How might the COVID-19 pandemic ultimately impact higher education?
In 2013 I introduced the peak higher education scenario. I’ve developed it further since. Alas, American higher education has generally fulfilled that forecast. Now that COVID-19 has hit, things are getting worse, and faster. Imagine peak higher education on steroids and with the fast forward button jammed down.
tl;dr – it could be bad. Very bad.
In this post we’ll identify the various pressures the pandemic exerts on colleges and universities. Let’s focus on the financial dimension. For sake of (relative!) simplicity I’ll focus on the United States. Reader can carry some findings over to other countries’ post-secondary systems, depending on local conditions.
Preparatory notes: the economic hit may be severe and complex, with many moving pieces and interlocking elements. As you read on keep in mind those connections.
Pandemic: I’m going to refer to my previous scenarios about how COVID-19 could play out, short, long, and wavy. My assumptions about the broader economic picture will stem from those futures.
Apologies for being telegraphic or clipped in what follows. I am running low on time.
Cuts to public higher education American states have reduced per-student funding since the early 1980s, generally. Recessions have accelerated this tendency, as reduced state economic activity cuts tax revenues. The American economy is hitting a recession for at least one quarter this year, so we should expect at least a 2008-2009-level reduction in support.
If COVID-19 follows my other scenarios (long, wavy), we’re looking at multiple quarters of recession. We could also call this a depression. Whichever terminology we use, state governments will have less to spend on higher ed.
To expand on that point a little: think of how unemployed people make less, so pay less in state income taxes. They also spend less, which means a smaller amount of sales tax reaches state coffers. State governments may also see certain budget lines forced to grow. Think of publicly supported health care as the pandemic sickens residents. Think, too, of state infrastructure work becoming more expensive: extra cleaning of certain sites, funding to public medical systems. Recall that states have community obligations as well.
Combine that with the very low regard most states have for their public colleges and universities (see this story) and imagine just how far public appropriations can fall by fall 2020.
Endowments For the relatively small number of campuses that have significant endowments, those are in serious trouble now.
Three-quarters of the $630 billion in endowment funds at U.S. universities and colleges is invested in equities, or stocks, according to the most recent available accounting, at a time when share prices have plummeted since the start of the coronavirus.
This may rebound or even recover at some point, depending on how long the pandemic rages and just how far it ruins the economy. In the meantime, those colleges and universities will likely suffer a hit.
Families spending less As the overall economy sours many families will have less to spend, and still less desire to. They will hunker down for safety and survival. Not all – some will be profligate on cheap credit, while others maintain or expand their resources. But a good and growing number will lack the stomach to put out for college.
One result is down-shifting which institution they attend. Instead of a research-I, a state school. Instead of a state school, a community college. Rather than a liberal arts college, a wholly online enterprise.
Another result may well be holding off on going to university at all.
Now, there’s a strong counter to this, namely our habit of increasing enrollment during economic crises. Community colleges should see a spike upward, as they did in 2008-2009. Online-only schools may as well.
Charitable giving Gifts, donations, and alumni support may drop as well.
Philanthropy, especially annual campaigns, will decrease as individuals lose jobs and personal net worth. Overall giving in 2008 dropped 11.7 percent from the previous year, and donations to education also experienced similar double-digit drops. Endowment returns will decrease in correlation to stock-market performance; in the year following the Great Recession, endowment returns dropped on average by 23 percent, according to a survey of more than 400 universities.
Enrollment decline During this semester we may see some students disengage from classes for a variety of other reasons: personal stress, family health, economic crisis, bad experiences, technological issues, and more. They could take incompletes or withdraw from classes.
What happens to them in summer? How many will take classes then? Will that odd season see an enrollment drop?
But summer pales in importance next to fall term. As I’ve said, much depends on how the pandemic plays out. If COVID-19 is done by August – or, more importantly, if we perceive it as beaten by then – we could see students return to campus in full force. Some might not. They could fear infections, either from insufficiently cleaned sites or from risky classmates. Others might prefer the online experience because of its convenience or the safety of doing it from home. A gap year might look appealing. Overall enrollment might tick down.
And if COVID-19 continues to rage, or comes roaring back during fall term? How much further will enrollment slide? Art & Science Group polled high school seniors and found some who are rethinking college this fall, either considering attending a more local and cheaper campus, or who are pondering skipping this fall term entirely. And recall Brian C. Mitchell and W. Joseph King’s aphorism from How to Run a College (2018): enrollment means revenue.
