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COVID-19 Creates Stark Consequences for Colleges

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As we approach the last week of May, colleges are working feverishly on their plans for the fall semester. While many colleges are anticipating in-person classes this fall, others are waiting to commit. It appears that July 1 has been somewhat arbitrarily designated as the default date for schools to announce their firm plans. That’s because, for those campuses that will welcome students back in full force, so many actions have to take place before the first student trods the sod.


Other schools may need an earlier date. The University of Notre Dame, for example, has committed to bringing all students back to campus for Fall 2020 the week of August 10. That’s more like Summer 2020. Obviously, this means that ND’s campus is currently a beehive of activity, establishing safety protocols for students. No doubt, other schools are watching what is happening there to see what The Irish do, right or wrong.

Colleges May Be at Financial Risk

It’s far from business as usual for higher education now. The reality of COVID-19 has dragged colleges into an unwelcome brave new world that threatens ominous outcomes for the ill-prepared. In researching what some of those consequences might be, I came across an essay by Charles Fain Lehman that spells out multiple stark realities. In American Colleges Are Headed for a Meltdown, Lehman predicts that “The coronavirus crisis could sink many schools — and leave a windfall for the survivors.”

That’s a scary statement, and at first glance, you may think it’s exaggerated for effect and overly sensational. Unfortunately, Lehman is correct. Here’s some supporting evidence. In an article less than two weeks ago, Fred Thys advises that One Third Of Private 4-Year Colleges Are At High Risk Financially, Model Predicts. Why such a precise evaluation?

A model developed by Boston startup Edmit finds that more than a third of private four-year colleges in the United States are at a high risk financially.

“Many colleges will be able to help students find ways to survive this crisis, but others will need to make the incredibly difficult decision to seek a merger or close in the next few years,” co-founder Nick Ducoff said.

The survey analyzed 17 years of revenue from tuition, return on investments, expenses and the size of tuition discounts that 937 colleges offer students. Of those, 345 are at high risk, meaning that if present financial trends continue they would be able to survive six years, at most

That survey-analysis was run without the novel coronavirus effect factored in. Try to imagine the magnified negative impact those imperiled schools — the ones that would be able to survive six years, at most — will have to absorb in the coming year or two. It’s not an optimistic scenario, even if COVID-19 is taken out of the equation for these schools:

The model assumes that colleges will lose 10% of their tuition revenue this coming academic year because fewer students will enroll and because they’ll have to offer more discounts on tuition to entice students, and 20% the following year. It also assumes that revenue from investments declines 20% this next academic year

The stock market bubble deflated as much as 30 percent earlier this year, and the financial stability of college endowments has taken a blow. The financial stability of the United States Government is also in question with the national debt growing out of control; perhaps beyond control would be better put. This certainly isn’t helping any financially fragile institution’s future at all.

Could a Meltdown Be on the Horizon?

What about Lehman’s college “meltdown” prediction? He sets the stage with some dark drama:

They’ve been through riots, protests, and natural disasters — but America’s colleges have never seen anything like the financial meltdown the coronavirus is about to bring to their campuses.

The rising wave of health fears, added costs, and vanishing tuition payments could crush small colleges, many of which were already hanging by a financial thread. Those that can weather the crisis — including big-name universities with billions in their bank accounts — in turn stand to gain big from the fallout.

The emptying out of schools and the mass transition to distance learning has already been “the largest all-sector hit that we’ve ever seen,” Jim Hundrieser, a vice president with the National Association of College and University Business Officers (NACUBO), told the Washington Free Beacon. But the challenges of this spring pale in comparison to the shock many colleges are expecting in the fall, when social distancing measures and a possible second wave could create the most surreal semester ever

China is currently experiencing a second wave of COVID-19 in its Jilin province, threatening 108 million people. If a second wave happens here in the US, as predicted by numerous experts (see ForbesExperts Predict Second Wave For Coronavirus: Will College Campuses Really Reopen In The Fall?), financially challenged colleges that were able to survive the first wave this spring will likely succumb to the second.

