November 23, 2020

Universities brace for enrollment decline

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(BUSINESS WIRE) Sixty-seven% of higher education leaders say decreased revenue from tuition and student housing are their two largest challenges, according to a poll from NEPC’s Endowments and Foundations practice.

Lost revenue in these two areas reflects the reality facing colleges and universities. More than 65% report enrollment declines in the 2020-21 school year due to the pandemic.

While the majority (78%) offered a combination of in-person and online classes fall semester, the number of students on campus fell dramatically as well. Nearly three-quarters (73%) report declined occupancy in school-owned housing. About one-quarter (23%) indicated a decrease of more than 50%.

“The coronavirus pandemic created the most severe liquidity crisis higher education has faced since the Global Financial Crisis. Schools continue to grapple with the tension between near-term spending needs and pursuit of long-term goals (maintaining inter-generational equity, promoting broader access to education, etc.),” said Sam Pollack, a partner in NEPC’s Endowments and Foundations practice.

A minority of respondents cited a decline in state and federal funding and decreased donations as their top financial challenges.

College and university leaders also opined on the future of higher education after the threat of COVID-19 eventually dissipates. The long-term changes to higher education after the pandemic, nearly half (44%) of the leaders say they expect sustained lower enrollments will continue. About one-third (36%) anticipate a prolonged increase in the number of commuter students and one in five (20%) expect significant price decreases for all organizations.

“As the spring semester approaches, leaders in higher education remain focused on their organizations’ financial sustainability,” Pollack said. “The continued pressures of COVID-19 will cause different adaptations for each college and university. Some will target different students or introduce new programs, while others will look to cut costs to shore up their financial position.”

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