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Desperate Circumstances Prompt a Desperate Call on Congress

COVID-19 outbreak impact This month, AACTE joined like-minded institutions in writing a letter to congressional leaders in updating their earlier findings regarding four key COVID-19-related economic indicators that are placing significant financial burdens on higher educational institutions. The emergence of more detailed data regarding these four categories (enrollment, student financial need, auxiliary revenues, and new expenditures) revealed the troubling truth that our prior estimates about the impact of COVID-19 on the economic health of educational institutions was significantly underestimated and that the challenges students and schools are facing are far more severe than initially thought.  

As a consequence of these updated findings, AACTE signed on to a new letter urging Congress and the Administration to finalize negotiations as quickly as possible on a supplemental spending bill of sufficient size to provide at least $120 billion in needed support to students and campuses across the country. The detailed new findings described in the letter, while suggesting a potentially long, painful economic road ahead for some higher ed, provides a detailed and illuminating accounting of the many ways COVID-19 is burdening enrollment, student aid, and revenues at institutions of higher learning around the country.

Though a decline in enrollment as a consequence of COVID-19 was expected, the data suggest a more troubling and perhaps enduring result. Of particular concern is the 13% freshman drop across all institutions, the almost 19% drop at community colleges, and a concentration of losses of Black and Latino male students.

Regarding student aid, AACTE’s previous estimate that student financial need would increase by 20% has been proven to be a low estimate. COVID’s disproportionate impact on low-income students and their families drove up financial need among those students hit hardest by the pandemic. A study conducted by the American College Health Association and the Healthy Minds Network determined that over 63% of college students had experienced financial losses directly or within their families due to COVID.  According to another study: “ (w)orking students suffered a 31% decrease in their wages and a 37% drop in weekly hours worked, on average.  Moreover, 61% reported to have a family member that experienced a reduction in income.”  

Another troubling finding, the declining auxiliary revenues of educational institutions— including fees from room and board charges, event and parking fees, and bookstores and facility fees—was also significantly underestimated. Auxiliary revenues are a predominate portion of university revenue. Expecting colleges to reopen in the fall, it was anticipated that institutional revenues from these fees would decline by as much as 25%—or roughly $11.6 billion. However, much like the estimates regarding enrollment, the predictions were far off the mark as COVID forced most institutions to close their campuses—cutting off access to important auxiliary revenues.

Further, the prior estimates did not account for possible state budget cuts.  Now that states are finalizing their spending plans, we know that numerous states have already cut support for higher education programs, including financial aid programs, while many others have announced plans to do so.  At the 44 public institutions who provided detailed information for the updated letter, 32 reported that their state has implemented budget cuts ranging from 5% to 58% of overall support, with the average cut being 11.3%.  

Accompanying the letter is a state-institution-specific accounting of some of the economic challenges faced by higher ed institutions around the country. While the details described in these finding may be troubling,  AACTE hopes that enumerating them in such detail sufficiently captures the extent of the economic hardships that these institutions are forced to confront in the wake of COVID-19. 

 


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