Higher Education Was Already in Trouble Before the Coronavirus

“The pandemic, while it has undeniably worsened the outlook for many institutions, has only exacerbated and brought into sharper relief some of the extant forces threatening to pop the higher education bubble.”

Much has been made about the damage the ongoing Coronavirus pandemic is likely to do to higher education. True enough, many institutions are facing revenue shortfalls as a consequence of the global pandemic that has shut down college campuses, among other aspects of life. Some colleges and universities are responding with hiring freezes, while others are taking more extreme measures. In a striking example, the University of Southern California is cutting salaries for its senior leadership; forgoing raises for faculty; and pausing travel, discretionary spending, and capital projects.

Perhaps even more worrying than immediate revenue loss, colleges face uncertainty about when and in what capacity they will be able to open back up—and how prospective students will adapt to that uncertainty. Thirty percent of students surveyed this month by Junior Achievement USA said COVID-19 is impacting their expected college start date. Another recently commissioned survey, by the American Council on Education, finds 12% of current college students are uncertain about their plans to re-enroll in the fall or definitely plan not to do so due to COVID-19.

But even before the virus closed campuses and moved classes online, the current higher education model was beginning to look unsustainable. The pandemic, while it has undeniably worsened the outlook for many institutions, has only exacerbated and brought into sharper relief some of the extant forces threatening to pop the higher education bubble.

Demographics and Dependence on Per-Student Revenue

Perhaps most fundamentally, demographics are working against colleges. Universities proliferated in an era of population growth; however, in recent decades, fertility rates have begun a sustained decline. The result is fewer prospective students for a greater number of institutions to fight over. College enrollment has fallen every year since fall 2011, dipping below 18 million students for the first time in a decade this past fall, according to the National Student Clearinghouse Research Center.