Even major “elite” schools have been hit hard, as Forbes‘ Chris Westfall explains:

The University of Michigan anticipates losses of $400 million to $1 billion this year across its three campuses. California’s university system suffered $558 million in unanticipated costs in March alone. The main campus of the University of Colorado will lose at least $67 million through the summer, ABCNEWS reports. Forbes has already documented the financial challenges facing smaller schools – now, 174-year-old MacMurray College in Illinois joins ranks with three state institutions in Vermont in shutting its doors forever

US Students Changing Educational Plans

Thirty-four percent of American adults (ages 18 to 64) have canceled or changed their education plans. Adding to the revenue loss due to dropping enrollments is the additional cash crunch caused by rigging for safety on campus. I addressed this in my previous article, Colleges Continue to Change Course for Fall 2020. Lehman agrees [with my bold emphasis]:

Added safety measures mean more expenses, Brown education professor Susanna Loeb told the Free Beacon. Colleges will need to pay fixed costs, like staff salaries and facilities maintenance, while simultaneously spending more on cleaning, testing and added space for socially distanced classes and living. At the same time, money will stop flowing in; Robert Kelchen, a professor of higher education at Seton Hall University, said that colleges are expecting a 20 to 30 percent drop in revenue next year

Kelchen makes a staggering assessment. While students may, in fact, be able to return to campus this fall under intensified, in-person strictures — “party hearty” days are over, at least for the near future — there may be some conspicuous extracurricular absences, mainly sports. This is where it really gets messy. The NCAA has stated that all students must be on campus in order for a college’s sports teams to play. The biggest revenue maker for the Division I schools is, naturally, football. Can football revenue fever override student safety concerns and cause too-early openings? Let’s hope not.

Penn State University takes in $110 million every season in football ticket revenue, media broadcast rights and associated sales. According to school officials, this income supports all other university sports programs, a similar revenue-sharing setup employed by other DI schools. Take football out of the equation and a college’s entire sports program could collapse in domino fashion until things return to “normal,” if, indeed, they ever will.

Accordingly, keep your eye on the relationship between returning college students this fall and their schools’ gridiron goings-on. I predict that at some schools, even with students back on campus, football this fall may not happen. Why? I’ll save an analysis of that for another day, but if you’re curious, check out what it takes to prep a college football team for its first game. Regardless, the trickle-down from no football this year would also be worth following, if that does happen at big schools.

Endowments Matter

While the full list of COVID-19 consequences has yet to be completed, you may be wondering which schools are most likely to survive the pandemic. A major clue can be found in endowments. Check this list for the Top 100 richest universities. The Top 10 (as of Fall 2019) are:

1. Harvard University

2. The University of Texas System

3. Yale University

4. Stanford University

5. Princeton University

6. Massachusetts Institute of Technology (MIT)

7. University of Pennsylvania

8. Texas A&M University System

9. University of Michigan

10. Northwestern University

Endowment levels as of today have yet to be calculated, but you can be sure that the stock market dive, along with associated pandemic-related expenses, have put a large dent in all of these. Imagine the effect on schools with much smaller reserves.

Summing up for now, Lehman makes an excellent point, one which we should keep in mind as the coming months’ drama unfolds:

Higher education resembles many other industries facing the coronavirus crisis. The small players look set to be decimated by the coming storm, while the ones that are big and wealthy enough to survive will wield even more power on the other side.

It’s going to be an extremely interesting 2020 on many fronts. Higher education is among the top fronts I’ll be watching. Buckle up!

——————

By: Dave Berry
Title: COVID-19 Creates Stark Consequences for Colleges
Sourced From: insights.collegeconfidential.com/will-coronavirus-kill-higher-education
Published Date: Thu, 21 May 2020 14:44:40 +0000

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Apply Online For Student Loans

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Apply Online For Student Loans

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However, it’s important to remember that student loans are still loans, and you should borrow responsibly. It’s advisable to budget regularly and avoid unnecessary purchases or luxuries to ensure you can manage your loan repayments in the future.

Before applying for student loans, explore other options such as scholarships, grants, or parental funding. These resources can help reduce the amount you need to borrow and minimize your financial obligations.

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In conclusion, applying online for student loans can provide you with the financial support needed to pursue your education. However, it’s important to borrow responsibly, explore other funding options, and plan for a successful career to ensure you can manage your loan repayments effectively.

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Webinar Recap: How COVID-19 is Affecting Financial Aid

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Many families are facing new financial challenges in light of the coronavirus emergency, and College Confidential has fielded dozens of questions on this topic recently. To address those queries, we hosted a webinar on April 9 entitled “Paying for College Amid Changes Due to the Impact of COVID-19.”


