By Anna Kane ’20
As state governments and local municipalities across the U.S. begin reopening amidst the novel coronavirus pandemic, colleges and universities remain in debate over whether or not to keep campuses closed for the fall semester. The direction individual colleges and universities take has the ability to affect the number of COVID-19 cases, and can also result in economic ramifications for the surrounding area.
“Higher education in Massachusetts is one of the state’s leading industries; the state is well known as an education hub,” Mount Holyoke lecturer in entrepreneurship, organization and society and Entrepreneurship Coordinator Rick Feldman said.
As of 2019, Massachusetts has a total of 93 higher educational institutions, including 15 public universities and 78 private colleges and universities, according to World Atlas. Approximately 514,008 students attended post-secondary schools within the commonwealth in the fall of 2013.
Feldman pointed to an article written by President and CEO of the Economic Development Council of Western Massachusetts Richard K. Sullivan Jr. that was published by MassLive in February. According to Sullivan’s article, Mount Holyoke College has an annual payroll of more than $65 million and a workforce of more than 1,200 faculty and staff, the majority of whom live in the area. In the 2018 fiscal year, the College also paid over $13.6 million to vendors in Western Massachusetts for goods and services, such as food and office supplies.
Using IMPLAN, a regional economic impact modeling platform that provides data from the Bureau of Labor Statistics, Censure Bureau, Department of Commerce and private research firms, Feldman estimated that the total revenue from tuition, room and board in Massachusetts totals $30 billion annually. Western Massachusetts accounts for approximately 10 percent of this revenue, or $3 billion. According to MassLive, the University of Massachusetts system “has a direct connection to one in 10 Massachusetts households and has an annual economic impact on Massachusetts of more than $6 billion every year.”
“From a future economic development point of view,” Sullivan wrote, “one of the biggest strengths of Western Massachusetts is being home to some of the best, world-class colleges and universities.”
The issue is much broader than just Massachusetts, however. According to the National Center for Education Statistics, a research division of the U.S. Department of Education, total revenues for post-secondary institutions during the 2016-2017 school year totaled $649 billion. For private higher education institutions like Mount Holyoke, 30 percent of revenue comes from tuition and fees, income which colleges stand to lose should they be closed in the fall.
In an April 7 press release, Moody’s Investors Service — an American credit rating agency — announced in their research that the COVID-19 pandemic will continue to put pressure on colleges and universities in the U.S., Mexico, Canada, Australia, the U.K. and Singapore due to a reduction in income from lower student enrollment.
“If campuses remain closed for part of the year, income from residence halls, catering, conferences and sporting events will be lower than budgeted. Endowment and gift income may also decline,” Jeanne Harrison, Moody’s vice president and senior analyst, said in the press release.
If campuses reopen in time for the fall semester, dealing with the demand on budgets will likely be more manageable, especially if international students are able to return. “International student flows will depend on how the outbreak and policy response evolve[s] in individual countries, with the U.S. and China the most influential,” Harrison said. “Most rated universities rely heavily on Chinese students, who account for 23 percent of international students worldwide.” According to the College’s website, international students account for 27 percent of Mount Holyoke’s student body.
“The quick summary here is this,” Feldman said. “Over $10 billion a year comes into Massachusetts, and about $1 billion comes to western Massachusetts, from out-of-state and [international] students, making higher education a very major ‘export’ industry. The out-of-state source is the most threatened by the current circumstances.”
While a vaccine for COVID-19 is still in development, the timeline of the pandemic remains largely unknown. Causing challenges for planning beyond an already uncertain fall semester, there is also concern that distance learning could continue through spring 2021, as a second wave is expected to occur in October or November of this year.
Research conducted by epidemiologist Michael Osterholm and colleagues at the University of Minnesota has found three potential scenarios the spread of the virus could follow, projected through 2022. In the first scenario, the current peak in COVID-19 cases is followed by alternating waves of small outbreaks every few months. In the second, as a result of relaxed social distancing measures, the current peak is followed later in the year by an outbreak longer-lasting and more disastrous than the first. The second wave would be followed by small, occasional waves of outbreaks. The third scenario would see the current wave becoming the new normal, with outbreaks of equal size and duration lasting until 2022.
