledges that if Salve saw reduced enrollment, the school would not hire as many adjunct professors.
RWU School of Law student Sheya Rivard said the university held a virtual town hall discussion in which school officials mentioned a “fund” would be created to help students who are in financial trouble. However, school officials were vague on details, Rivard said.
“There really wasn’t a whole lot of explanation as to how that fund would be allocated, how would you qualify for it, how do people pay into it,” Rivard said. “There really isn’t a whole lot of concrete answers about what might be done to help students monetarily.”
Rivard added that she’s concerned whether or not her summer internship – which would potentially get her a $2,500 stipend – will still be available. The stipend money, Rivard said, would help pay her college expenses.
“Any little bit [of help] is a lot,” Rivard said.
Williams said RWU offers opportunities for financial aid appeals for both new students and returning students if their situations have been impacted by the pandemic.
RWU is also offering seniors who were unable to complete graduation requirements due to the pandemic an additional year of eligibility. Such students, the school’s website states, will be eligible for an RWU grant “equal to the amount” previously awarded to the student.
Williams added that federal stimulus funding will also provide some help to students, but the school is waiting on further guidance from the U.S. Department of Education on that.
Despite the uncertainties for many students and colleges, there’s one thing that is clear, said Tandberg.
“The longer this [pandemic] continues, the worse it’s going to be” financially, he said.
James Bessette is special projects editor at PBN. Contact him at Bessette@PBN.com.
