Monday, May 4, 2020
Colleges Face 15%-20% Drop In Enrollment; S&P Lowers Credit Rating Of 25% Of Colleges
Wall Street Journal, Coronavirus Pushes Colleges to the Breaking Point, Forcing ‘Hard Choices’ About Education:
From schools already on the brink to the loftiest institutions, the pandemic is changing higher education in America with stunning speed.
Schools sent students home when the coronavirus began to spread, and no one knows if they will be back on campus come fall. Some colleges say large lecture classes and shared living and dining spaces may not return. Athletics are suspended, and there is no sense of when, or if, packed stadiums, and their lucrative revenue streams, will return.
Every source of funding is in doubt. Schools face tuition shortfalls because of unpredictable enrollment and market-driven endowment losses. Public institutions are digesting steep budget cuts, while families are questioning whether it’s worth paying for a private school if students will have to take classes online, from home.
To brace for the pain, colleges and universities are cutting spending, freezing staff salaries and halting plans for campus building.
“The world order has changed,” said Sundar Kumarasamy, vice president for enrollment management at Northeastern University, where 18% of students are international and may not be able or willing to travel to the U.S. come fall. “When we build models, we don’t have a variable called virus.”
For many schools, the pandemic is exposing flaws in their own business models. Even before the virus hit, many colleges and universities were running on razor-thin margins, with 30% of those rated by Moody’s Investors Service showing operating deficits. ...
Before the pandemic, about 100 of the nation’s 1,000 private, liberal-arts colleges were likely to close over the next five years, predicted Robert Zemsky, a professor at the University of Pennsylvania’s graduate school of education, in “The College Stress Test,” a book published in February. He now says 200 of those schools could close in the next year.
Schools should expect a 15% decline in enrollment next fall and a $45 billion decline in revenue from tuition, room and board and other services, according to the American Council on Education, the nation’s largest advocacy group for colleges and universities. Some administrators say those projections are too rosy.
Inside Higher Ed, Colleges Could Lose 20% of Students:
Four-year colleges may face a loss of up to 20 percent in fall enrollment, SimpsonScarborough, a higher education research and marketing company, has predicted on the basis of multiple student surveys it has conducted.
Inside Higher Ed, S&P Slashes Outlook for 127 Colleges:
S&P Global Ratings dropped outlooks on more than a quarter of the colleges and universities it rates because of the COVID-19 pandemic’s effects on higher education.
The ratings agency cut ratings on 117 colleges -- 84 private institutions and 33 public institutions -- from stable to negative. It changed outlooks for 10 more -- seven private and three public -- from positive to stable. And it left unchanged outlooks for 50 institutions that were already negative.
Those actions mean the share of colleges and universities that S&P rates with negative outlooks has more than quadrupled in just a few months. At the end of 2019, just 9.2 percent of its rated higher ed universe had negative outlooks. After the actions announced today, 38 percent does. The agency maintains public ratings on 436 public and private colleges and universities.
- The Atlantic, There’s No Simple Way to Reopen Universities
- Forbes, Here’s A Look At The Impact Of Coronavirus (COVID-19) On Colleges And Universities In The U.S.
- Inside Higher Ed, More Cause for Concern About Fall Enrollment
- New Yorker, How the Coronavirus Pandemic Has Shattered the Myth of College in America
- Politico, College Choice: Reopen and Risk Virus Spread or Face Financial Ruin
- Slate, Empty Lecture Halls, No Fall Football, a Freshman-Only Campus
For complete TaxProf Blog coverage of the coronavirus, see here.
Yes, because most universities fear a major drop in income if they don’t offer - or at least say they “plan” to offer - in-classroom instruction this year, many are willing to risk infecting both students and faculty (including the most vulnerable at high risk of dying) when they return to the close confines of a classroom where infection is almost inevitable.
Therefore, for those who teach at law schools, and are also at exceptionally high risk, it's important to understand - and to persuade the administrators planning for the fall term - that the concerns and considerations related to undergraduates and to law students are very different, and that the law school can easily operate differently from the undergrad colleges.
Thus, even if a university feels compelled to accept the risks of COVID-19 infection by having in-classroom instruction this fall for undergrads, it can - and arguably should - permit the law school to largely proceed with on-line instruction if it decides it is appropriate to do so.
Many articles report that parents are growing reluctant to send their young children to a university far from home when there is a significant chance that they will become infected with COVID-19 from interactions in classrooms, dormitories, and elsewhere - especially if there should be a second or even a third wave - where the in-patient hospital care, out-patient hospital care, and and "home"/dorm care they could receive may be problematical.
Many incoming and other students want to have, and parents who pay the bills want them to have, the complete "college experience" where they live away from home and with peers, often for the first time in their lives; participate in sports, clubs, parties, and other activities; learn from the close supervision and discipline provided in a classroom how to study at a level far exceeding high school; etc. - something they would not receive from on-line instruction alone.
Indeed, many are balking at suggestions that they might have to pay the same high tuition for on-line instruction which the university charged for in-person classroom learning, and others suddenly can't - or are, at the very least, very uncertain about being able to - pay the high tuition at a major private university.
For these reasons, it is expected that many newly admitted students will eventually decide - in a significant number of cases even after putting down a deposit - not to attend any university this academic year (i.e., "take a gap year"), or to attend a college near home where they will save money and be better situated should they become infected with the virus, or if there is another wave of infections.
Many of these same concerns may well motivate even students who were scheduled to return to their university to continue their education to likewise take a gap year, or to enroll for a term or a year at a less-expensive college near home.
For all these reasons, it is likely that many universities, reluctant to lose the income ordinarily derived from tuition, room, board, etc. - might be willing to cut some corners and risk scheduling in-classroom instruction for the fall term, despite the very substantial risk that some students and faculty members will become infected and possibly require hospitalization.
But almost the opposite is true regarding law students.
Experience during earlier times of economic uncertainty and a poor job market shows that more students will want to go to law school and become 1Ls to ride out the period of great economic uncertainty, and graduate three years later into a stronger economy with a better job market including substantially improved opportunities for employment as attorneys or otherwise.
Those who will be returning to the law school seem to be very eager to simply get their degree, pass the bar, and begin earning an income, and are less interested about issues such as on-line vs. in-classroom instruction which are a much greater concern for inexperienced undergrads.
Also, few law students come for, or really actively participate in, the various extra-curricular activities and opportunities so beloved by many undergrads.
Law students are older and more mature, so concerns about not being able to take care of themselves if they become infected, and/or if there is a second wave, are far less than for immature 18- or 19-year old undergrads who are often just learning to live away from their parents for the first time.
Finally, law students have generally developed their study habits sufficiently enough that they no longer need the very close supervision and discipline which can best be provided in a classroom setting, and they probably already have significant experience taking some courses on line - just the opposite of undergrads.
In summary, many if not most of the reasons pressuring administrators to take the risks of infection associated with in-classroom instruction this fall - e.g., reducing sharp drops in attendance, the need for close in-class supervision and discipline, unfamiliarity with on-line learning at a higher ed level, etc. - do not apply to the law school and law students.
So, even if administrators feel compelled to schedule in-classroom instruction for most of the university this fall, it can easily permit the law school to proceed (with possible exceptions for clinics and some specialized courses) with on-line instruction for the fall 2020 term.
After all, most law schools have - and certainly should be willing to assert where appropriate - some independence from the remainder of the university, especially that regarding undergraduate education.
Posted by: LawProf John Banzhaf | May 4, 2020 5:58:48 AM