The four questions facing university leaders during the Covid-19 crisis

With campuses closed and finances weakening, these are the broad strategic points university leaders are considering right now, according to Alan Ruby

April 24, 2020
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With continued uncertainty about the trajectory of Covid-19, there are four basic questions facing higher education leadership teams as they plan for the next academic year: will we open? If we do, who will come? How will we be financially? And how long will this last? 

Will we be open?

Ideally, yes. But what “open” looks like will depend on infection rates and what we learn about the virus. Scientific knowledge about antibodies, vectors of transmission, the possibility of reinfection and prevention is still accumulating.

Online tuition will be an option for some – particularly those institutions that already had a robust digital presence. Others will look to offer blended courses, with online classes for the first weeks or first semester and in-person classes when it is safe to do so. Or we may see socially distanced classes and campuses.

The guidelines for the reopening of universities in China preclude mass gatherings and limit numbers in labs and the library. Similarly, the elementary schools in Denmark opened last week with staggered starting times, desks six feet apart and handwashing requirements after every break.

So, we may see a shift away from large lectures to more intensive tutorial systems, or more flipped classrooms where the content is delivered digitally with scaffolded reading guides and small in-person discussion sessions.  

Who will come?

The format may influence enrolments, with students preferring an in-person experience. But there are other more immediate factors that will shape enrolments for international and domestic students.

For international students we need to look at individual preferences and some practicalities. It seems likely that some prospective students will defer enrolling until the virus has abated or a vaccine is widely available; or until the full immersion experience with face-to-face classes and close social engagement is assured.

Others may enrol in their home country or one nearby, which may increase demand for branch campuses and help places such as Singapore and Malaysia increase international student numbers.

Whatever their aspirations, international students will still need to apply for entry visas when borders are open. There could be additional health screening and closer scrutiny of medical insurance. Processing times are likely to be longer as there will be a backlog of applications. Some students may also have problems securing documentation about high school completion if schools have been closed.

When visas are secured, the next challenge will be transport. While advance bookings are currently available and relatively cheap, as travel resumes demand may exceed supply especially if constraints on cabin occupancy continue. Some of these barriers will also touch existing students, many of whom went home when campuses emptied their residence halls and closed facilities. Australian universities with an academic year beginning in March, for example, saw a sharp drop in numbers of returning students. 

Recent survey data and reports from US and UK universities point to a drop-off in new undergraduate enrolments for the coming academic year. This will increase competition for domestic students from secondary schools which, in the US, are graduating classes about the same size as they have been for the past few years, about 3.2 million.

Some universities and colleges have already waived test requirements and increased tuition discounts and the number of scholarships they offer to maximise enrolments. High unemployment and low interest rates may increase demand for higher education, just as they have in previous economic downturns, which may help institutions meet enrolment goals.

But we may also see some shifts in domestic preferences as students opt to be closer to home just in case the virus recurs later in the academic year. Universities in the US that have large out-of-state enrolments are likely to see lower numbers arriving in September, which will further reduce income.        

What does this mean financially?

The lower numbers of out-of-state and international students will reduce income when the academic year begins. This further depresses annual revenues, which were already down because some of last term’s fees for housing and services were repaid to students. And it will come after a summer where conference and short-course revenues are unrealised. At the same time as discounts and scholarships to secure enrolments increase, net tuition income will be down.

The loss of revenue will affect all institutions, but the prestigious and highly selective research universities and colleges will be cushioned by reserves and by going further down the applicant wait list to fill the incoming class.

They also usually do well with graduate school enrolments in recessions, attracting people to professional programmes. The community colleges and universities serving a local and relatively isolated community will also see less leakage.

It is the middle band of institutions, largely tuition fee dependent with a history of discounting and no endowment, that will be hardest hit. Many are indebted already and have been deferring maintenance for some time. They have limited capacity to fund a partial switch to online programmes and some are in crowded regional markets with effectively no wait list to draw on to fill existing places. This is why Moody’s has a negative rating for higher education in most of its markets and why Lloyd’s is urging UK institutions to pay close attention to liquidity and cash to keep operating.

How long will this last?  

Some of these factors will continue to shape demand and revenue flows until there is a vaccine. Lessons from past public health crises and the aftermath of the September 11 terrorist attacks show that it took three or more years for incoming classes of international students to return to and exceed previous levels.

While there is now better infrastructure for recruiting and supporting international students, the spread and scale of Covid-19 is more pervasive and larger. So, most institutions that have been operating in a global market will need to keep an eye on cash reserves, tighten operating expenses and maximise enrolments to have a robust future.    

Alan Ruby is a senior fellow in the Alliance for Higher Education and Democracy and director of the Global Engagement Office in the Graduate School of Education at the University of Pennsylvania

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