The Novel Coronavirus Can Kill Colleges as Well as People

By RICHARD K. VEDDER

I am no public health expert, but if the novel coronavirus is pretty severe, as many experts are saying, like other institutions in society America’s colleges and universities will suffer. Classes may have to be cancelled, public lectures scrubbed, athletic contests (March Madness itself!) compromised (the latter a potentially huge loss to the NCAA).

But besides these obvious effects, there are several less obvious effects. Universities depend heavily on outsiders—taxpayers and private donors—for financial sustenance. If the coronavirus’s disruptive force triggers a significant economic downturn, certainly highly plausible, tax receipts will fall, leading, after some lag, to reduced state subsidies for public universities. There is a real probability the near 20% drop in stock prices from their peak will be sustained, maybe even worsened. This would particularly hit schools in three ways. First, endowments will lose value, in the long run necessitating some reduction in institutional financial support. Second, as the wealth of donors falls, university private contributions will also take a hit.

There is a third potential financial headache: a deterioration in the financial condition of pension funds to support present and future retirees. If stock prices fall 20%, other non-equity valuations stay constant, and endowments and pension funds have 60% of their money in equities, most will take about a 12% reduction in their value. Since some pension funds are on shaky grounds to begin with, this could lead to some real pain and suffering. One unintended consequence: some faculty and staff may defer retirement beyond original plans.

Moreover, this is obviously a global health catastrophe, and American universities are more dependent than previously on the international economy. Foreign students are an important revenue source—they were a lifesaver as some states reduced subsidies to schools after the 2008 financial crisis. It is hard to believe this will not have some negative impact on enrollments—the only issue is how much.

There are other international interactions as well. Many schools have promoted study abroad programs, sometimes even for profit (allowing instruction to be provided by lower cost educational providers overseas while students still pay American tuition fees). The perceived risks associated with prolonged absence from the U.S. will probably seem greater as horror stories spread about people getting sick from travel or quarantined in rooms with little outside contact.

To be sure, we do not really know whether the American impact this year will be measured in a few thousand sick individuals and a few hundred deaths, or a much bigger outbreak, possibly worst than the 1918 “Spanish” flu occurring at a time when transportation and communication costs were vastly higher, possibly reducing contagion a bit from what it would be today.

However, remember Plato: necessity is the mother of invention. Already schools that are closing like the University of Washington or Columbia University are using internet capabilities to increase existing use of online technology. Not all learning can be done effectively online, but certainly some can. Indeed, the health crisis-induced expansion of online learning might lead to a revelation: students can learn a lot of stuff as well online as by the use of the same technology that Socrates used over two millennia ago, talking to an audience (via lectures and oral discussion).

Still, there are some schools that are fragile financially for which this unanticipated development could be sufficiently large that it is their death knell—what if planned new students for next fall are reduced several percent, enough to push some tuition-dependent schools into closing? Maybe not very likely, but clearly plausible. Especially vulnerable are tuition-dependent schools without much endowment, including most HBCUs (historically black colleges and universities), many non-selective state schools and some community colleges.

On a slightly more cheerful note to conclude an otherwise depressing epistle, when the economy turns downward with unemployment rising and incomes falling, college enrollments actually tend to rise—some students finding it hard to get good jobs decide to invest in their future earning capacity by attending college. So schools do not usually see big enrollment drops in the short run arising from downturns, even though their revenue is constrained by poor economic conditions.

Let’s hope this is much ado about next to nothing and the negative effects turn out to be minimal.

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Even in a Crisis, Cancelling Student Loans is a Bad Idea

The Senate is at a standstill while public health and the economy are in a death spiral. What’s the hang- up? Student loan cancellation. Democrats in the Senate are attempting to tack a provision onto the pending stimulus package that would provide $10,000 of student debt cancellation to each borrower. This is nonsensical and irresponsible.

Quick action by the administration has put a pause on student loan payments and interest. That means that not a single borrower is on the hook to make a student loan payment for at least two months. And once the payment hiatus is over, borrowers facing hardship have the option to enroll in a variety of existing repayment plans that lower monthly payments to an affordable level based on income and that provide for forgiveness of persistently unaffordable debt. Borrowers with little or no income will pay nothing.

Government spending should be swift and generous, but it shouldn’t be targeted at student borrowers. College educated workers are among the highest earners in the economy and are the most likely to retain their employment and earnings during any downturn. That’s why loan forgiveness plans like those proposed during the Democratic primary would end up being hugely regressive in nature.

Instead we should be sending cash immediately, both through immediate cash transfers and an expansion of unemployment insurance. The estimated cost of the proposed student debt cancellation would be $370 billion. That’s enough to make an immediate cash transfer of $1,100 to every single American.

We needn’t quibble now over who should receive a check. We don’t yet know who will need help.  Instead of basing eligibility on past earnings, checks should be mailed immediately to every American. If we make the payments taxable, our existing progressive tax code will make sure that the cash stays in the hands of those who need it and is clawed back from those who don’t.

In a time of crisis, all ideas should be considered, but this one is far off the mark. It would be foolish for Democrats to hold up the other urgently needed aspects of a stimulus package in order to accomplish this foolhardy handout.

