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Colleges stand to lose millions because of the coronavirus

Schools are refunding student room and board for a portion of the semester and facing an uncertain admissions cycle for the fall.

A man walks across the nearly empty Temple University campus in North Philadelphia last week.
A man walks across the nearly empty Temple University campus in North Philadelphia last week.Read moreTIM TAI / Staff Photographer

Temple University refunded millions of dollars to students who were forced to leave their dorms and return home to finish the semester online.

There’s also money gone from canceled campus events and a loss of sports-related revenue. Many other questions swirl: Will the coronavirus affect summer and fall terms? Will students feel safe to enroll? Will their families, who may face job loss, be able to pay? Will the campus be able to open? Will it have to shut again for a second virus wave?

Temple said it couldn’t estimate how much money it has lost already — or could lose in coming months. Pennsylvania State University president Eric Barron said during a virtual town hall his school also faces a loss of millions. The Pennsylvania State System of Higher Education, which oversees 14 universities, is projecting a $100 million revenue shortfall.

And many other universities face the same dilemma, one that has no timetable and could cause lasting damage.

“There’s just no way we won’t see a tremendous financial hit to many institutions,” said Nathan Grawe, a professor of economics at Carleton College in Minnesota and author of the 2018 book Demographics and the Demand for Higher Education.

The federal stimulus package includes monetary relief for colleges, but college officials say it’s unclear exactly how much they’ll get and what it could be used for.

Compounding the problem, many colleges already were struggling to compete for fewer students as the pool of high school graduates shrinks and international enrollment wanes. Pennsylvania’s state universities have lost about 20% of their enrollment since 2010. Many colleges, even elite ones like Bucknell University, missed their enrollment targets last fall.

Moody’s, the investment rating service, this month revised its outlook of the higher-education sector from stable to negative, citing “unprecedented enrollment uncertainty” and “risks to multiple revenue streams.” It noted that more than 30% of public universities and nearly 30% of privates were already running operating deficits.

» READ MORE: As coronavirus forces colleges to move online, some give students option of ‘pass/fail’ grades

The blow from the virus could force more mergers and acquisitions — even closures, some experts said.

“These institutions have been around for a long time,” said Brian C. Mitchell, a higher-education consultant and former president of Bucknell. “They’re tremendously resilient. But there is a hard economic fact that we’re going to have to face here, assuming that what we’re hearing, in terms of modeling for both weighing the depth of the crisis and the length, is true.”

Loss of room-and-board revenue

The first major hit to college budgets came in loss of room-and-board revenue, as the virus arrived and students left midsemester. Many universities have committed to compensating students with either credit for next year or, as in Temple’s case, actual refunds.

Others have yet to announce exactly what they will do.

Lehigh University in Bethlehem said it will give students a choice of a refund or credit. The University of Pennsylvania said it also would reimburse students and announce a process later this spring. Drexel, whose school year is divided into quarters, said it won’t charge students who don’t live on campus for the spring term, set to begin April 6.

For large universities with big endowments and budget reserves, absorbing the loss will be challenging; for smaller, tuition-dependent private schools or strapped public institutions, it could be a major setback.

“This has been enormously challenging, especially for students and their families, and we as a system have a lot of work ahead of us with the legislature and the governor’s office," said Dave Pidgeon, spokesperson for Pennsylvania’s state system.

An admissions cycle interrupted

Spring is the time when colleges typically bring thousands of prospective students — those who have been accepted but not yet enrolled ― onto their campuses for tours and visits as they decide whether to commit.

This year, Temple has been able to have only one such on-campus event.

“There’s a tremendous amount of anxiety across campus about where we are going to land in the fall,” said Shawn Abbott, vice provost for admissions, financial aid, and enrollment management.

Many colleges are scrambling to create or bolster virtual tours and create virtual days for those accepted students.Temple just launched a new tour and virtual information session. It plans to release a virtual event day April 1.

At La Salle University, students and faculty were making tour videos of the campus.

“This is unprecedented,” said Dawn Soufleris, La Salle’s vice president for student affairs. “We all need to be incredibly nimble because things are changing rapidly.”

» READ MORE: As colleges compete for fewer students, the pressure rises to meet enrollment targets

Every year, La Salle holds “blue and gold days,” bringing hundreds of accepted students and their families to campus, giving them a feel for university life. The college had held a couple of events earlier in the year, but two scheduled for late March and early April will be replaced with virtual experiences, she said.

Many schools, including La Salle and Ursinus College, have rolled back their deposit date deadline to June 1 to give students more time to decide. At Ursinus, in Montgomery County, 155 of the 165 accepted students who completed a survey said an extension would help.

In addition to offering virtual chats, presentations, and panels with current students, parents and faculty, Ursinus also reopened its admissions to accept students who may be reconsidering enrollment options.

“We want to be sure we are doing all we can to help students make the right decision so they can thrive and succeed from the beginning,” said Shannon Zottola, enrollment management dean.

Still, potential problems abound

Mitchell, the higher-education consultant, questioned whether parents would be comfortable sending children to a “population dense” place like a college campus if the virus is still present. Those in urban areas may be particularly challenged for the same reason some New Yorkers are fleeing the city, he said.

Students, including those from other countries, may be hesitant to travel in the fall, especially after they were sent home this semester, said Grawe, the Minnesota professor. That could mean another revenue hit for many schools where international students typically pay full price.

For schools with a largely local draw, there could be an upside. La Salle’s Soufleris said most of its students come from Pennsylvania, New Jersey, and Delaware, within driving distance.

“We think that’s actually going to be a positive for us,” she said.

Temple also saw encouraging signs: Deposits from accepted students are running 14% ahead of last year and more than 100 students applied for admission after the priority deadline, Abbott said.

“Perhaps students and families may be more apprehensive about going too far away,” he said.

Cutting back expenses

As economic news grows bleaker, universities have begun cutting back. Temple on Wednesday instituted an administrative hiring freeze, asked departments to cut expenses this year, and said it planned for a 5% reduction next year.

And at the virtual town hall, Penn State’s Barron said the school’s hotel and conference centers, airport, housing, and food services — operations dependent on self-generated revenue — stand to lose millions. The residence and dining operation, which typically serves 20,000 students, has only about 1,200 remaining who were not able to go home, he said.

The university has committed to paying employees’ full salaries at least through April 30.

Grawe saw an upside in that universities so swiftly pivoted to put instruction online and close much of their operations.

“Campuses are proving to be adaptable,” he said. “It’s remarkable to see this much change in such a short amount of time.”