At the start of the year, several troubled colleges were underway with public plans to shore up their finances and strengthen their institutions. Although their turnaround tactics varied, they often included attempts to grow enrollment, reduce operating expenses and garner more donations.
Yet the coronavirus pandemic has thrown some of those plans out the window. Few colleges, if any, were prepared to grapple with a crisis that would force campuses to shutter nationwide and instructors to take classes online during the spring term and possibly into the fall.
Colleges of all sizes have refunded room and board fees, an increasingly important source of revenue. Moreover, the coronavirus has made enrollment officers uncertain about whether students — including those who have already paid deposits — will show up in the fall if campuses remain closed.
The outlook for many colleges is bleak, with analysts from Moody’s Investors Service saying they’ll be facing “unprecedented enrollment uncertainty” for the coming fiscal year. A handful of small colleges have already folded under the financial pressure from pandemic.
Education Dive checked in with three college leaders whose institutions were underway with big changes before the pandemic to find out how they’re adapting their turnaround plans. Here’s what they had to say.
Hampshire College, in Massachusetts, started the year with ambitious goals. After appearing on the brink of closure in 2019, the small liberal arts school was gearing up to debut a new curriculum, had just launched a $60 million fundraising campaign and was charting a course to more stable financial ground.
But the pandemic has added a few wrinkles to those plans. In all, the college may lose more than $1 million from the crisis before the end of the 2020 fiscal year, most of which is coming from room and board refunds, its president, Ed Wingenbach, told Education Dive.
Hampshire also expects to miss out on more than $500,000 in revenue this calendar year from its auxiliary services, such as its on campus events venue, the Red Barn, as well as from other events and facility rentals. In the 2018 fiscal year, Hampshire received nearly $2.7 million in revenue from auxiliary enterprises, according to its latest publicly available financial statement.
“All of our auxiliary revenue sources are essentially dried up for the summer,” he added.
Still, Hampshire is pressing on with its plans.
When the college was staring down potential closure last year, it admitted just over a dozen students to its freshman class. Now, raising enrollment to around 1,000 students total — up from about 700 today — is key. Hampshire has extended admissions offers to 667 students for the fall of 2020.
Hampshire officials hope their revamped curriculum will help. Starting with this fall’s entering class, the college will scrap majors entirely and instead students will organize their studies around addressing contemporary challenges, including climate change and social inequity.
That goal has taken on greater urgency in the wake of the coronavirus, Wingenbach contends. “That’s what people want,” he said. “We can turn around and start thinking about how to address the myriad issues that emerge from … a global pandemic.”
Even before the pandemic, officials knew they’d have to do a significant amount of fundraising to close the college’s deficit. Although the coronavirus stalled that effort in early March, momentum for the campaign is building again, Wingenbach said. Hampshire has raised $13.4 million toward its $60 million goal.
“Many of the people who donate to Hampshire College have accelerated pledges,” he said. “They see that this is a time of real need.”
Goddard College, in Vermont, has been working to slash expenses and hold the line on its enrollment since its accreditor placed it on probation in 2018 over financial and governance concerns.
To help grow its cash reserves, the school launched a $4 million fundraising campaign in January. “Not the best timing given that we had a global pandemic emerge soon after,” said Bernard Bull, Goddard’s president, in an interview with Education Dive. “So we’re a little bit behind.”
However, Goddard’s students, most of whom are age 25 and older, don’t live on campus, meaning the college won’t lose out on as much room and board revenue as some other liberal arts colleges.
But many students spend eight to 10 days each semester living on campus, where they interact with their advisors and other students through workshops and group sessions.
Because Goddard couldn’t bring students to campus this term, it replaced the associated residency and travel fees with a $250 technology fee to hold the program virtually. That lowered the total amount each student pays by around $500 to $1,000, with the college losing about $600 to $800 per student.
To prepare for a virtual fall term, the college plans to invest around $150,000 to $200,000 in expanding its digital infrastructure. Moving to hold the fall semester entirely online was a “significant decision,” Bull said. “Being a tuition-dependent college with limited cash reserves, it was not feasible for us to plan for both scenarios,” he added.
Goddard’s enrollment and accreditation review in July will help determine its fate.
Student headcount has dropped from around 800 students in 2010 to just 350 today. To make up for the subsequent decline in tuition revenue, officials have slashed around 30% from its budgets through layoffs and other cuts over the past couple of years.
Bull said interest in Goddard’s programs are still strong. Yet enrollment officers nationwide aren’t sure if they’ll fill their seats this fall, especially as many students and their families grapple with lost income from being laid off or having their work hours reduced.
If a significant number of Goddard’s students take a semester off and new enrollment doesn’t make up for that lost tuition revenue, it could create a “critical situation” for the college, Bull said.
Even a 5% to 10% drop could be a challenge for the college, he told Education Dive in an email. “We don’t know how much (our accreditor) will take into account this circumstance,” he wrote.
Federal relief is helping, however. The U.S. Department of Education is distributing roughly $14 billion to colleges through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, nearly half of which must be given to students as emergency grants. Goddard has been allocated about $320,000.
It also received funding through the Paycheck Protection Program, which provides loans to small businesses that may be forgiven if employers meet certain requirements, such as keeping all their workers on the payroll for eight weeks.
“That’s going to give us some additional financial stability as we work through these uncertainties in the next couple months,” Bull said.
St. John’s College
St. John’s College, which has campuses in Maryland and New Mexico, is nearing the end of a five-year plan to close its budget shortfall, which shrunk from $12 million in the 2016 fiscal year to about $1.9 million in the 2020 fiscal year.
Officials also recently cut tuition by 33% and launched a $300 million capital campaign to help the college switch to a philanthropy-supported model. The move was met with an uptick in applications from prospective students and donations from alumni.
“This (crisis), obviously, puts a halt to some of that momentum,” said Mark Roosevelt, collegewide president of St. John’s and head of its Santa Fe campus, in an interview with Education Dive.
However, he said, earlier moves to cut around 40 administrative positions as well as the headway made with the capital campaign has better equipped St. John’s to weather the pandemic.
So far, it’s been costly. St. John’s has refunded $1.9 million in room and board fees, though some of that will be offset by roughly $500,000 in food service savings. Roosevelt estimated the college is missing out on roughly $1 million in auxiliary revenue from hosting summer conferences and other events.
However, St. John’s also received about $4.6 million from the Payroll Protection Program across its two campuses.
And it’s using the CARES funding earmarked for its own purposes to continue to pay its work-study students. The money designated for students is being used in various ways, such as helping students travel back home or buying them electronics to attend school virtually.
But next year’s budget is now in flux.
“There are too many variables for me to be able to tell you whether we’re going to be able to balance our budget next year or not,” Roosevelt said. Depending on when travel restrictions and lockdown orders lift, the fall semester may be held entirely virtually, be split between online and in-person instruction, or be pushed back a few weeks.
“Assuming we’re back in session in the fall, and assuming that international kids can travel to the country, and assuming we don’t have more than a 10% hit on enrollment — and those are three big assumptions — we should be fine in our budget balancing year,” Roosevelt said.