Friday, March 27, 2020  |  Category: COVID-19

Near-Term Impacts of COVID-19

Check out all of our COVID-19 coverage and analysis.

This is Part 3 of a 5-part series on the Strategic Implications of COVID-19 for higher ed. Part 1 of this series outlines the Scale of the Pandemic. Part 2 surveys the Immediate Impacts (March-August 2020). Part 4 looks at the Near-Term Strategic Priorities (2020-21). Part 5 looks at the Lasting Impacts beyond 2021 (still in progress).

Two Scenarios for Next Year

The Immediate Impacts of COVID-19 transformed the final weeks of the academic year, disrupting student and scholarly life, and derailing both summer enrolments and recruitment for the Fall. In the best-case scenario, the coronavirus will miraculously, spontaneously fade away this summer, or a vaccine will be developed and deployed in record-breaking time. Even in that best-case scenario, however, COVID-19 will have lasting effects on enrolments and operations for the 2020-21 academic year.

We can hope for the best, but we also need to plan for the worst.

The more likely scenario, based on epidemiological projections, is that a second surge of infections will peak this fall, and college and university campuses will remain closed for at least half, if not all, of the upcoming academic year. In-person classes and labs, experiential learning, international recruitment, varsity athletics, and research would all remain suspended for the class of 2024’s freshman year.

In either scenario, higher ed will face enormous challenges later this year and into next.

Inevitable Government Cuts

Federal and provincial/state governments will inevitably be running deficit budgets throughout 2020 to provide emergency stimulus and supports to businesses, individuals, and probably also public sector institutions. (We appear to be entering an economic downturn to rival the Great Depression.) Political decision-making can be notoriously difficult to predict, however, and governments already struggling with the energy-sector downturn (such as Alberta and Newfoundland/Labrador) will not have the means to subsidize the entire economy for long. Three days after declaring a state of emergency over COVID-19, the province of Manitoba unveiled a budget that cut PSE funding for the third consecutive year. Institutions in Alberta, Ontario and other jurisdictions were already bracing themselves for a shift to performance-based funding models before this crisis hit. uAlberta still plans to lay off as many as 1,000 employees. The pandemic will significantly exacerbate already intense financial pressures on institutions; public colleges and universities will likely need emergency funding.

We can bank on any government bail-outs being short-lived. 

As soon as public health restrictions ease and Canadians go back to work, governments will start looking to balance their budgets by cutting expenditures, and higher ed will again be a juicy target. State and provincial legislatures have repeatedly demonstrated a willingness to claw back grant funding mid-year, sometimes retroactively.

Uphill Advancement

Until a cure or vaccine is developed, medical-doctoral universities conducting COVID-19 research will be well-positioned to attract tri-council funding, foundation grants and charitable donations. Other institutions will be competing with hospitals, emergency shelters, disaster recovery organizations and food banks for scarce donor support. An EAB survey of 77 advancement officers in early March found that some institutions had discontinued telephone solicitations and 20% were already discussing suspending fundraising activity entirely.

Young alumni will be graduating into the worst employment market in a generation. A prolonged economic downturn will impact endowment returns for even the wealthiest institutions, and suppress the generosity of major donors, who will be waiting for market recovery. (There may be some donations of devalued stocks by those few people who could use the capital loss for tax purposes, of course.)  In addition to those fundraising challenges, alumni and donor engagement will be hard hit by the cancellation of convocations, alumni events, and homecoming football games.

Advancement teams will need to pull out all the stops just to preserve what they can of alumni affinity and engagement through social media.

(I’m reluctant to point it out, but the only “upside” potential for fundraising will be in terms of existing planned gifts, which may be realized if a sizable percentage of older alumni and donors fall victim to the pandemic.)

Legal Challenges

(Disclaimer: I am no lawyer, and this in no way should be construed as legal advice.)