I’ll return to this below.
Refunds Several universities have issued partial refunds to students for room and board. For example,
At the University of Wisconsin system, which encompasses the state flagship in Madison and 12 regional campuses, officials estimate they are paying out about $78 million for refunds of room and board charges after clearing students out of residence halls.
“We decided to refund this because we thought that was simply the ethical thing to do,” said system President Ray Cross. Students and families need the money, he said. “Of course, this is a huge revenue hit.”
Refunds could go beyond room and board. Fees are a likely target, as we can see in this petition, which calls on the University of California San Diego to reduce fees that the author deems to be no longer appropriate:
Since UCSD decided to put all the classes online, then the school fees, like
Spr Qtr Campus Activity Fee 73.06
Spr Qtr ICA Activity Fee 259.04
NonRes Supplemental Tuition Sp 9918.00
Spr Qtr Recreation Facil Fee 117.00
Spr Qtr College Activity Fee12.08
SPRING QTR STUDENT SERVICE FEE 376.00
SPRING QTR TRANSPORTATION FEE 64.58
TUITION SPRING 3814.00
Spr Qtr University Center Fee 101.46Should be lower or cancel. Please support please. A lot of students still suffer from the student loan.
The bigger target is tuition. It may well be that many students find the digital experience to be of lower quality than the face-to-face instruction they had recently received. Beyond student opinion, stories could circulate through mainstream and social media of badly designed classes, slow response times, awful video interaction, etc. How many will request partial refunds or reduced tuition prices? How many will do so informally versus filing lawsuits (Americans do love litigation) versus lobbying states legislatures?
Campus medical costs The majority of college and university costs are compensation to staff. Custodians to presidents, professors to librarians, paying for people is typically the lion’s share of a campus budget. And that may shoot up. Medical costs have already been rising, as insurance costs rose and institutions were unable to pool resources for improved economies of scale.
The pandemic should make this worse. As more people get sick insurance companies will have to pay out more, which puts pressure on them to realize more revenue through fees. And as more academics get sick, ditto. It may well get more expensive to operate a campus – just as revenue starts dropping.
International student numbers These may decline worldwide for obvious reasons: fears of infection and official travel restrictions. How long these fears persist depends on how long the pandemic lasts and with what severity.
Some American colleges and universities have relied on international students since around 2000. Their absence is another financial blow.
Campus sports The NCAA is paying Division I campuses much less than they expected, as games get canceled:
Two weeks after the event was canceled, the NCAA announced it will be distributing $225 million to its approximately 350 Division I members, much lower than the $600 million it was set to dole out in installments had the tournament been played.
This isn’t a great deal of campuses – precious few actually make money on spots – but points to ripple effects throughout American academia. Some schools offer sports to boost recruitment. What happens when those games are no longer played? How long does fondness for and awareness of teams last when they’re mothballed?
Put all of these together and what happens to American higher ed by this time next year?
One academic thinks one fifth of these institutions are staring at a cliff:
I think in the short term, it’s not 10 percent that are in real trouble, it’s 20 percent. That’s not to say 20 percent are going to close. But it ups the possibility. We’re now going to have upward of 20 percent really terrified. If this crisis is going to take out all of next academic year, that bottom 20 percent may never come back.
Let me flesh out that death’s head a little more. Think, first, of queen sacrifices. As enrollments slide for some, doing a cost-benefit analysis is going to be very appealing for quite a few administrators and trustees, not to mention making sense for legislators. Departments that bring in the lowest number of students – and also fail in institutional politics – are likely to face cuts or mergers with other departments. The same goes for other units: programs, schools.
Campuses can also merge. This can be voluntary, when a healthier college or university absorbs one on the edge of extinction (really “acquisition” is a better name than “merger” for this reason). It can also be involuntary if state governments get involved.
Closures are now more on the table than they have been for the past decade.
Alongside these measures all colleges and universities have some tested tools in their toolbox:
- Nudge faculty and staff out the door with buyouts, early retirements, and other inducements or maneuvers.
- Cut faculty and staff compensation through furloughs, reduced medical support, reduced retirement support, cuts to salaries.
- Increase tuition and fees, expecting students to go further into debt. When will we reach the $2 trillion mark, fall 2021? Spring 2020?
- Double down on adjunctification after an initial wave of not rehiring adjuncts. Who will be able to fill open tenure lines, much less create new positions?
