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Students Demanding Refunds After Campus Closures Will Seriously Hurt Some Schools

Students Demanding Refunds After Campus Closures Will Seriously Hurt Some Schools

“Every residential college and university in America relies on that auxiliary revenue stream. It is baked into the budget”

Colleges and universities with massive endowments will be fine, but schools which are already experiencing financial problems could be in serious trouble.

Inside Higher Ed reports:

Coronavirus Closures Pose Refund Quandary

Students across the country are making hurried plans to move out of their dorm rooms as the number of campus closures over coronavirus concerns skyrocketed past 200 Thursday.

Away from their dorms and dining halls, many students and parents are wondering if and when they’ll be refunded room and board fees.

But for colleges relying on such fees — called auxiliary fees — to support their operating revenue, refunds could be devastating.

“Every residential college and university in America relies on that auxiliary revenue stream. It is baked into the budget,” W. Joseph King, president of Lyon College and co-author of How to Run a College, said in an email. “Significant refunds will cause real problems at many institutions. It will just be worse for those with tighter or deficit budgets.”

Auxiliary services are becoming an increasingly important part of colleges’ operating revenue, especially for private, four-year institutions.

“Most colleges run their own housing. It is usually their biggest source of auxiliary revenue,” King wrote. “Assuming the residence hall is paid for, the net auxiliary revenue can be substantial. Even if it is financed, there is usually a positive revenue stream.”

Smith College, a women’s liberal arts college in Northampton, Mass., with approximately 2,400 students, is requiring all students to move out of on-campus housing by March 20. Smith said it will offer prorated room and board refunds. In fiscal year 2018, Smith collected $40.4 million in residence and dining fees — about 16.5 percent of its total operating revenue.

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Comments

Count my former university as one of those to be hit hard. There have been layoffs, dorm closures and downsizing of all kinds in the last five years as campus enrollment has plummeted from 9200 to 5300. The campus is operating on a shoestring budget as it is, and having to do refunds on a large scale would be crippling.

Dantzig93101 | March 15, 2020 at 5:35 pm

I hate to say it, but: Good! It’s about time that some of those indoctrination centers went out of business.

Colleges with $75+K annual costs have been “dead men walking” for a long time. Most will survive some refunds. The larger danger, in my opinion, is that distance learning will be occurring at all levels of education, including elementary school children. Unless this is an abject failure, it is hard to see tolerance for $75+K costs continuing at anywhere near the same level.

I see the closures of everything being a bit about virus vector control, a bit about cover your ass strategizing, and a bit about tanking the economy as a way to make the Trump gains go away. I am sure all three are in play to varying degrees with all of the players who have shut stuff down, and of course the colleges were the first to go with it full scale. It happened so fast that I have a hard time believing that every single place came up with it independently on their own. You would think that some of them might realize that it will likely lead to some long term changes in how education is done, and it might not be a great idea to close the campus given that there were likely entire states without a single positive test at that point.

I suspect Oberlin was salivating over how they could save a quick Million on dining and custodial services. Wait, that would mean that they can think more than an hour into the future. Nevermind.

Another Voice | March 16, 2020 at 5:41 pm

Not Oberlin’s year. The action of closing down campus should see more protests about tuition reimbursements and/or the out-of-pocket cost of students required to vacate campus etc. Already crying poverty to the courts it will be interesting to see their new and return enrollment numbers and meeting the fixed expenses for the upcoming contractual 20/21 year. What do they say about Karma being a bitch?

Oh, let me feel sorry for those schools — having to refund money that they didn’t earn! The students paid (or the lenders and/or parents paid) for the school to provide schooling, room and board. If the school breaches its contract, then the students are entitled not just to the unearned tuition, room and board, but for the WASTED money and time for the past half-semester.

I don’t care if it busts the schools, they should not have bought into this bullshit panic!

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