Potential revenue losses for institutions of higher education by fiscal year 2021 could come to a total of $183 billion, according to a new study that analyzed revenue shortfalls.
Paul Friga, a public higher education consultant for the Association of Governing Boards of Universities and Colleges and vice president of strategy for HelioCampus, conducted the study with data from 107 institutions. The losses he found stemmed from decreased enrollment, tuition discounting, declining international student enrollments, the suspension of athletic programs, and direct COVID-19-related expenses.
Of the accrued losses, Friga estimates that in 2021 the most significant budgetary impact will come from revenue losses totalling $85 billion. Those projected reductions would be compounded by state budget cuts that could reach $74 billion, and institutional expenses related to COVID-19 could total an estimated $24 billion.
While institutions have sought to mitigate these pandemic-induced budgetary challenges by implementing hiring freezes, layoffs, operating budget cuts, and delayed capital projects, shortfalls still remain.
Institutions could best position themselves to avoid long-term funding crises by readjusting curricula, delivery models, and services — along with additional federal relief — Friga said.
Additional federal aid could help lessen continued budgetary blows. But while Congress has begun the budgetary process for administering additional aid, Friga estimates that President Joe Biden’s proposal could still leave a potential gap of up to $146 billion.
“COVID-19 proved that higher education can quickly respond to urgent situations,” Friga said. “Now boards and campus leaders need to use that responsiveness and inventiveness to ensure the longer-term financial health of higher education.”
“Any meaningful effort to address the pandemic and the economic dislocation it has caused will require the participation of colleges and universities, and we urge you to ensure they have the resources they need to accomplish this,” NASFAA wrote in a community letter to congressional leaders in January. “For all these reasons, we strongly urge you to provide at least $97 billion in support to postsecondary students and institutions in any relief bill.”
Publication Date: 2/9/2021