Paul L. Caron
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Monday, December 7, 2020

Colleges Grapple With Grim Financial Realities: Net-Tuition Losses And Steep Discount Rates Augur A Precarious Spring

Chronicle of Higher Education, Colleges Grapple With Grim Financial Realities: Net-tuition Losses and Steep Discount Rates Augur a Precarious Spring:

A new survey conducted by The Chronicle and two other organizations sheds some light on the financial challenges that colleges face as they approach a spring semester that might be even tougher to pull off than the fall.

Many of the surveyed institutions — particularly small private colleges — offered high discount rates and saw significant declines in net-tuition revenue. Smaller institutions and those with lower graduation rates were also more likely to lose value on their endowments.

Larger institutions, meanwhile, were more likely to lose revenue on athletic events — particularly if they had an NCAA football program. (Colleges in Republican-controlled states were also more likely to lose money on athletics.) Among doctoral institutions that have NCAA football, 61 percent experienced a decline in athletics revenue, while only 36 percent of doctoral institutions that do not have football lost revenue. The athletics-revenue losses among doctoral institutions that have NCAA football was greater than those among master’s institutions with football, at 52 percent, and baccalaureate institutions with football, at 41 percent.

Also true among larger institutions in the survey — and those with higher graduation rates — was a correlation with losses on dining and residence operations and on spending more to retrofit the campus and test for Covid-19.

The Chronicle conducted the online survey from October 20 to November 11 in collaboration with the course-scheduling firm Ad Astra and Davidson College’s College Crisis Initiative. This analysis is based on responses from financial officers at 162 colleges across the United States, both public and private, from baccalaureate to doctoral. Two-year colleges were initially part of the survey but were ultimately dropped from the final results because the number participating did not constitute a representative sample.

On the whole, says John Barnshaw, vice president for research and data science at Ad Astra, the survey confirms some assumptions about the pressures colleges are facing and indicates that institutions with size, prestige, and higher graduation rates — qualities that provided “preservative effects” in the crisis — will pull away from smaller, poorer institutions.

“There was pre-existing inequality in society before you have a disaster, and in the intermediate to long-term aftermath, it tends to expand even further,” he says. “Some institutions might be OK with weathering the storm for a year. But as this continues to go on, the more long-term to intermediate concerns are not likely to improve in the future.”

https://taxprof.typepad.com/taxprof_blog/2020/12/colleges-grapple-with-grim-financial-realities-net-tuition-losses-and-steep-discount-rates-augur-a-p.html

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Comments

Colleges are hotbeds for redistributing the wealth (of others).

How about taxing billion dollar endowments (that have compounded essentially untaxed for generations) and redistribute the money to financially stressed colleges.

I can hear the hypocritical squealing already.

Posted by: Cas127 | Dec 7, 2020 1:21:09 PM

Any info on the growth of admin costs over the years?

Posted by: David Weiss | Dec 7, 2020 10:44:05 AM

Quote: Among doctoral institutions that have NCAA football, 61 percent experienced a decline in athletics revenue, while only 36 percent of doctoral institutions that do not have football lost revenue.

That remark is in the realm of "water is wet." Football is the big revenue maker in college athletics. If you have it and can't fill huge stadiums with people, you lose income. If you don't have it, that revenue isn't there to be lost.

Posted by: Mike Perr | Dec 7, 2020 9:49:56 AM