As the world of higher education braces for budget cuts and furloughs in the wake of COVID-19, prospective and currently enrolled college students must now grapple with an impending recession that could further dampen their financial prospects by impacting their scholarship aid.
While the economic outlook is somewhat unprecedented in its sudden onset, students may find additional avenues of scholastic support as institutions look for creative solutions to combat the economic crisis, but the sudden shift in aid is already damaging student financial planning.
The University of Arizona withdrew funds for certain graduate students who had not yet committed to the school and Louisiana State University was forced to reduce Presidential Aid Scholarships in the immediate aftermath of the crisis.
Part of these funding cuts are from the strain that colleges are certain to face in the fall from changes in enrollment.
NASFAA joined others in the higher education community in an April 9 letter that outlined this decline and urged Congress to provide financial support to mitigate an expected drop in enrollment. The groups anticipate a 15% drop in enrollment, including a projected decline of 25% for international students, which the letter says will result in a revenue loss of $23 billion.
Amid this uncertainty, some institutions and local agencies are trying to offer new avenues of financial support.
Queens University of Charlotte in North Carolina announced that it would provide any Charlotte-Mecklenburg Schools graduates an annual $10,000 scholarship, which was part of a university initiative to be launched next fall but was instead expedited, to attend Queens.
In Kansas, State Treasurer Jake LaTurner plans to dole out a total of $50,000 in scholarship for 20 high school seniors.
“While we can’t bring back the end of their senior year for our Kansas high schoolers, we wanted to find a way to ease the disappointment a bit and surprise a few of our hard-working seniors with a little extra money to help them get going toward their educational goals after graduation,” LaTurner said.
But even with these innovative efforts, the financial diagnostic in the short-term is severely challenging, with an unclear endgame for the virus creating a grim outlook.
Doug Shackelford, dean of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill, in a webinar broke down the financial strain institutions of higher education are experiencing into two categories: the known and unknown costs.
The known costs, he said, stem from shutting down campuses, cancellation of all campus activities (including conferences and athletic events), research programs being stalled, and endowments being down because the capital markets have slipped.
Shackelford said those costs, while significant, are already built into different financial analyses, but the unknown costs create a greater existential threat, primarily deriving from whether universities can open in the fall, which remains increasingly uncertain.
“The total cost of financial and business challenges that we're facing from this virus, I think are certainly unprecedented in my career,” Shackelford said. “You'd probably have to go back to [World War II] to see a time that universities are facing the challenges that they're facing.”
Even with this prognosis, Shackelford said he believes that universities will work to plug some of the immediate financial holes that students find themselves in, and cited UNC creating its own student fund, which is supported by private donors to provide students with emergency support for unexpected expenses.
“I don't know that any of us have a really good handle on how far out, long-term this goes,” Shackelford said. “I expect, and I've seen this with some of our own donors, they are particularly interested in stepping forward generously to alleviate some of the pain that they're observing, so that this has as little effect as possible, particularly on disadvantaged populations, which we know are being hurt even more than others during the virus.”
The impact on scholarship aid is mixed, according to Deborah Shames, an independent educational consultant with Personal Best College Coaching, who said she believes universities will have incentives to both boost and cut aid.
“On the one hand, colleges may be looking to keep a more geographically diverse population. So they may offer more merit scholarships to students from further away who might be tending to stay at home for college because of everything that's happening now,” Shames said.
While some institutions may take this approach, Shames said each university will behave according to its own budget and endowment, which could prompt others — coming to terms with the financial hits they took from giving room and board refunds, for example — to cut said scholarships.
With a likely decrease in enrollment for international students, Shames said that universities may be looking for students from other pools.
“They may go to their waitlist and end up trying to sweeten the deal and offer more money late in the game to students that they wouldn't otherwise, just in order to fill their classes,” she said.
As institutions of higher education continue to wrangle with the new realities of the virus, Shames said that there will be myriad factors for schools to consider when it comes to doling out scholarship money. Whether these trends become systemic or long-lasting will be harder to predict.
“I don’t know that there's a crystal ball to answer that question,” she said.
Publication Date: 4/27/2020