Why US colleges may collapse financially during the pandemic - Business Insider

She'd consider taking the online classes at Yale the coming semester if the school lowered the cost of tuition, but she already has plans to work on Telehealth Access for Seniors, the non-profit she started, and study for the LSAT if she takes a leave for the fall semester.These experiences help explain why the US college and university system, a longstanding access point into adulthood and the middle or professional classes, is suddenly looking precarious. Enrollment numbers were already falling; governments are now cutting funding for state schools; and many schools are being forced to refund students' room-and-board fees after sending them home for the semester.While universities can draw funds to operate from their endowment, a pool of donor money intended to provide an ongoing source of funding, these funds are not meant to entirely replace normal fees when times get hard. These regional private schools, with student bodies typically below 5,000, are "heavily reliant on undergraduate tuition dollars" and were in trouble even before the pandemic, she added.Whether you're a State U or a nestled liberal arts school, the increasingly high fees students pay to live in dorms, eat dining hall food, and generally be a college student are increasingly critical to the survival of the institutions they attend.These fees are a fixed source of revenue that is nearly identical for colleges of all types — a College Board review of the average undergraduate costs for the past academic year found that both in-state and out-of-state students at a public college pay about $11,500 to live in a dorm. Private colleges, where tuition is more than triple a public school on average, charge just under $13,000 to live on-campus.At Wake Forest University, where students are required to live on-campus for their first three years, the school ended with net revenues of more than $27 million last academic year after accounting for students covered by financial aid, according to the school's audited financial statement. Further complicating the picture, endowments can be skewed towards investments with longer time horizons, and some assets can be hard to sell out of quickly without taking a big hit."There's a misperception that they are rainy-day funds," says Maloney, the senior director of research at EAB.Right now, the financial pressure on schools is much greater because of the potential losses of recurring revenue from room and board, as students and parents weigh whether they want to pay full tuition for online classes. Taking a tip from trade schools and community colleges, Firat said, they'll need to "be much more vigilant about [students'] career readiness." Firat added that some schools may need to cut funding for certain student services on campus and reallocate those dollars toward, say, career centers.Colleges will also need to come up with a solid answer to students' question: Why on earth would I pay hundreds of thousands of dollars to take classes online, when I could just as well take them at my local community college and save most of that money? These schools typically scoff at the idea, Horowitz said, because they believe they're "profoundly unique" and don't want to muddy their brand.Lydia Page, an online program administrator at New York University, said most schools haven't yet proven the value of virtual classes — after all, the shift to all-remote education this semester was pretty sudden. "If I had the perception that I was going to be paying for a lesser experience, I probably wouldn't want to do that." For Minh Phuc Tran, the rising sophomore from the University of San Francisco, a couple months' of Zoom classes has been enough to convince him that going to college is a lot more than just going to class."I would rather take a gap year," he said, "and find some internships or work on something I'm passionate about and learn a lot more than focus solely on school at home with online classes."