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Dreamstime
Higher Ed Dive
'Sharp' pandemic recovery not likely for colleges: report
Hallie Busta
Dec. 8, 2020
Dive Brief:
A pair of new reports from Moody's Investors Service and Fitch Ratings
offers prognoses for the pandemic's impact on colleges during 2021.
Enrollment volatility will persist, the ratings agencies say. Moody's
predicts net tuition revenue will decline at around 75% of private
schools and 60% of publics. Along with lower auxiliary income and state
funding, colleges' budgets will remain strained.
A "sharp" rebound is not likely, Moody's analysts note, citing an
uneven recovery and that state funding and net tuition revenue will
likely still be suppressed in fiscal 2022.
Dive Insight:
Moody's analysts predict the pandemic will challenge higher education
operations through at least July 2021, but they don't expect conditions
to snap back. Operating revenues will be down 5% to 10% sectorwide for
fiscal 2021, they note, and continued weakness among critical revenue
sources is expected to trouble schools after that point.
One decision that could significantly affect colleges' projections is
the extent to which they will open campuses this spring. To stave off
the possibility of having to shutter campuses due to coronavirus
outbreaks — as happened this fall — several colleges are adjusting
their academic calendars. And some plan to increase virus testing.
Enrollment has been another area of uncertainty. Preliminary data show
fall 2020 graduate and undergraduate counts are down 3.3%
year-over-year. Moody's projects enrollment will decline around 2.5% in
fiscal 2021. That decrease, along with an uptick in financial aid,
should bring median net tuition revenue down 3.3% for private schools
and 0.9% for publics.
Large comprehensive universities will generally fare better than smaller regional colleges, however, the report says.
Colleges were facing pressure to lower tuition and fees before the
pandemic. The crisis may exacerbate that trend, "as expected family
incomes and contributions decline and the need for greater
institutional aid (typically in the form of tuition discounting)
grows," Fitch Ratings Director Emily Wadhwani explained in a separate
report.
Tuition discounts at private nonprofit colleges hit a new high last
academic year. And tuition increases for 2020-21 were historically low
at public and private four-year colleges.
International student enrollment is also an area of concern, the
reports note. Those students tend to pay full price, offsetting aid for
domestic students, so a decrease in their numbers can hurt colleges'
ability to lower costs.
International student enrollment fell 16% this fall, with an even
bigger decrease (43%) among newcomers, according to a survey published
last month. The pandemic likely compounded an ongoing trend of fewer
new foreign students coming to the country, for which U.S. visa
restrictions and more opportunities in other countries have been
contributing factors.
Higher ed groups are calling for updated guidance on how international
and exchange students can access U.S. institutions during the pandemic.
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