The COVID-19 coronavirus pandemic is devastating lives, livelihoods, and personal, business, and government finances around the world. Unfortunately the American higher education market hasn’t escaped this economic destruction either. College and Universities are facing a perfect storm of reduced enrollments, reduced endowments, and increased expenses all at the same time.
No longer Recession Proof
Higher education typically has been considered a “recession proof “ industry, with students going to school regardless of economic conditions and in fact enrolling in higher numbers during recessions in order to ride out bad job markets and improve their skills. During the 1918 Spanish Flu Pandemic, American colleges and universities responded with quarantines and masks much like today. However, the COVID-19 pandemic is unprecedented in modern history forcing colleges and universities to suspend classes while faculty and students fear catching the virus on campus. This in turn is leading to lower tuition and dormitory revenues, and increased costs due to more stringent cleaning, more personal protective equipment for faculty, staff, and students, increased healthcare screening and staff, and lower capacity due to social distancing.
In addition to lower revenues, public colleges also are facing the potential of reduced state funding due to decreasing state tax revenues. Loss of lucrative international students due to travel restrictions and a hostile domestic political environment further undermines the school’s finances. This would force schools to increase tuition and student debt would soon follow. (So now might be a good time to question a liberal arts degree and possibly pursue a more marketable / lucrative degree). Private colleges, even those with decent endowments, are also facing financing pressures due to declining enrollment and there is the potential that some colleges might close.
Layoffs and Cost Cutting
Schools are also responding by laying off faculty and staff, including the University of Akron, the University of Texas at San Antonio, and Ohio University. They are also putting construction projects on hold, and freezing hire and raises. These are drastic measures and if the fall semester suffers from 15% or more enrollment drops as experts predict, then many schools will not survive in their current form and might end up closing or becoming a satellite campus.
America will get through the COVID-19 coronavirus pandemic, but the future of American Higher Education will look very different than it does today.