Insider spoke with three college admissions consultants who all said campus shutdowns to help prevent the spread of coronavirus could be devastating for smaller schools.
The government’s CARES Act allocated nearly $14 billion to help colleges and universities stay afloat during the pandemic. But for schools with small endowments, it might not be enough.
Many colleges and universities are losing revenues they would receive from athletics and campus conferences if they were open.
Several schools have already announced closures and, according to one expert, several others are “hemorrhaging cash.”
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Some small liberal arts colleges and state schools might close for good because of the coronavirus pandemic, experts say.
Insider spoke with three college admissions consultants who all agreed that from a business standpoint, campus shutdowns put in place to help prevent the spread of the novel coronavirus aren’t looking good for the future of small schools.
Some colleges are “just hanging on,” according to Mark Sklarow, the CEO of the Independent Educational Consultants Association, a Washington, DC, based nonprofit that works to inform students and families on school selections.
“It would be safe to say that there are some colleges that are right now on the short line, kind of hemorrhaging cash, because they’re still paying professors and all of that,” he said. “With no money coming in, and in an admission cycle that is confusing, to say the very least.”
Colleges and universities across the country have transitioned to online classes because of the coronavirus pandemic. And while schools are still receiving tuition money from students, they’re not receiving revenue they normally would from athletics, conferences, and more. On top of that, they’re spending more money on online training programs and software.
The government’s $14 billion in coronavirus aid might not be enough to save small schools
The federal government’s Coronavirus Aid, Relief, and Economic Security Act — or CARES Act — allocates nearly $14 billion to help colleges and universities stay afloat during the pandemic.
Even big schools are being hit hard. The University of Kentucky said it’s facing a $70 million shortfall in revenue next year. The University of Minnesota said earlier this month that it expected to lose up to $300 million from COVID-19 closures. The University of Michigan forecasted losses up to $1 billion.
But at smaller schools that don’t have large endowments, the CARES Act funding might not be enough, and several schools are facing closures.
The Vermont State College system has closed three campuses permanently, and Franklin University of Ohio announced the closure of its Urbana Branch Campus.
Mike Reilly, the executive director of the American Association of Collegiate Registrars and Admissions Officers, told Insider that smaller campuses might merge together to save money.
“I think we will see an uptick, unfortunately, in the number of schools that either close,” he said. “Or you may see more mergers where you see institutions, particularly state systems, where they start to look at the number of campuses they have and merge them into smaller, into a fewer number of campuses.”
Schools have lost ‘tremendous value’ in recent weeks, one expert said
Sklarow said school portfolios have lost “tremendous value,” particularly at a time when there’s an increased demand for financial aid
He told Insider that he believes many smaller schools are “going to do whatever they can to open” to students.
“Keep in mind that one of the things making the financial outlooks so tough for colleges right now is, they’re not only returning students’ money for meal plans that went unused and parking and all of that, but they’re not getting basketball revenue, because games were all canceled and TV contracts were all canceled,” he said, adding that football schools will have a similarly tough time.
Allen Koh, the CEO of Cardinal Education, a Bay Area-based education consulting company, agreed, that coronavirus is wreaking havoc on college admissions, and it could cause hundreds to go bankrupt.
He doesn’t think in-person classes will return anytime soon, however.
“If you think about a university, their greatest asset is their professors,” Koh told Insider. “Their professors happened to be looking at 10% to 15% mortality rates.”
“So number one, I can’t imagine professors would be eager to reopen campuses,” he continued. “Number two, I don’t think universities would be either, thinking about how many Nobel prize winners you’d lose… So there might be a hybrid where all the kids come back, but the professors are sheltering in place themselves.”
Despite school closures and concerns over when students will return to classes, Reilly said interest in going to college is still a priority for high school students.
According to a COVID-19 impact study from the AACRAO, 90% of students surveyed said the pandemic caused no delay in making admissions decisions.
“I think things are pretty fluid right now,” Reilly told Insider. “I think students are resilient and I think they’ll also recognize that when the economy has taken a hit like that, your best leg up to get employed is through education. So I think that’s still is a powerful draw.”
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