Colleges Continue to Churn Through Refund Plans

As colleges come up with plans to refund room and board, some are better received than others.

April 6, 2020
 
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It’s been nearly a month since colleges began to close their residence halls in response to the new coronavirus outbreak, but many are still figuring out exactly how to address room and board refunds.

Some colleges, such as Smith College, Harvard University and Amherst College, announced almost immediately that students would receive prorated room and board refunds. Many others have come up with partial refund plans in the following weeks, which have been met with praise by some students and with lawsuits and petitions by others.

Refund decisions are ever changing. This was apparent at the University of Minnesota Board of Regents meeting Friday, when the board voted 8 to 4 to approve a new student fee refund plan.

Previously, the university system had offered a $1,200 room and board credit for students on the Twin Cities campus and a $1,000 credit for students on all other UM campuses. This plan would have cost the university system $12.6 million in lost revenue.

The new plan, created in light of Minnesota governor Tim Walz’s stay-at-home declaration issued March 25, would provide prorated refunds for students on all six University of Minnesota campuses for room and board fees, student activities fees, and parking fees, if applicable. The new plan would cost the university system $27.8 million, more than double the original plan.

That’s a significant figure, even for a state system like the University of Minnesota, according to Craig Goebel, principal at Art & Science Group. He pointed to a recent report that the University of Wisconsin Madison is estimating a $100 million loss due to the coronavirus outbreak. The entire UW system expects to spend $78 million on room and board refunds. Elsewhere, Clemson University announced it faces a $20 million loss, $15 million of which will be for refunds. The University of Maine system has processed $12.8 million in room and board refunds as of March 31. (This paragraph has been updated to note that the University of WIsconsin Madison is expecting a $100 million loss.)

The University of Minnesota Board of Regents vote follows a petition calling on the University of Minnesota Twin Cities administration to increase refunds to students from the initial $1,200 to “at least $2,500.” It has gathered more than 500 signatures.

“The University of Minnesota instructed students to stay home after spring break due to this pandemic but isn’t compensating students the right amount for their losses,” the petition reads. "This petition is aimed to push administration to give students their rightful compensation of at least 2500 dollars."

The plan approved Friday would refund the “most common” student -- meaning a student who chose the most common options for housing, dining plans and the like -- $2,364, according to Julie Tonneson, senior vice president of finance and operations at the University of Minnesota Twin Cities. Actual refund amounts will vary by student.

Students in Arizona have also been leaning on their universities to pay them back for services not rendered -- but instead of just petitions, they took the universities to court.

Students have filed a class action lawsuit against the Arizona Board of Regents in an attempt to receive prorated room and board and student fees refunds from three universities -- University of Arizona, Arizona State University and Northern Arizona University -- after they moved classes online.

The sued for breach of contract -- a common class action claim, according to Kent Schmidt, a lawyer at international law firm Dorsey & Whitney who is keeping a running blog of coronavirus-related class action suits.

“[Arizona Board of Regents]’s performance under the contracts is not excused because of COVID-19 and the housing agreements provide no such terms excusing performance given nationwide pandemics,” the complaint reads.

The University of Arizona is offering students a choice between a 10 percent refund at the end of the semester and a 20 percent credit to be added to their account next year. Arizona State University will offer a $1,500 nonrefundable credit. Northern Arizona University announced Friday it would offer a 25 percent credit. But the students say it’s not enough.

“The students’ claim is pretty sympathetic. This is not an insignificant part of the money you pay to go to college,” Schmidt said.

The lawyer went on to explain the situation many colleges find themselves in.

"The problem is that a significant part of that money also goes to pay salaries of the people there working in the cafeterias and people that are doing various other jobs relating to the room and board," he said. "The question becomes: Is the university caught in the middle? Do they have to refund the money to the students, or are they under pressure to keep paying the employees?"

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