Public Higher Ed Is Going to Need a Bailout

Right now, by necessity, higher education institutions have been focused on short-term continuity as they deal with the sudden disruption of a global pandemic.

But soon, real soon, as in, like, right now, I believe they need to move to prepare for operating in a world where we may have to practice some form of social distancing for the next 12 to 18 months, the earliest period at which we can expect wide distribution of a coronavirus vaccine. While experts expect the prevalence of disease to decline over the coming months, until there is a vaccine, it will periodically resurge, requiring (at least localized) periods of social distancing.

A huge proportion of higher ed institutions are tuition dependent, and even a slight shortfall in enrollment requires deep cuts. A sudden collapse in enrollment and tuition revenue is an existential threat.

For example, over a three-year period ending in 2015, the College of Charleston saw its number of out-of-state students decrease by 400 students. This decline resulted in a $2.1 million budget shortfall that led to immediate midyear cuts as well as cuts in subsequent years. This resulted in “hard choices” that had the potential to “inhibit the college’s ability to fulfill its mission.”

This was all a shortfall of one-half of 1 percent of the total budget. We are facing something much worse.

How many institutions could operate if their out-of-state cohort is reduced by 10 percent? How many could handle an overall enrollment decline of 20 percent?

We have many reasons to anticipate such a collapse.

1. The industries that employ students both during and in between semesters are collapsing. Tremendous numbers of working students are going to be unemployed for a significant period. While the government appears poised to provide some basic support, where is the money for tuition going to come from?
2. Institutions that rely on out-of-state or international tuition to provide sufficient revenue are facing huge challenges to enroll those students. Why would any student who is possibly looking at a semester of distance learning while living at home enroll in an out-of-state institution and pay the significantly higher tuition?
3. A recession will deplete state budgets at a time when many states have not restored funding to the levels seen prior to the last recession. Cuts of the funding that does remain seem inevitable.
4. Students considering first-time enrollment in the fall may decide to defer enrollment until the full passing of the crisis.

Our public higher ed institutions have been living hand to mouth for decades. The adjunctification of faculty has squeezed as much operating expense out of the system as possible while leaving it less prepared to shoulder the current scramble.

Airlines and cruise ships are apparently in line for a bailout. The hospitality industry is being crushed.

Public higher education is going to need the same kind of massive support from the federal government or risk collapse.

Healthy educational institutions should be a vital part of a return to American prosperity, but if we don’t act, they may not be around when we most need them. A healthy education sector right now would be positioned to cushion the blow on individuals. Instead, students are forced to crowdsource their own mutual aid efforts.

These efforts are admirable, but they shouldn’t be necessary.

Fortunately, we have proposals ready to take off the shelf for both establishing tuition-free public postsecondary education and canceling existing student loan debt. Tuition-free institutions will allow for a stable base of funding for operations and ensure that tuition is not a barrier to student enrollment. The debt cancellation would deliver an immediate macroeconomic benefit to the country.

At this moment, we’re witnessing the cost of waiting too long to deal with a problem we know is coming and we know will have severe consequences. I hope we don’t wait too long to confront this one as well.