- Cut all kinds of budget lines: professional development, building maintenance, salaries. Campus politics will heat up as units and individuals jockey to avoid the next swing of the ax. I expect academic libraries will be in some cross hairs.
- Expand online offerings. After all, these can’t give you coronavirus. And there’s little expectation of tenure among online instructors.
- Keep trying to tell the story of higher education’s value in more effective ways.
- Deny that there’s any crisis. Seriously, people will do this… and they’ll tend to have tenure.
I do wonder if we might not see some new construction, since interest rates are effectively zero and campuses can borrow… unless their credit ratings are too low for banks.
About those cuts: back in 2001 and, less so, in 2008 there was talk of “cutting the fat.” I’ve heard some of this since, usually from Republicans complaining about some of higher ed. Yet as Chris Newfield acidly and correctly notes:
But Paul's frame is wrong&will block that: #highered has been overspending. This implies we have fat still to cut. The @chronicle should never publish expenditure charts like this one, uncorrected for enrollment growth or inflation. 2/3rds of increase was HEPI, rest enrollment
— Christopher Newfield (@cnewf) March 25, 2020
We’re out of fat. We’re cutting sinew, muscle, and bone. Hence my forecasting of queen sacrifices, mergers, and closures. Peak higher education on steroids.
How higher ed can best navigate this terrible crisis is… the subject for another post.
PS: The title of this post is a reference to a classic line from the great science fiction tv series Babylon-5.
For more reading consider Paul Friga’s recent article.
(thanks to Todd Bryant, Michael Horn, and more friends for links and thoughts; cliff and birds photo by Derek Bruff; cliff by Michael Coghlan)
Bryan,
You’re right on with this prediction. Higher ed is headed for a terrible reckoning. Along with a lot of other industries it will line up for a bailout, but the amount of money they want just isn’t there. I support the mission of the schools and the efforts of the professors, but the higher ed industrial complex simply got too huge and sells an obscenely overpriced product of dubious value. As Dahn Shaulis has documented, higher ed was headed for a meltdown already. The coronavirus will just make it more precipitous and sudden.
As for blaming state funding cuts, if the Christopher Newfields of the world had a shred of honesty, they would preface their pissing and moaning about the cuts by acknowledging that private colleges also had skyrocketing costs, we likely built too many public colleges, we let them get too big, many colleges have huge endowments and slush funds, it was always questionable to feed/house and entertain students, too many people go to college, students shouldn’t be compelled to go four years, colleges shouldn’t control credentialing and access to the job market (a huge conflict of interest), sportsball should have long ago been spun off as a separate fan-supported entity, it’s inexcusable to gouge students for textbooks and exploit the adjuncts, and on and on.
Keil, thanks for the plug. Yes, we saw the College Meltdown years ago, as well as much bigger concerns related to environmental destruction and worker oppression. People have been looking at climate change and pandemics since at least the early 1990s. See also my US Injustice blog from 2008 to 2013. Before that I was doing research on environmental justice and Quality of Life Indicators (1998-2010) but most of that work ended up in file drawers of my clients.
http://theamericaninjusticesystem.blogspot.com/
https://collegemeltdown.blogspot.com/
Keil, thank you for the thoughts. Always good to find another Dahn Shaulis fan.
“the higher ed industrial complex simply got too huge” – I think that’s where we are, especially since 2012 or so.
I’m really struck by your point about college sports. Like the European model?
I would disagree with a few points.
-Chris Newfield is really focused on public higher ed. To be fair, that’s about 2/3rds of US higher ed, depending on how you measure it, and a very rich field to focus on.
-“many colleges have huge endowments” – actually, no. Most have zero or paltry amounts. Only a relative few have endowments sufficient to be of real use.
Bryan, thanks for replying. I think the higher ed sector was too big starting in the 19th century, it picked up steam after WWII with the GI Bill, but it really got too huge post-1965 with the easy availability of federal loans coupled with official government policy to have everyone go to college. The documentary Broke, Busted, and Disgusted makes this point. The post-Griggs decision for more employers to use college degrees as a requirement in hiring was a factor as well.
Re college sports, it never made any sense to attach sports right to schools. The entire rest of the world doesn’t do this in any major way. It’s a flagrantly stupid and destructive model we got from the English boarding schools and colleges in the 19th century. Even most sports in the US (X Games, most Olympic sports, motor sports) are not attached to schools. I suggest you watch Schooled: The Price of College Sports or read Taylor Branch or Joe Nocera.
