"The Hit Is Huge": Colleges Brace For 'Fatal' Blow Of Next Fall As Face-To-Face Instruction Uncertain

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by Tyler Durden
Monday, Apr 20, 2020 - 09:15 PM

A viral post written by a veteran professor on Medium recently grabbed prospective students' attention in saying provocatively: "This is a message to all high school seniors (and their parents). If you were planning to enroll in college next fall — don’t."

"No one knows whether colleges and universities will offer face-to-face instruction in the fall, or whether they will stay open if they do," University of La Verne law professor Diane Klein wrote. "No one knows whether dorms and cafeterias will reopen, or whether team sports will practice and play."

"It’s that simple. No one knows. Schools that decide to reopen may not be able to stay that way. A few may decide, soon, not even to try. Others may put off the decision for as long as possible — but you can make your decision now," the veteran teacher said, making the case that it's the worst time ever for families to make the massive financial commitment. After all, who wants to drop an initial $50K or more to potentially sit at home for Fall 2020 and take online classes?

Student sits with her belongings before returning home to Florida from Massachusetts for the rest of the semester, Getty Images.

And it's 100% accurate that colleges and universities are flying through the coronavirus economic 'pause' blindly, now slashing budgets for next year and in many instances notifying employees that drastic cuts are coming, including regarding salaries and staffing positions — possibly even reaching into faculty ranks.

Colleges and universities across the nation are stuck in financial limbo at a moment that key staffing, faculty contracts, student recruiting, tuition and donor revenue-related decisions are typically made for next year, also as controversy erupts over refusal to refund student housing and campus activity fees. Crucially, endowment values have plunged along with markets.

The $600 billion-plus higher education industry is expected to suffer effects of this Spring's campus shutdowns at least through next Fall, given everything down to campus tours for potential recruits have been canceled, leaving open the crucial question of incoming levels of freshmen and vital tuition revenue for next year. And now it's not a question of profitability, academic reputation or long-term growth, but of mere survival

In a new report Bloomberg warns this week"Administrators across the nation increasingly fear their schools may not reopen for the fall semester." This amid mass cancellations of everything from sports to summer programs and classes, to shuttering of on-campus facilities and student activities. It further details panicked institutions which were already struggling, now fearing amid coronavirus closures and 'online only' format, bracing for the "fatal" blow of next Fall, when students may opt to not return and wait things out. 

“The hit is huge,” Larry Ladd, a consultant with the Association of Governing Boards of Universities and Colleges, told Bloomberg. “They will have less financial cushion because that summer revenue is no longer is there.”

Worse, high school guidance counselors and parents are well aware of this 'state of limbo' and don't want to risk major investment in their entering college freshmen's education when there may not be a Fall semester. Bloomberg continues

“I would tell kids: Number one, the likelihood of having face-to-face classes in September is pretty darn small,” said Scott White, a retired guidance director for more than 20 years at Montclair High School in New Jersey. Referring to Covid-19’s risk to older people, he said: “You’re not going to get 65-year-old college professors going in.”

Northwestern University is still making that tough call. “Our return to on-campus instruction in the summer or fall quarters is also not guaranteed,” the school’s president, Morton Schapiro, wrote in a letter Thursday. He said the decision to refund room-and-board payments and student fees for the spring had cost more than $25 million, and the school is facing more losses from endowment declines, increased financial aid and the cancellation of some on-campus programs.

Another consultant said “empty dorms is what kills colleges” — precisely the state of things at institutions across the nation at least through summer. 

Empty campus amid coronavirus lockdown: California State University, Northridge resembles a ghost town during lockdown. Image source: Danielle Tranter/

While wealthier schools such as Harvard, Brown and Princeton are expected to weather the storm with greater ease, with some already offering students housing credit and prorated refunds conditioned in their return to campus, the crisis has hit student housing managers and investors hard for the majority of campuses in which the university doesn't own its own student housing. Some students and families are already suing to get tuition and campus fee refunds.

Needless to say this is completely uncharted territory for institutions which of necessity make all their major funding, staffing, and financial decisions some six months before the Fall opening and start of the semester. Like other sectors of the US economy, universities are bracing for the avalanche of debt problems sure to roll down hill into the still very much up-in-the-air Fall semester.