Higher Education Teeters

Every sector of the economy is going to be severely tested by pandemic closings and related fallout.

As one example, the pandemic will test every college and university and could be a deathblow to some of the growing number of economically distressed colleges and universities. Here are a few of the pandemic’s probable ripple effects:

  • fewer campus visits of prospective students, leading to a decline in applications
  • far fewer international student applications
  • reduced yields of accepted students because families will be unable to afford even deeply discounted tuition, room and board
  • a loss of good will as upset families seek refunds from March-May tuition, room and board
  • shrinking endowments meaning less “passive income” to pay salaries, keep the lights on, and maintain campus facilities*
  • reduced alumni giving due to widespread loss of income and wealth
  • due to a spike in unemployment, graduates will struggle even more to find white collar jobs that pay a “livable wage” and provide benefits, further complicating the sine qua non of higher education

Educational institutions change slowly, but the pandemic is likely to accelerate The Great Contraction. The most distressed institutions will close shop. Others will seek partners with whom to merge. Every college and university has to become much clearer about the two or three things they do especially well. Even if they successfully refine their missions and curricula, a growing number of faculty, administrators, and staff will lose their jobs.

Tough times indeed.

*the total amount of deferred maintenance is an excellent indicator of relative fiscal health

 

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