Newfield, Goldrick-Rab, and the rest of the “state funding cuts are to blame” crowd are right that many states haven’t kept up the per-student spending with enrollments. But they don’t do a good enough job of acknowledging the financial predicament most states are in, plus they gloss over other factors like the increase in administration and complete lack of cost containment by colleges.
Yes, many colleges don’t have big endowments, but many do, including some of the ones like George Washington and NYU that do the worst price gouging.
Bryan,
I enjoy reading your pieces, and this one identified critical problems—not challenges and not opportunities. Unfortunately, I believe that state funding to higher education will drop to unbelievable lows. Of course, many governors and legislators will give a wide-spectrum of reasons. To the point: I predict that we will see many public colleges and universities close. I predict that we will see many independent colleges and universities close.
The selective universities and colleges will survive, but they will be stealing from one another. Rugged individualism.
We will have fewer regional universities. We will have fewer community colleges. We will have more technical colleges and polytechnic universities.
We will experience more than a queen’s sacrifice.
What happens to our civil society when the number of unemployed reaches many millions than we will read about on Thursday? Perhaps a more “genuine” form of populism will emerge? Not Trump. Not Sanders.
The outcomes that I predicted, in this message, are not relevant. What will be relevant is how long can the federal, state, and municipal governments pay for critical public services in an extended period of little revenues and high expenses? No state government deficit are allowed. State and county sales tax revenue and local property valuations and revenue will crash.
Is it time to come up with something far beyond the queen’s sacrifice? Yes, absolutely. Sadly.
Noel, thank you for these dark meditations.
You are right to zero in on how we can keep funding the necessary public services. If we foul this up financially we’ll be in for some truly terrible triaging.
On the other hand, or in another vein, I will post about the positive aspects of higher ed’s sudden migration online. Coming soon.
Noel is accurate, I think, and we need to envision what will replace the credentialing system that we *now* have. Precedent for such a massive change was set before 1840, the demise of an earlier social institution that served for centuries in various ways — indentured apprenticeship. Crushed by the advent of wage labor, changes in the workplace and how it was managed, apprenticeship imploded during the industrial revolution.
We are at a similar juncture right now — COVID is an externality that has the potential of deinstitutionalizing higher ed — including public formal post-secondary education, as Noel astutely points out. Low-status branch campuses will be the first to close down. CCs will have to rethink their missions IF millions and millions are out of work.
Background on this: Here in Florida’s Panhandle, we’ve had one major disaster after the other: in 2010, we had the BP Oil Spill which we STILL have not recovered from ECONOMICALLY. BP pumped billions into the local economies, but no one noticed. Then, in 2018 it was Category 5 Hurricane Michael, and my house is still unoccupied, still being repaired. The accumulated effect is beyond comprehension, and now a global pandemic on top of it. The psychological shock of all these disasters is hitting the schools hard — local stats on district school participation online is DOWN significantly. It’s not working. People here are desperate because our tourist industry is our life-blood, and the virus has just shut it down, far worse than the BP Oil Spill.
Here in Florida’s Panhandle, we are rural, and our banks here don’t know how to access SBA PPP loans. They are skeleton staffs to begin with. It will be the same (but more ironic, of course) as rolling out ObamaCare in 2014.
Glen, you are exactly right that the credentialing is the crux of the issue, and especially in the wake of the virus it will be even more so. Even if the colleges get bailed out (very unlikely), completely reform themselves, or we come up with new version of higher ed, or make it free, or even migrate it online, none of this will matter if employers start hiring people without degrees. Since most people go to college just to get the degree, most people just won’t go to college any more. That is likely the reality after the virus, when people will be desperate to get into job world and employers will be face with a big pool of applicants without degrees.
Credentialing: so far there’s a lot of anxiety and a flurry of improvisation around this as the campus level, starting with grades, and quietly moving into student evaluations.
I’ve put in a few queries to accreditors I know.
Keil, what role do you think microcredentials could play?
Bryan, I think microcredentials are fine. The main things we can’t have in a credentialing system are the schools issuing the credentials (a huge conflict of interest), the credentialee paying to be credentialed (another conflict of interest), onerous requirements for the credential, the credential systems to be ranked, and there be hundreds or thousands of credentialing systems.