Unless government moves to shield public institutions from lawsuits, we can likely expect students, employees, unions, vendors and other partners to pursue legal remedies for losses experienced during campus shutdowns. At a bare minimum, campus Ombuds offices will struggle with an escalating caseload, but institutions will likely incur increased legal costs on many fronts. Students’ educations were obviously impacted to some degree by abrupt library and campus closures, unilateral changes to program delivery and assessments, cancellation of field studies, internships, clinical placements and labs. Their campus experience was diminished by cancellation of athletics, extracurriculars, childcare and food services. Those living in residence were either summarily evicted by their landlords, or exposed to potential infection. International students have been faced with the additional complexities of study visas, work permits, and health insurance coverage. Faculty and staff had to work overtime to adapt to remote work and online delivery, often utilizing personal internet and telephone resources for college business. There will be challenges over intellectual property rights of courses moved online. Distributed workplaces may result in more privacy breaches and cyber attacks. There are even complexities of workplace health and safety regulations that may leave institutions liable for the ergonomics and safety of employee home offices.

It may take months for the full spectrum of individual and class-action legal challenges to become clear.

There are endless financial issues to resolve, from refunds of student tuition, lab fees, convocation fees, parking permits, residence fees and meal plans to compensating staff and faculty for cancelled travel plans, sick days spent in quarantine, and overtime. Some students have found themselves without access to computers or the internet. Some institutions immediately offered generous emergency measures. Many extended course withdrawal deadlines and “academic forgiveness” policies (addressing the academic, but not financial, costs of failed courses). uRegina offered to refund parking fees and suspend parking tickets. NAIT assured all staff that they would receive ten additional sick days in case of self-isolation. Institutions like Centennial, Sheridan, and York bought thousands of laptops to loan to their students.

On the other hand, some institutional announcements have been hamfisted, tone-deaf, or cruelly insensitive. Many have put off making decisions about refunds, a pressing concern for many students and families, to deal with more urgent matters (and perhaps to see how much government aid will be forthcoming). Some have refused refunds because the year was largely complete, or health authority decisions were beyond their control. Some even announced summarily that they were changing building locks to ensure that staff and faculty did not attempt to return to their offices. Students in residence may have had the most difficult time of all (see below).

International Crash

Whether the health emergency is resolved by September or not, there can be no doubt that it will have already had a devastating impact on international student recruitment for this Fall. Even once borders are reopened, travel bans are lifted, airlines start flying, and student visas are getting processed again, the psychological effect on the market will persist, for months if not years. Perceptions of Canada as a safe and welcoming country will be more nuanced in the aftermath, and if the economic recovery in Asia outpaces us, Canada will be less attractive as a destination to study and work as well. After the spring of 2020, international travel and study abroad will feel slightly more risky to parents and prospective students worldwide, and the rising middle class in many regions will have suffered a financial setback. Times Higher Ed quite reasonably predicts it will take 5 years for international mobility to recover.

Canada’s boom in international enrolments will be thrown abruptly into reverse this Fall.

If the borders remain closed, international enrolments will be limited to those students already in the country, or those who could not leave during the pandemic. If social distancing stays in place, international student enrolment will be limited to online programs. More institutions will investigate online English-language pathway programs, like those provided by CultureWorks for a number of top-tier Canadian universities, as a way to maintain the pipeline for international enrolments once the borders open.

No matter what, competition for a suddenly shallower pool of international students will be more intense than ever before.

The financial impacts will be a multi-billion-dollar nightmare for almost all colleges and universities, who have become dependent on international growth to offset declines in domestic demographics and government funding. But for institutions with 50% or more international enrolment, this shock could well be an extinction-level event. Analysts suggest one-quarter or more of US colleges, particularly private tuition-dependent ones, will not survive the financial aftershocks of a prolonged shutdown.

And of course, a sudden drop in international enrolments will only intensify competition for domestic students.

