Yahoo Finance Community colleges are experiencing existential crises with more stimulus uncertain
It’s not clear if U.S. colleges (or anyone) will be receiving more stimulus before the end of the year.
And several college leaders told Yahoo Finance that if they don’t, many of these schools will struggle to survive in the years to come.
“The biggest concern is we're going to find many institutions that are serving some students with the greatest need or the greatest barriers to ... completion may not have the financial viability to continue,” Carrie Welton, director of Policy and Advocacy at the Hope Center for College, Community, and Justice, told Yahoo Finance. “We’re actually risking taking those institutions off the table for students altogether.”
‘We desperately need help’
The Connecticut State Colleges and Universities (CSCU) system oversees 17 institutions serving 85,000 students, and CSCU President Mark Ojakian has been vociferously calling for more state funding.
Specifically, he’s asking the state’s governor for a $69 million bailout.
“I assure you that CSCU is committed to our process of rebuilding a sustainable model for public higher education in Connecticut,” Ojakian wrote in a letter to Connecticut Governor Ned Lamont, “but we desperately need help in building a bridge to take us beyond this troubled year.”
Enrollment at community colleges in the CSCU system dropped by 15% this fall compared to last year, along with a 6% decrease at CSCU state universities.
“I mean, it's no surprise around the country enrollments are down,” Ojakian said in an interview with Yahoo Finance’s On The Move (video above). “When you have ... enrollments down at residential institutions and you're losing room and board revenue, it's not surprising that you’re going to see serious financial challenges that we currently have.”
CSCU dipped into its reserves during the summer to offer tuition-free community college to students. The program takes a last dollar approach, which essentially covers tuition costs students have after taking out Pell Grant and federal aid.
“Reserves are thin,” Ojakian noted. The school is projecting a 51% drop in reserves at its community colleges and a roughly 38% decline at state universities by the end of June 2021.
“As we come out of the pandemic, you’re going to see vulnerable institutions having to consider closing or merging,” Ojakian said. “We are working with our state partners, because public higher education is critical, as we try to rebound economically. Our colleges and universities are the engines that are going to help really start up our economic development … in the future.”
‘I feel like we’re on a rollercoaster ride’
Quinsigamond Community College President Luis Pedraja told Yahoo Finance about stimulus negotiations are a whirlwind for schools like his that are trying to get by amid the pandemic.
“I feel like we’re on a rollercoaster ride that we can’t get off of,” Pedraja said, “and we don’t know who’s driving it.”
The Massachusetts school provided laptops, WiFi devices, opened food pantries, and funding in recent months to help students pay expenses like rent and health care after the school received $2.6 million in funding from the CARES Act passed by Congress in March. (The school also supplied ten respiratory technicians who were in their second and final year of training to help local hospitals.)
Tuition for a two-year degree from the school, doesn’t have any on-campus housing and went remote amid the coronavirus pandemic, costs about $12,000 including books and other expenses.
Pedraja noted that almost 2,700 of the school’s roughly 7,000 students applied for aid as 47% of them — mostly women over 25 years old — lost their jobs. And the federal money was crucial to keeping many enrolled, Pedraja added, as 93% of Quinsigamond students that received aid did not withdraw during the spring semester.
“There are some significant impacts in terms of the money that has affected our students and us,” he explained. “In the spring, we have had to hold back filling positions. I’ve been trying to mitigate the decline in revenue by focusing on attrition and … only strategically hiring.”
Overall, enrollment at community colleges across the country has dropped by 8%, according to estimates from the National Student Clearinghouse Research Center. Quinsigamond is facing a 5% drop in head count, and Pedraja noted that “each 1% of enrollment decline is abut a $365,000 hit for us.”
If enrollment continues to decline fast and hard, “we could see about anywhere from $600,000 to a million … in the red,” he added. “It just swings from being in the black to being several million in the red, depending on the appropriations and the enrollments.”
‘Education is like roads; it's like libraries [and] airports’
Despite the gloom, there’s a silver lining: A combination of free college programs and creative responses to the pandemic have indicated a potential reversal in 2020 enrollment trends at some point.
After the state of Michigan offered a special community college program to front-line health care workers, enrollment surged. More than 65,000 people signed up so far, and that number will continue to increase before the application window closes at the end of the year.
About $24 million came from the Governor’s Education Emergency Fund, part of the CARES Act.
Henry Ford President Russell Kavalhuna told Yahoo Finance that the surging interest in the Detroit school is “a light of optimism that through this tragic crisis, you’ve got people who are willing to invest themselves through education.”
Kavalhuna said that about a quarter of the school’s funding comes from the state and about half comes from enrollment. Enrollment dropped by about 3.4% this year.
“There’s just so much unknown,” Kavalhuna said. “The operational challenges have been significant. We've laid employees off. Unlike most crises, this one continues to drag on and you're constantly confronted with major decisions that affect people's lives and their professions with either not enough information or not enough time.”
He stressed that state and federal aid helped the school navigate the pandemic’s choppy waters.
“The CARES funding was pivotal … but was it perfect? No,” he added. “I understand why policymakers did not want to allow us to backfill a loss of revenue. I would be encouraging of policymakers to consider ways to accomplish that goal, while not being so strict that you stop institutions from serving the communities that deserve the most need.”
Out of the $14 billion provided higher education in the CARES Act, according to Politico, about $8.9 billion has been spent by schools so far. And more stimulus will be critical, Welton of the Hope Center added, even though schools haven’t completely exhausted funds from the first CARES Act.
“Just because that money hasn't been spent yet doesn't mean it was sufficient to cover the full losses that institutions are facing,” she explained, adding that “the federal government has underfunded higher education even before the pandemic.”
The American Council on Education has asked for “at least $120 billion for higher education” in the next stimulus package. The latest version of the HEROES Act, passed by the Democratic-controlled House last month but not taken up by the GOP-controlled Senate, included a total of $282 billion for education and child care.
“Education is like roads; it's like libraries [and] airports,” said Kavalhun, the Henry Ford president. “This is a national infrastructure that is necessary for the society.”
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