During the event, moderated by Aaron Murphy, manager of learning and development with Inside Track, the following panelists offered their perspectives on the issue:

  • Denise Trusty, director of financial aid with Morehead State University
  • Laura Reisert Kalinkewicz, associate vice president of college partnerships with RaiseMe
  • Amy Nelson, director of sales at International Scholarship and Tuition Services
  • Charlie Javice, founder and CEO of Frank.

Check out the following topics that the panelists discussed, along with their views of how things may unfold amid the financial challenges brought on by the coronavirus outbreak.

Family Finances Changed? Contact Your Schools

If you plan to start college in the fall as a freshman — or return to school as an existing student — and your financial situation has changed since you applied for financial aid, you should contact the colleges on your list immediately. Financial aid departments can consider appeals for more money, but must base these decisions on each individual student’s situation, Trusty said.

“I know with Morehead State, where I work, we will be doing professional judgement calls on all students who say they’ve been affected,” she noted. “We will reach out to those students to see what we can do to help them maybe obtain additional funding, additional grants, scholarships, whatever they would be eligible for. We do professional judgment all the time for our students, because things happen all the time. This year will be an especially large amount of those, I’m sure, but those are up to individual schools to make that call for their students.”

In addition, she added, the Department of Education has set aside over $6 billion for additional grants and scholarships that the universities will be able to use. “Currently, I don’t know how that’s all going to play into this,” Trusty said. “So that will be up to each individual university on how they lay those out. I know it will be beneficial, I just don’t know how available that will be to each student.”

Keep in mind that schools are accustomed to reviewing financial aid appeals, and they all have processes in place for to do so. “It is really, really important to know that schools typically leave a budget from 10 percent to 20 percent or so of their financial aid dollars for what would be called a professional judgment bucket,”Javice said. “Therefore, there is additional money to be had, and it’s up to you to request it. You should approach your school as soon as you know you might need more money, and be prepared to show supporting documentation demonstrating how your finances are different from when you filed your FAFSA initially. This might require proof of a job loss, medical bills, a cut in pay or another such issue, Javice said.

In addition, if another school gave you a better financial offer, you can petition the school that gave you the lower offer for more money, Javice noted. “This typically works better for private institutions versus public state schools, given the fact that they have a little bit more discrepancy and more dollars to put to work in terms of a tuition discount,” she added. “This is solely up to the school on a case by case basis.” In some cases, the money is distributed on a first come, first serve timeline, so don’t wait if you know you need more aid.

Although financial aid can be a stressful topic, try not to be emotional when you request more money, Javice added. You’ll get a lot further by having organized documentation to present than you would by getting angry or upset, she noted.

Consider Outside Scholarships

The coronavirus situation has changed plans not only for incoming freshmen, but also for current college students, Nelson said. “Organizations are stepping up and trying to find ways to provide additional scholarship opportunities this year,” she noted. Students should be proactive in seeking those options.

Raise Me is offering new micro-scholarships for students who are seeking additional funding sources, Kalinkewicz said. In addition, she encourages students to ask colleges for more time to make decisions, even if the school hasn’t extended its deposit process. You can always try and request additional time to get your financial aid package right, she noted.

Finding more money is not relegated to younger students, Javice added. “Adult learners comprise the biggest group of people actually going to college today,” she noted. It’s very common for people to be seeking new types of skills and going back to college to gain additional degrees. Financial aid is available to adult learners, and they may even get aid to pay such costs as rent, she added. In addition, they can seek outside scholarships or employer-matching funds to pay for their educations.

Not Necessarily Too Late to File FAFSA

Students who didn’t file a FAFSA already should do that as soon as possible so you can get access to financial aid funds, Javice said. Federal FAFSA deadlines are usually in June, but states make their own deadlines for state aid. Some states, such as New Jersey, have moved their deadlines back for this year, so check to make sure you stay on top of your deadlines.

And if you file for financial aid and you decide you don’t want it, you can always decline the financial offer or portions of that offer, Nelson said. Your best bet is to apply so you can take what you need and decline any amounts you don’t need. Even if you don’t think you qualify for financial aid, you should apply anyway because you could be surprised at what you’re offered. “You really need to complete that [FAFSA] process every year,” Nelson said. “The process is very easy, and jobs can come and go. It’s your safety net and you want to make sure you’ve completed it. It makes it a whole lot easier when situations like this arise.”