According to The New York Times, deciding whether to hold classes online, on-campus or in some other way is largely dependent on the type, location, funding and student body size of individual institutions. Small, wealthy colleges are better able to afford a return to campus that requires social distancing protocols and extra sanitization. Commuter and rural schools with lower rates of COVID-19 may also be better able to prepare for and maintain social distancing, making them less risk averse to an outbreak.
“States are in different circumstances in terms of the proliferation of the virus, and also the funding they receive,” Lynn Pasquerella, president of the Association of American Colleges and Universities and former president of Mount Holyoke College, told The New York Times. “Private liberal arts colleges will want to bring students back because the cost of tuition is often premised on the added value of a rigorous, close-knit campus environment.”
According to NPR, the spring 2020 semester was met with major revenue loss in postsecondary schools across the country, as room and board refunds saw less money coming in and training professors and purchasing equipment for the transition to distance learning saw more money being spent. This trend is expected to continue as the virus progresses. The Mount Holyoke News reported on April 20 that Mount Holyoke College has already lost $7.6 million due to the pandemic.
“Many administrators and analysts believe that the best-case scenario is a 10 percent loss in revenue from tuition, room and board, which would mean millions of dollars of losses per school,” Feldman said. A 10 percent decrease in revenue would lead to a $300 million decrease in funds spent directly on goods and services provided in the region schools operate in, he elaborated.
Prior to the outbreak of COVID-19, enrollment in postsecondary education was already in decline across the U.S. According to a December 2019 report published by the National Student Clearinghouse Research Center, overall post-secondary enrollments decreased by more than 231,000 students from fall 2018, a 1.3 percent decrease. This marked a decrease of over two million students in the decade, falling below 18 million enrolled students nationwide. The same report found that enrollment in Massachusetts state universities has declined a total of 3.8 percent since the fall of 2017.
If enrollment drops significantly at colleges and universities, the $14 billion federal bailout passed by Congress on March 27 as part of the CARES Act will not be enough to keep them from closing permanently. On May 12, Democrats in the House of Representatives unveiled a COVID-19 stimulus bill known as the HEROES Act expected to cost $3 trillion, which would be the largest relief bill in U.S. history if passed. In addition to providing funding for COVID-19 testing, hazard pay for frontline workers and assistance to the U.S. Postal Service, the bill would allocate $37 billion toward higher education. The HEROES Act would allow emergency aid given directly to students by individual colleges under the CARES Act to include undocumented and international students. Additionally, the HEROES Act would provide more emergency relief to colleges and universities to aid the loss of income stemming from the coronavirus pandemic.
Dr. Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases since 1984 and the leading infectious disease expert in the U.S., also warned in his Senate testimony on May 12 that a premature opening of the economy could trigger an uncontrollable outbreak that, in addition to causing unnecessary and avoidable “suffering and death,” would become “a setback on the road to economic recovery.”
Speaking at a virtual event held by the Peterson Institute for International Economics on May 13, chair of the Federal Reserve Jerome Powell warned that the economic downturn caused by the COVID-19 pandemic was not only unprecedented in modern history, but could permanently damage the economy if policy responses by the federal government remained insufficient.
“While economic response has been both timely and appropriately large, it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks,” Powell said. “Since the answers are currently unknowable, policies will need to be ready to address a range of possible outcomes.”
According to Powell, the economic burdens resulting from the pandemic have fallen on the people “least able to bear it.” A survey conducted by the Fed found that nearly 40 percent of people who were working in February and were members of households making less than $40,000 a year lost their jobs in March. The U.S. Bureau of Labor Statistics reported on May 8 that the April unemployment rate rose to 14.7 percent, up from under 4 percent in January.
“The consequences state-wide and region-wide include lost jobs in many sectors as local vendors suffer serious decreases in sales to their higher education customers — and significant decreases in consumer spending in higher education staff educations occur — hurting yet another group of local businesses from real estate to restaurants to grocery stores to recreation and entertainment,” Feldman said.