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SAT tests canceled. College tours on hold. High school juniors struggle with life ahead

Spring is traditionally a big time for high school juniors preparing for college, with SATs to ace and transcripts to perfect.

Many had scheduled campus tours in April to narrow their college choices and impress admissions deans with their in-person visits. Spring athletes planned to show off to college recruiters filling spots on team rosters and budding scientists expected to boost their admissions chances by taking home top prizes in high school robotics matches.

But the coronavirus pandemic has put the brakes on that momentum and brought the usually hectic spring term of junior year to an abrupt standstill. High schools have been closed, tests canceled or modified, and college campus tours canceled, leaving many teenagers and their families frustrated and uncertain about the path forward.

“I’m definitely nervous for a lot of reasons,” said Nathan Brophy, 17, a junior at Cambridge Rindge and Latin School. “I was planning to visit a bunch of colleges on April spring break and that’s not happening. I’m not sure if I’m going to get my grades this semester. It’s just a lot, just in general. No one has answers for any of these questions.”

Brophy said some of his teachers have been better organized than others in the transition to online classes, and many of the resources he counted on to help him study for the Advanced Placement tests and SATs were school-based. Now, he worries that when he does take the standardized tests, he won’t do as well.

“It’s frustrating to not know how it’s going to happen,” said Anna Galer, 17, a junior in Easton. “I know it’s totally a first-world problem compared to what so many people are facing right now. But it’s also really hard to know that something I feel like I’ve worked so long for is getting screwed up.”

Galer said she and her mom were going to visit colleges in Ohio and New York over spring break in April. Now, she’s checking out virtual tours online, but it doesn’t give her the same sense of campus life or a gut feel about whether a college is the right fit.

She’s also worried that she will be juggling too much this summer, between her job at a camp, studying and taking the SAT test and other entrance exams, and visiting colleges. “When you’ve been thinking this is your plan,” Galer said. “It’s hard to do a 180.”

Some colleges have started easing their requirements to adjust to chaotic and uncertain times.

A handful of higher education institutions, including Case Western Reserve University, made standardized test scores optional last week citing the coronavirus.

“We would rather students focus as best they can on their academic subjects rather than worrying about the SAT or ACT,” Richard Bischoff, Case Western's vice president for enrollment management, told the publication Inside Higher Ed. “Testing has always been just one factor in our evaluation of applications, and we are confident that we will continue to make quality admission decisions for those students who are either unable to test or who choose not to submit test scores.”

Last week, the College Board, which administers some of the major standardized entrance exams, announced AP tests will be available as 45-minute, online exams that may be taken at home. Committees are already at work selecting questions for the online exams, according to the College Board.

“To be fair to all students, some of whom have lost more instructional time than others, the exam will only include topics and skills most AP teachers and students have already covered in class by early March,” the College Board said in a statement.

SAT tests have been canceled through at least May 2, in an effort to prevent the spread of coronavirus. The College Board in a statement on its webpage said SAT tests scheduled for early June have not yet been canceled, but the organization “will continue to assess its status with the health and safety of students and educators as the top priority.”

The College Board will schedule new testing dates as soon as possible, the organization said.

Colleges are going to have to make more concessions for students, said Michele Hernandez Bayliss, copresident and founder of Top Tier Admissions, a private college counseling firm.

Colleges that require students to submit their scores for a slew of standardized tests will have to scale back their expectations. Schools that make admissions decisions based in part on whether students visited the campus will have to reconsider that strategy at a time when tours have been cancelled and state governments have warned against traveling, she said.

“They’re going to have to make adjustments for everyone,” Bayliss said.

Families have been scrambling in recent weeks, and Bayliss and her business partner Mimi Doe have advised students to adopt a plan B. Lacrosse and softball players whose seasons have been cut short may have to cobble together family home videos of their games to submit to college coaches. Students who planned to compete in science fairs may want to consider making YouTube videos for younger children about their inventions, Bayliss and Doe said.

Elsa Martinez-Pimentel, the Massachusetts regional director for uAspire, which helps low-income and first generation students through the college financial aid process, said her organization has delayed efforts to get high school juniors prepared to fill out complicated federal forms that are necessary for grants and loans to attend college.

The organization had hoped to start the process this spring so high school students weren’t crushed by academic work, tests, and college applications in the fall of their senior year. But these juniors, many in Boston, are busy getting set for online classes after their schools shut down, she said.

The organization’s counselors and workers have also been deployed to reach out to high school seniors who are suddenly at home with no access to printers and with limited Internet capability trying to download last-minute parental tax information and fill out all their paperwork to make sure colleges award them the financial aid they need to enroll this fall.

“I think our juniors have a little more time to buy,” Martinez-Pimentel said.

Still, it can be difficult to regroup after students who have worked so hard find themselves suddenly stalled by the virus, students and counselors said.

Galer, the Easton student, said she wavers between being upset and resigned depending on the day. But she does take some consolation in knowing that she’s not alone.

“Everything that’s happening to me is happening to everybody across the world,” she said.

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