Getting Down to Business in Difficult Days

April 3, 2020

Inside Higher Ed, Brian C. Mitchell and Richard K. Gaumer

Colleges must immediately develop flexible financial planning that accounts for what happens in the spring and what might occur in the fall, write Brian C. Mitchell and Richard K. Gaumer.


As the pandemic deepens, higher education has been fairly uniform in its response. Most colleges and universities have closed. Where they can, many of those institutions have pledged to convert to an online platform to complete the semester’s remaining coursework.

The solutions adopted make good sense to most observers. But clearly no one, including America’s college leadership, prepared fully for what the country is likely to face. In the stimulus package, higher education leaders requested $50 billion in federal relief but will receive only $14 billion, far short of the support needed. Many of them will confront a severe cash-flow crunch that may cause some colleges to collapse. With most students gone, now is the time to look at the damage done, plan for what to do and anticipate ways in which the crisis can be managed effectively.

First, the coronavirus pandemic has laid bare the fragility of the tuition-driven revenue model at most institutions. Many higher education leaders have pledged to prorate the second semester’s room and board fees for their students. In Boston, for example, local colleges and universities might refund up to $670 million in unused room and board. There are, of course, numerous ways to do so.

But brick-and-mortar institutions are highly labor and land intensive. At some point, the bills must be paid. Using room and board credits applied to the fall semester, insurance triggers that prompt reimbursements and refunds from food service contracts, as well as shifting money from other accounts or the unrestricted portion of the endowment, may work for many of them. But the effects on the overall financial picture will be serious and even dire.

Colleges must immediately develop flexible financial planning that accounts for what happens in the spring and what might occur in the fall. If the fall semester is delayed or canceled, the implication will move beyond the immediate financial bottom line to a question of institutional sustainability. Should students no longer fill available seats over the next six to 12 months, mergers, sales, closures and acquisitions will increase as part of a general shakeout across American higher education.

One internal political solution is to look at where efficiencies and economies of scale can be created that do not diminish the rationing pie jealously guarded by campuses invested in the status quo. There may be ways to adjust the bottom line. One example is, for instance, to determine whether prescription drug benefits might be lowered for self-insured colleges and universities and those that participate in larger self-insurance pools. The savings produced, which can start almost immediately, will cover some of the unanticipated shortfalls and provide discretionary money to undertake needed short-term steps, like online programming.

To put a Band-Aid on the immediate crisis, many institutions have pledged to convert to an online platform to finish this semester’s instruction. Shifting to online programming presents obstacles. First, many colleges do not support a robust platform that can be adapted to scale. Second, there are unspecified additional costs in training, technology upgrades, facilities, needed bandwidth and faculty and support personnel. Third, not all faculty may be willing to participate in online programming. Additional numbers of them are untrained. And will this cobbled-together online format produce a high-quality education for students?

For many institutions, it may be far better to work out a blended arrangement with groups like Coursera for Campus, which enable any college or university to offer existing courses and certificates to their students. Coursera recently announced that they are making Coursera for Campus available at no charge through July 31 to any college or university impacted by the coronavirus. Other providers, like Podium Education and the Foundry College, might also provide some adaptable assistance. In the post-coronavirus world, one outcome for colleges to consider is whether closer relationships with ed-tech providers might actually reinvigorate their existing curriculum while simultaneously preserving it. This approach ties the strength of traditional pedagogy to the needs of the 21st-century workforce.

This is also an opportunity for colleges to evaluate and improve campus services. Students and their families need assurance that critical services affected by the coronavirus will be provided. All services must be seamless, readily available and meet the needs that are challenged by the virus. TimelyMD, a telehealth company focused on transforming health care in higher education, is a good example of how colleges can improve existing campus services during the coronavirus crisis. It provides 24-hour access to telemedicine and counseling services that can support initiatives like social (physical) distancing. Additionally, counseling services delivered via telehealth improve access to mental health support for students facing increased anxiety and stress. These types of services enable colleges to have a clear value proposition for students returning to their campuses. Students might otherwise consider transferring closer to home or completing their education online.

And that’s the point for colleges and universities in the midst of an unprecedented disruption. This can either be a time to hunker down and fix the finances — at least temporarily, with financial parlor tricks — or an opportunity to understand how it can be used to plan for a sustainable future. If the disruption is an opportunity to become more adaptable, we may find a silver lining amid the panic and chaos of the moment.