Reduced Student Mobility

This Fall, a combination of overprotective parents, financial anxieties, and lingering concerns about residence disruption will unquestionably also make domestic students less willing to move away from home. In March, a survey of 300 US families found that 31% of applicants in urban centres and western states were already considering deferring their acceptance, a third of those explaining that they wanted to stay closer to home. Since then, COVID-19 cases and deaths have started to skyrocket across North America, and anxieties will rise even more in the crucial decision-making months ahead.

Campus closures, although necessary, have removed campus tours and open houses from the student recruitment mix this year, disadvantaging smaller institutions that depend on personal visits as key tools of persuasion. More and more are ramping up efforts at virtual campus tours, livestreamed admissions Q&A, and social media interactions. Deadlines for application are being extended, application fees reduced, and unofficial transcripts accepted. Webpages for prospective and admitted students are being optimized. Institutions are also investing more in branded swag to mail to admitted applicants, from sweatshirts to branded cowbells.

No matter how clever the recruitment tactics, student recruitment faces an unprecedented atmosphere of uncertainty.

Whether the economic recession is short-lived or prolonged, it has already impacted RESP returns, investments, household incomes and property values. Many of the summer jobs on which students depend have been eliminated by states of emergency. Considering that the costs of meals and accommodation are far greater than most college or university tuitions in Canada, the inevitable tendency will be to pursue education closer to home, if at all.

The economic shock will benefit institutions in major population centres.

We can expect application volumes and yield rates to hold steady or perhaps even improve at big city schools with sizable youth populations within commuting distance. More selective, prestigious universities can simply pull more deeply from their domestic applicant pools, scooping the best-prepared students from community college cohorts next year. (College enrolments will be buoyed, on the other hand, by retraining workers displaced by massive unemployment and the collapse of entire sectors of the economy – more on that in Long-Term Implications of COVID-19.) It was a costly exercise for small colleges in northern Ontario to lure students from the GTA before the pandemic; now it will be prohibitively expensive. In early March, when the full scope of the pandemic was still unclear, the EAB found that 75% of US enrolment managers were already very concerned about yielding their Fall 2020 class.

(Read our COVID & Enrolment white paper analyzing surveys of 54,000 prospective students about their intentions for fall 2020.)

A New Double Cohort?

Across North America, the class of 2024 may be one of the smallest in decades.

In mid-March, a survey of 487 US high school seniors found that 17% were already thinking of taking a gap year, deferring their college enrolment. Understandably, they were growing concerned about financial costs, about health and safety, and about the uncertainty of a campus experience this Fall.

But to interpret that market research, it’s critical to bear in mind that it was conducted between March 17 and 20. At that point, there were just 6,300 cases of COVID-19 in the entire US, and the disease had claimed only 108 lives. (As of this writing, just 3 weeks later, the US has 401,000 confirmed cases and 12,905 dead – more than a hundredfoldincrease!) Here in Canada, college campuses were just starting to close in Ontario and Quebec, and Quebec was the only province to have declared a state of emergency.

Provincial health authorities may or may not allow students to gather on physical campuses this September (and if they do, they will likely have to reverse that decision in October.) But as the Coronavirus death toll mounts, and North American cases peak in the next month or so, the fraction of incoming students ready to defer the start of their post-secondary education is bound to spike as well. It could easily hit 60% or even more.

International and domestic students alike may defer their 2020 academic year, in droves.

If you were working in higher ed at the turn of the century, you doubtless remember the “double cohort” in Ontario. The government eliminated OAC (grade 13) and abruptly high school graduations doubled in 2003. The surge of 100,000 additional students prompted expansion and construction on college and particularly university campuses (since OAC was a prerequisite specifically for university applicants), and led to much more competitive admissions. As I recall, a small percentage of high-performing students “fast-tracked” their high school and graduated in 2002 to beat the admissions rush, while more than a third deferred PSE by taking a fifth year “victory lap” at high school, to accumulate stronger grades in senior-year courses. Market forces, and concerns about competition for admissions, therefore led applicants to smooth out the double cohort effect a bit, increasing applications slightly in 2002, significantly in 2003, and somewhat less in 2004.

