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Schools Brace For Revenue Drops, Consider Staff Layoffs

Undergraduate students at IE Business School

College presidents are prepping for revenue drops, according to data collected by ABC Insights, a higher education-focused research firm. Nearly three-quarters (72.1%) of college presidents responding to a survey conducted between March 27 and April 1 said they are considering laying off staff as part of a plan to deal with the coronavirus pandemic. However, 75.2% also suggested they’re considering “hunkering down” in response to the spread of COVID-19.

ABC Insights conducted the survey alongside the Association of American Colleges and Universities (AACU). Some 285 college presidents were invited to participate, and of those, 142 completed the survey. The majority of respondents were presidents of private, four-year institutions, followed by public four-year schools, and then public two-year community colleges.

ABC Insights survey

There is a difference among types of institutions and how they play on responding to fallout from the virus. Private institutions are less likely to hunker down and more likely to layoff staff, according to the data. Some 76% of presidents from private universities said they are considering hunkering down compared to 70% of public universities and 87% of two-year colleges. But 78% of private schools say they’re considering laying off staff. At public universities (67%) and community colleges (60%) fewer presidents are considering laying off staff.

Smaller schools are also more likely to consider laying off staff, the data say. Some 81% of presidents at schools with a total enrollment of zero to 5,000 are considering laying off staff compared to 57% of medium-sized schools (5,000 to 15,000 students) and 65% of large schools (15,000+ students).

ABC Insights survey

ABC Insights survey


As the spread of coronavirus wreaks havoc on economies, markets, and industries, higher education has not been spared. Depending on how long shelter-in-place orders last and the length of coronavirus’s impact on normal life, higher education could be impacted even more. It’s no secret higher education in the U.S. already has its issues. In an effort to attract students, many universities have borrowed funds to erect state-of-the-art dorms and buildings. To offset operating costs, universities have spent the past few decades increasing tuition at a much higher rate than average wages. The result has led to increasingly high student debt and graduates with debt as well as decreasing enrollments.

If COVID-19’s impact lasts through the summer and into August when schools are scheduled to start again, the impact will likely get worse. Business students at top universities across North America are already revolting over MBA tuition costs after the move to online learning this spring. In an exclusive Poets&Quants survey conducted at the end of the March, a third of MBA admits planning on enrolling this fall said they might defer and nearly half (43%) said they want tuition lowered if MBA classes start online.

ABC Insights survey


College presidents are bracing for that decrease in funds and revenues, the ABC Insights survey results say. About 70% of all college presidents responding to the survey expect funding at their universities to decrease by at least 10%. The most (40% of college presidents) expect revenues to drop between 10% and 15% in fiscal year 2021. Another 21% expect revenues to drop by 5% to 10%. Once again, presidents of smaller colleges and private colleges expect more revenue decreases than those at public universities and community colleges.

The majority of respondents said they expect tuition amounts to stay the same. Some 12.7% of respondents from private schools said they actually expect tuition to decrease at their institutions. A smaller amount (2.1%) of four-year public schools expect a decrease in tuition costs and 0.0% of community colleges expect a decrease. On the flip side, 20% of community college presidents said they expect tuition costs to increase. Some 12.8% of public university presidents and 8.9% of private school presidents reported the same.

Of course, with the nature of a pandemic and its spread, a lot of this data would likely change on a daily or weekly basis. Simply put, it’s impossible to know what the world and status of COVID-19 will be like in July and August when schools are ramping up to start again.

ABC Insights Survey


Still, when asked what they’re most worried about, the majority of college presidents (42%) said enrollment is a major concern. Another 27% said they were most concerned about finance.

“Hitting new student enrollment targets and existing student retention targets,” one respondent said when asked about what they were most worried about.

“The duration of the epidemic leading to lost revenues and necessary layoffs,” another said.

And at least some are beginning to worry about existential issues to higher education.

“Long-term challenges in student behavior when it comes to the value of a liberal arts college.”

ABC Insights survey