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V4I3: Financial Sustainability in The Time of Covid

By: Sonny Ramaswamy, President, NWCCU

As I write this article, it’s been over two years since the World Health Organization (WHO) declared a Public Health Emergency of International Concern regarding the virus that causes severe acute respiratory syndrome coronavirus 2 (SARS-CoV2), aka COVID-19. On 11 March 2020, WHO declared the situation as a global pandemic.

In the third year of the pandemic, the drumbeat of ever more transmissible and virulent strains of the virus, including the highly transmissible Omicron variant, which has caused incredible levels of global morbidity, seems to be dissipating. The global community is fatigued, what with the various lockdowns, mandates, protests, supply chain challenges, business shutdowns and job losses, the Great Resignation, budget reductions, and shifting COVID policies with the changing political winds.

Indeed, as infections due to the Omicron variant have decreased precipitously, indoor mask and vaccine mandates, proof of vaccination, testing, and social distancing, the hallmark of the pandemic over the last two years, are being lifted in many parts of the United States, including on many college campuses. Many colleges are reverting to in person/on campus instruction.

There’s a sense that it’s time to “live with the disease” and to treat the coronavirus as endemic, not too dissimilar to the situation with the cold and influenza viruses. Many scientists, however, including those working at some NWCCU-member universities, warn it may be too early to end the mandates, because of the potential for future SARS-CoV2 virus variants wreaking havoc – indeed one scientist refers to this as “endemic delusion.”

The global pandemic has contributed to a litany of macro impacts in the United States during the last two years: ~79 million infections; ~910,000 deaths; ~500,000 fewer births; ~$4.5 trillion in COVID relief at the federal level, along with a significant amount of relief funds at the state level, along with various other economic, social, and political impacts.

Combined with some of the macro impacts of COVID, at the micro level, American colleges and universities received ~$76 billion in emergency relief funds through the CARES Act and Higher Education Emergency Relief Fund and other legislation, including aid to institutions and direct aid to students.

Almost overnight, institutions had to innovate: they switched midstream from on-campus to online classes or hybrid/HyFlex approaches; some institutions allowed students to continue to stay in residence halls, while others provided laptops to students or allowed students to access Wi-Fi from parking lots. Our member institutions figured out innovative ways to deal with the myriad challenges, including finances and cash flow, declining enrollments, summer melt, recruitment issues, impacts on retention and graduation, issues of mental health, PTSD, and emotional well-being, challenges to being able to offer experiential learning, equity issues, digital divides, advocacy, and even the long-term viability and sustainability of some institutions. Most gratifyingly, institutions partnered and shared in business office and educational resources and approaches to offer online and experiential learning opportunities.

Institutional accreditors, including NWCCU, sought federal flexibilities for online education, length of term, pass/fail, funding and student aid, tax and veterans’ issues, to name a few. Similarly, with federal approval, we successfully launched virtual evaluation visits, which we hope will be a thing of the past in the fall 2022 visit season.

The National Student Clearinghouse estimated that enrollments at American colleges and universities declined during the pandemic by more than one million, with community colleges being impacted more. Undergraduate enrollments declined by more than 6.6 percent, whereas graduate enrollments declined only slightly. However, freshman enrollments that appeared to have stabilized, fell 9.2 percent in fall 2021, compared with pre-pandemic levels.

The American Council on Education’s Pulse Point Fall 2021 survey suggested that demographics of enrolled students at two-year institutions had shifted as a result of the pandemic. Most college presidents agreed that doubling the maximum Pell Grant would increase the enrollment of low- and moderate-income students at their institution. The survey also spotlighted student mental health as a significant concern, along with nutritional and housing insecurity. In addition, faculty and staff disengagement, retention, morale, and mental health were of concern.

Combined with the challenges resulting from the pandemic, which likely will have long-term impacts and continue to exacerbate societal disparities, the changing demographics in America are another concern for colleges and universities. For example, the decline in birth rates triggered by the Great Recession of 2008 is projected to create sharp reductions in enrollments of traditional college-age students starting in 2025, referred to by some as the “demographic cliff.” A second demographic cliff, because of low birth rates during the COVID pandemic (fertility rates of 1.779 and 1.781 in 2020 and 2021, respectively), is projected to result in 300,000 to 500,000 fewer children in America. Some claim the demographic cliff is a “manufactured crisis,” invoking the National Center for Education Statistics’ (NCES) projections of the number of high school graduates through 2030 being relatively constant. Note also that, according to a report published by the Western Interstate Commission for Higher Education (WICHE) the impacts on higher education may not be quite as serious at least through the early 2030s; however, WICHE’s report also projects that declines past 2033 are likely to be amplified because of the birth declines during the COVID-19 pandemic.

