We’re just weeks into the Coronavirus crisis, but many colleges and universities are already facing financial meltdown. Tucker Carlson recently predicted some schools would not survive this, and he was right.
The reason things are unfolding so quickly is that many schools were facing financial strain before the crisis hit.
Kirk Carapezza writes at WGBH:
Struggling Colleges Face Financial Nightmare With Students And Classes Off CampusEven before the pandemic, many small private schools like Hampshire were facing a financial situation reminiscent of the nightmare in the Stanley Kubrick film. Wingenbach said the college had figured out how to survive, launching a $60 million fundraising campaign led by Hampshire alum Ken Burns, the documentary filmmaker.“It was just a question of being really disciplined about how much we spend and how we allocate our resources,” Wingenbach said.But the pandemic has shaken the financial stability of most private and public colleges. Collectively, they owe graduating students millions of dollars in refunds for room and board — returning students are being offered credit toward next year’s housing instead of a refund, to cushion the blow of the losses. The outlook is so bleak that Moody’s Investors Service changed the credit rating for higher education from stable to negative a few weeks ago…Hampshire is on the hook for about $900,000 in room and board refunds, according to Wigenbach. If current students are reluctant to leave home, or families can’t afford to pay, Hampshire will take another unexpected hit this fall with the loss of housing and tuition payments.
Many schools were already worried about lower enrollment. Now they are worried that some enrolled students won’t return in the fall.
From CBS News:
Colleges suffering huge financial blows from pandemicColleges across the nation are scrambling to close deep budget holes and some have been pushed to the brink of collapse after the coronavirus outbreak triggered financial losses that could total more than $100 million at some institutions.Scores of colleges say they’re taking heavy hits as they refund money to students for housing, dining and parking after campuses closed last month. Many schools are losing millions more in ticket sales after athletic seasons were cut short, and some say huge shares of their reserves have been wiped out amid wild swings in the stock market.Yet college leaders say that’s only the start of their troubles: Even if campuses reopen this fall, many worry large numbers of students won’t return…”If you play out the scenarios that are out there, it really makes you nervous,” said Mary Papazian, president of San Jose State University, which estimates it will lose $16 million by the end of May. “We may be looking at cutting academic programs if it comes to it. We may be looking at laying off people. It’s a dire situation if the worst comes to pass.”
The recently passed stimulus bill included some money for colleges and universities, and they seemed to need it yesterday.
Kery Murakami writes at Inside Higher Ed:
Anxious Wait for Stimulus MoneyWhen Congress set aside about $14 billion specifically for higher education in the stimulus bill it passed two weeks ago, lawmakers had the well-intentioned goal of most of the money going to colleges and universities that serve larger shares of lower-income students.But lawmakers also didn’t want to penalize large institutions that don’t enroll as many lower-income students.The way Congress decided to deal with the issue, however, has complicated how billions of dollars of aid will get to colleges, lobbyists representing colleges and universities worry, and it could delay the money as campus leaders are anxiously dealing with a financial hit from the coronavirus epidemic.“We are deeply worried the institutions’ money won’t go out, in the best-case scenario, for a month, and in the worst-case scenario for several months,” Terry Hartle, the American Council on Education’s senior vice president for government and public affairs, said during a webinar last week for members of the Education Writers Association.
How long will it take for Democrats to propose a higher education bailout?
When that happens, Republicans should hold out until schools start cutting pointless administrators and departments.
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