This is what we have right now with the college degree system. The schools themselves issue the credentials, the students have to pay for the credential, the schools impose lengthy seat time and elective requirements, the credential systems are ranked (Harvard judged as infinitely superior to Podunk State), and there are 4,000 or more credentialing systems (one for each college). All of this combine to create the biggest reason why college is so obscenely expensive. Plus when there are that many credentialing systems, job applicants aren’t vetted by the same consistent process, and employers aren’t able to judge relative capability.
The credentials should be entirely issued by third party sources. Professor recommendations and school-related activities and projects can be part of the third-party credentialing process, but we can’t have schools be the ones to issue credentials. Ultimately employers will decide what the credentialing process will look like, as they grow to trust certain sources. When the dust settles I think there will be a few established sources like Linkedin or HireArt, or maybe one or two sources per industry (one for healthcare, one for tech, etc.). It should involve an in-person assessment with interview, battery of exams, portfolio of work, etc.
This is what we have right now with the degree system. Professor recommendations and school-related activities and projects can be part of the credentialing process, but we can’t have schools be the ones to issue credentials. This has created a system where credentialees have to pay to be credentialed
Here’s a new approach to credentialing — not quite as bad a blockchain proposals making the circuit (who can afford that post-Covid?) — whatchathink? https://www.christenseninstitute.org/wp-content/uploads/2020/04/Credit-Transfer-2.pdf
Glen, I’m sorry to hear about your house. Good luck.
Glen, re the Christensen idea. This is a huge leap forward. Finally we are getting someone who really understands the entire problem: we need credentialing to be done by third parties. They are right to make the parallel with EHRS and healthcare records, and call for a credential system like the CFA exam. They’re getting two things wrong: 1) the degree system should not be run parallel to this, it should be abolished 2) governments should not be paying for it, employers should
Yes — sadly — I finally agree with you.
But as Noel says, these are “critical problems”– not simply challenges to be faced.
This means, we need to quickly brainstorm what will replace the credentialing systems that we now have — quickly: it took indentured apprenticeship decades and decades to disappear, and decades after for higher ed to emerge in its place.
So, just to be clear, we are talking about social institutions here, and the need for something different. Ideas?
A huge question, Glen.
I’m not sure we’re at the stage of creating a post-secondary ecosystem from scratch, but it’s a fine prompt.
To think, first: what needs should such a thing meet?
We assume teaching and research. Public service?
Predictions about the future come in many different packages.
One such tradition is centuries old, and it has been warning for years about possible deep structural changes in society. Here’s a sample, back in Jan 2020.
https://www.jupiterrising.com/2020/01/12/1698/
This next one is much more self-serving, but provides additional “data” points.
https://astrostyle.com/astrology-and-the-coronavirus/
The issue, from this perspective, is not simply reinventing post-secondary education, but the opportunity for major reforms of society itself. None of this is millennarian, as it was in the 1960s. That was then, this is now. This will be harder, more difficult. The music and drugs won’t be as good.
“For they have sown the wind, and they shall reap the whirlwind” Hosea 8:7
Any thoughts on the extent to which this article is still (or ever was) on point? https://www.chronicle.com/article/A-Merger-Won-t-Save-Your/247194
It would be foolish for schools to risk merging when they need to be planning branch closures. Low performing branches are a liability in the present environment. Call this phase of the college meltdown, the Great Contraction.
The Chronicle article is closed off to non-subscribers. But Bryan reviewed the article in Medium.
https://medium.com/@bryanalexander/how-likely-are-campus-mergers-1cb06641b769
Glen is right, I just don’t see mergers saving many colleges. We just have way too many colleges. As education historians like David Labaree have pointed out, we built too many colleges starting in the 19th century.
The colleges have been sustained by a post-WWII artificial demand caused by official government policy to push everyone to attend college, plus the colleges (wrongly) controlling access to the job market with their degrees. This has always been a huge problem, and in the last few years it’s gotten more pronounced as college has gotten more expensive and enrollments have dropped. The virus will deal the death blow to many colleges. Mergers and closures will only save a limited number.
Keil, thank you so much for remembering my response!
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Yes, it doesn’t look good, but some people saw it coming, and some have felt it for years, decades, and generations.
https://www.linkedin.com/pulse/lets-all-pretend-we-couldnt-see-coming-dahn-shaulis/
Yup.
Here’s a good source for employment data, Shadow Stats. It’s much better than BLS. I used it during the Great Recession.
http://www.shadowstats.com/
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