Whether the demographic cliff is real or manufactured is not the issue; the enrollment declines have been occurring in the years prior to the pandemic, which only exacerbated the same, resulting in, as noted above, of one million fewer students during the pandemic. Additionally, a complete rebound in enrollments remains to be seen; the NCES’s projections show that, at least until 2025, numbers of high school graduates will continue to increase, and hopefully that translates into more college bound students, which is not a guarantee, because surveys suggest fewer than half the high school students are considering a four-year college, down significantly from the 72 percent considering college previously.

The significant reduction in immigration, projected to be down 2.5 million through this decade could, in combination with declining birth rates during the pandemic, result in a total US population of only around 375 million by 2050, instead of the previously projected 400 million residents, according to the US Census Bureau. The net result could be significantly fewer high school graduates enrolling in college over the next couple of decades.

The demographic challenges portend significant financial headwinds for colleges and universities. In the post-pandemic context with no additional “free” money from the federal government, budget cuts at the state level, donor fatigue, and despite the uncertainty of population demographics in America, colleges and universities can plan and act proactively to address enrollments, student success, and the concomitant impacts on financial sustainability. I wrote previously about financial sustainability being a marathon and not a sprint, because it takes comprehensive strategic and tactical approaches on student recruitment and retention and innovative educational programming to promote student success and close equity gaps to ensure financial sustainability.

It will take even more novel approaches to recruit and retain traditional students in the post-pandemic world. The competition for recruiting students will be intense. Although recent data suggest the significant downturn in enrollment of domestic international students is turning around, competition from other countries, including Canada, Australia, and European countries, for international students is another factor that requires creative recruitment solutions.

A potential pool of students could be the huge non-traditional student population, including the approximately two million veterans of recent conflicts, the almost 35 million individuals who did not complete college for various reasons, and the millions representing the Great Resignation. These non-traditional, often part time, students who want/need to update their credentials, i.e., upskilling and reskilling, are an outstanding pool for colleges and universities to consider and recruit from.

Colleges will need to compete against corporate efforts and partnerships and against other institutions of higher education – I heard a recent quip that Arizona State University is “hoovering up” students. This could include creation of flexible pathways, construction and deployment of learning communities, courses, and alternative credentialing, micro- and stacked-credentialing, badges, competency-based education, certificates, and non-traditional majors and degree offerings. These strategies must be comprehensive, adaptable, data- and evidence-informed, and include a portfolio of approaches focused on the fundamentals, including personalized education and services, intensive mentoring, intrusive advising and academic coaching, and experiential learning opportunities. Student educational offerings must include a combination of technical, cognitive skills and transferrable non-cognitive, core competencies, such as critical thinking, problem solving, and communication skills. In addition, students will need help with financial aid and just-in-time grants, social networks, food and nutritional security, housing, child- and health-care support, and mental health counseling.

Actions to ensure financial sustainability might include a portfolio of approaches as Marc Johnson, former president of the University of Nevada, Reno and former NWCCU commissioner, wrote and I wrote in the September 2020 issue of The Beacon. The key to achieving viability and sustainability is for colleges and universities to demonstrate the value proposition of higher education – student success – to the American public, which requires a reimagining and reengineering of higher education, laser-focused on student success and closing equity gaps, while ensuring accountability and transparency. Creating value is easy if every individual involved – students, faculty, staff, administrators, alumni, parents, donors, and other stakeholders – makes a commitment to do so.

NWCCU is stepping up efforts in the form of webinars, workshops, academies, and training sessions to bring the best ideas and approaches to support efforts to address many of the extant challenges such as financial sustainability and promotion of student success and closing equity gaps. Our hope is to create evangelizers to work with college faculty, leaders, and staff to adapt and adopt best practices.

Even though the pandemic brought us to our knees, it made us who we are: stronger, smarter, and more effective in promoting student success and closing equity gaps.

 

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