Ontario’s “double cohort” experience in 2002-5 seems like a useful analogy for what we can expect in 2020-22.

Higher ed is going to see a substantial drop in enrolment this Fall, particularly among international students but also among domestic students. Some enterprising applicants will likely push forward, even if they anticipate a substandard online experience, because they will be able to gain admittance to programs that are normally highly competitive. The majority will likely defer their education until the pandemic ends and classes can resume normally, hopefully in September 2021 (although some might predict March 2022). At that point, graduates from 2020 and 2021 will both be applying to PSE, creating a double cohort. And some proportion will defer an extra year or even two, perhaps to give themselves time to earn money, or to avoid the competitive crush for admissions, and the inevitably bumpy restart of campus operations in the new normal.

Unless government or institutions take extraordinary steps to incentivize students to start PSE this Fall, we’re going to see a steep drop in enrolment followed by a double-cohort effect in 2021-2.

This unevenness of demand will pose unprecedented challenges for college and university administrators, to manage abrupt whiplashing campus capacity and workforce. Perhaps government will subsidize campus operations at public institutions through the trough of 2020, so that institutions won’t be forced to furlough or lay off employees and then undertake a frantic search for replacement talent a few months later. More likely, institutions will need to take a compromise position, drawing on financial reserves if they are able, accepting some emergency government support, and inevitably slashing payroll to make it through a truly challenging year.

Empty Dorm Rooms

Institutions have forcibly emptied campus housing units this spring, but reduced international enrolments and domestic student mobility will make it challenging to achieve full occupancy next year either. Compass Group is already warning of a 30% loss in revenue over the next 6 months. Some institutions with private-sector housing partners may face substantial payouts next year, if the terms of their agreements guaranteed minimum occupancy levels.

Living at home or off-campus will be more attractive to price-sensitive students and parents, magnified by lingering horror stories from this year’s displaced residents.

Many of this year’s residence cohort endured days or weeks of uncertainty and increasing anxiety as institutions first reassured them campus housing would remain open, then offered refunds to encourage some to go home, and ultimately announced that residences were closing and students were required to vacate immediately. In almost all cases, institutions indicated that they would work with students in exceptional circumstances (such as international students who could not possibly return home), but they chose to communicate their policies in sharply different ways.

Throughout the first two weeks of the crisis in March, Carleton’s president wrote thoughtful, kind and encouraging daily messages to the campus community. On March 16, he addressed the issue of campus housing:

“In order to decrease density in student Residences and give students more flexibility, we are refunding room and meal plan costs on a pro-rated basis for students who choose to return home before March 22. I want to reassure everyone that international students who cannot go home because of travel restrictions will be taken care of not only to the end of the term but this summer as well. This is the Carleton way – we take care of each other.”

Benoit-Antoine Bacon, President & Vice-Chancellor
Carleton University – March 16 2020

Contrast Carleton’s position with the community college (who shall remain nameless) that declared summarily, “unfortunately, the Residence Agreement is a binding contract and cannot be terminated due to illness or the impact of COVID-19 elsewhere in the world.” Rest assured, this year’s cohort of evicted students will spend all summer sharing their shock and frustration with the world. And the oft-repeated metaphor of the campus dorm as cruise liner, a petri dish for coronavirus, will stay vivid in the public imagination for some time.

Looking toward the Horizon

The Coronavirus pandemic is a human tragedy and an economic crisis that is unprecedented in our lifetimes, and the disaster is far from over. Without minimizing the scale of devastation and disruption, very soon campus leaders will need to shift their focus to the opportunities and strategic priorities that may help their institutions survive and thrive in the years ahead. (Shameless plug: I’m available at short notice to consult with individual institutions; please drop me a line!)

Stay tuned for part 4 in this series: near-term strategic priorities in the wake of COVID-19 (2020-21) 

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What other impacts of COVID-19 do you think higher ed will experience by this Fall? Please post a comment below!

Post Tags: Coronavirus, Internationalization, Strategy