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.
For complete TaxProf Blog coverage of the coronavirus, see here.