The virus known as COVID-19 has changed every map of everyone's future scenario. Wafting out of China sometime during 2019, it has infected the planet's human population, and is killing-off hundreds of thousands of our kind.
Reports indicate that teenagers are not especially vulnerable to the flu virus of the current pandemic; nevertheless, their futures are greatly impacted. As you will read, the effects may not be all negative.
Among the negative side-effects of our very own pandemic, higher education is reeling. When colleges across America closed their campuses in March, 2020 an economic shock wave roiled us all. Few, very few college teachers were prepared to teach in a virtual environment. One, a personal friend, told me she was informed on a Friday that her classes would be online the following Monday. She had the weekend to prepare. She cobbled together decent content, and then faced the learning curve of the technology. It was not pretty, she reports.
As the academic year ended, and college students were pondering the fall semester, it dawned on parents that they had not received what they paid for on campus, in class, in person college education and campus life for their children. Law suits were filed, and the colleges began bunkering in self-defense. Not to be unsympathetic to the parents, but the colleges, in fact, had little or no money to refund. By the time the virus locked us inside, the costs to operate were already in accounts payable. There might have been a few unspent dollars for utilities, laundry and other minor budget items. But the big dollar items were irreversible.
Parents, most being convinced, shifted to "credit" for future enrollment and living costs. Once again, the colleges are caught between a rock and a hard spot. Most of the colleges and universities that the average person might think of are non-profits. That means they operate on close margins. Income pretty much equals expenditures year-by-year. (Remind me to talk about "yield" and other admissions office lingo.) Furthermore, the public universities are heavily dependent on their state legislatures' funding. Well, guess what has happened to tax revenue during the pandemic. Oh. How about that.
The fact is, there is little to no ability to offer credit for returning students, with one exception: financial aid. Reduce financial aid by thousands per student, and the cash flow may be realized to deal with parents' demands for credit.
Private colleges and universities are another story. They receive no taxpayer subsidies. They operate on similarly narrow margins (income-to-expenses). To compete for students with the public universities, private colleges often discount their tuition by tens of thousands of dollars. You need to understand this, so here's a hypothetical example.
The University of the North (public) advertises its annual cost of attendance as:
- Tuition $11,000
- Mandatory fees $3,000
- Room and Board $9,000
- Books and personal expenses (estimated) $4,000
- Total $27,000
- Institutional Financial Aid average/student <$4,000>
- Net cost (before loans) $23,000
The Bellwether University (private):
- Tuition $40,000
- Mandatory fees $5,000
- Room and Board $10,000
- Books, etc $4,000
- Total $59,000
- Institutional Financial Aid average/student <$30,000>
- Net cost (before loans) $29,000
It's that Institutional Financial Aid that will be impacted in upcoming years. Whether in the public universities or private, the burden of the pandemic's financial impact will be, in large part, passed on to the consumer (just as increased production costs are passed to consumers in every other aspect of the economy). Parents, you are the consumers of higher education. One mitigation you retain is helping your child be very intentional about to which colleges to apply; and helping your child focus on the "Why" of attending college. Among the fatalities attributable to the pandemic of 2020 is "the four-year experience." Attend college for a pragmatic education, not for an experience.