Some colleges also have supplemental applications to fill out for particular types of aid, so always reach out to your financial aid office for information on which documentation you should be completing, Kalinkewicz said.

Could Families — Not Schools — Be in the Driver’s Seat?

Because many merit scholarships are based on test scores and GPAs, some high school juniors are concerned that they won’t have access to those in the coming year. With test dates being canceled and grades moving to pass/fail, they fear they won’t meet the criteria to earn such scholarships.

“It’s clear to me that colleges and universities know the extraordinary circumstances we’re under,” Nelson said. “All schools are leaning forward and considering all options as the situation develops. I would continue to encourage juniors to stay engaged and stay informed.” You should also watch to see what happens with test dates, she said. The ACT and SAT dates could change, and some schools may forego the need for a test score altogether, she added.

In addition, some merit scholarships that have traditionally been based on test scores may become test optional, Kalinkewicz noted.

Keep in mind that in many cases, families are in the driver’s seat rather than having the colleges be in charge, Javice said. Some schools have lost revenue and are very eager for students right now, “so if you are scared because you thought you could never get into a specific school from an admission criteria standpoint, this is your year to stretch, this is your year to think about the schools that are your reach category and go for it, because schools need the money and need the students. So the power that used to be in an admissions office is in you, the student or the family’s hands,” she said.

She also advises juniors to request application waivers from schools to save the $50 to $100 or so per application that they would normally pay. The schools may say no, but it won’t hurt to ask, she advised. “Persistence is key when dealing with schools,” Javice noted.

Federal Student Loans Payment Suspended

As many families are aware, payments on federal student loans are automatically suspended from March 13 through September 30, 2020 thanks to the government’s CARES Act. This is essential to keep in mind, particularly for families that have multiple children in various stages of the college process.

“You will stop paying your loans and you will have zero interest from now until September 30, and that’s important for parents to know,” Nelson said regarding existing federal student loans. “If you had an auto draft, the auto draft has been shut off and will not continue. You can, however, continue to make those payments if you’d like, and any interest you had before March 13, once that interest is paid up, all your payments will go directly toward your principal.” She advises families with federally-backed loans to check with their loan servicing agents, because they have a lot of information for both parent and student borrowers on how the CARES Act will impact payments for the next six months.

Student Job Gone? Colleges Might Help

For students who expect to earn money via part-time or full-time work to pay for college, but can’t do so due to the coronavirus, colleges may have resources to help. “There are many colleges and universities that have put together emergency grants for students to cover expenses that they were maybe not expecting because of COVID-19,” Nelson said. “They are making accommodations to try and make up for that lost income for students.”

Trusty said Morehead State is continuing to pay students who were on federal work-study. “If they had a job, we are still paying them right now as if they were working, although they are not. In the summer, those funds will be flipped over to emergency grant funds. So we will make sure that our students are covered and can live as if they were employed with the work-study position.”

Some colleges have even made remote work available to students, Kalinkewicz added. Therefore, contact your financial aid office to determine if any accommodations are available to make up for lost student income whenever possible.

Consider Other Options to Save

If you are seeking ways to save money on college, you should also consider other resources, whether that means less expensive colleges, in-state options or potentially transferring down the road, Janice said. You can also save money by taking classes at a community college to pay a lower cost for your credits that can be transferred to a four-year college later.

“If you have that target institution in mind — maybe you’ve already been admitted there but your family has determined a year of community college will really help stretch things further — work on articulation agreements or a plan so you are taking the right classes that actually have the ability to transfer toward the degree you want at your target institution, not necessarily just as credit,” Kalinkewicz said.

In addition, many colleges offer merit aid for transfer students, she added. So always look for every potential financial aid and scholarship resource to best maximize your package and allow your dollars to stretch as far as possible.

Resource: To review the entire hour-long webinar, you can watch the replay here.

Share Your Thoughts

We’d love to hear your thoughts on this topic. Check out our forum to contribute to the conversation!

By: Torrey Kim
Title: Webinar Recap: How COVID-19 is Affecting Financial Aid
Sourced From: insights.collegeconfidential.com/financial-aid-amid-covid-19
Published Date: Fri, 10 Apr 2020 15:22:20 +0000

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