This is the first time higher education has faced the dual-crisis of finance and health.
After World War II, the American higher education foresaw a significant expansion, which helped their economy to grow. During the Great Recession, a similar plot took place: College enrollments surged along with the tuition fees.
In an ever-expanding industry, a tremendous amount of money has been circulating since then: contributing to the economy and funding for infrastructures and research models — but in a rather unsustainable manner with unsustainable debt levels.
The global economy has faced several recessions. However, the current global economic crisis we are facing is different: it is more so focused on saving lives, and then saving the economy.
With travel bans, lockdown, and social distancing enforced to minimize the transmission of coronavirus, enrollments face new uncertainty.
This is the first time higher education has faced the dual-crisis of finance and health. Thus, it’s hard for institutions to strike a sustainable balance.
Higher education was already on the verge of collapse long before the coronavirus forced the world into lockdown.
In the past eight years, colleges and universities alike had been facing the decline in domestic enrollments, only saved by the significant increase in international enrollments. But since the commence of the US-China trade war, international enrolments had also fallen low.
To attract more students, enormous debts were used to invest in infrastructures such as student centers and research labs. Such investments require a continual cash flow. Recessions jeopardize that cash flow. The financial future of most of those institutions were already at risk. Their annual operating budget desperately depended on the students’ tuition fees, which have been increasing.
As previous recessions illustrate, higher education has always been one of the first budget lines to be cut due to declining state appropriation needed to balance budgets. Competing against expenses such as health and pension, higher education is an easy target, as it was throughout previous recessions.
To manage unsustainable debt, colleges and universities would shift the costs to the students by increasing tuition fees — quicker in public institutions than in private. Student debt would rise as the student loan limit is relaxed.
Over the years, financial aid has increased substantially — although not enough. But the institution’s debts and tuition fees will outweigh the financial aid.
For instance, in March 2020, the congress of the U.S. has approved $14 billion (economic rescue measure against the coronavirus)for the educational sector: over $6 billion in student aid; and about $7.5 billion for institutions. However, colleges and universities are already spending around $8 billion just to refund room and board charges for the current academic year, according to the American Council on Education (ACE). Only 1% of that student aid has been distributed.
During previous recessions, enrollments saw bloom. What about now?
Enrollments were highly positive during previous recessions. As earnings decrease and unemployment rises, a theory suggests that individuals will be more likely to attend college. Research from Dellas and Sakellaris (2003) shows that when the unemployment rate rises by 1 percent, college enrollment doubles.
Travel bans and lockdown enforced all around the world has helped in minimizing the transmission of the virus. But the preventive measures themselves cause further consequences. All these pandemic preventions spell trouble to bring in international students.
For (and from) such unprecedented times like this pandemic, ‘Survey’ was invented. Asking the right questions to the targeted demographic results in much-needed data to evaluate the next steps. The primary targeted demographic are students, but they are not the only one to participate in such surveys: teaching staff, board members, parents, and all higher education stakeholders need to communicate properly as well.
Few surveys have already been carried out.
830 Chinese students have been unable to return to the US to continue their studies, as per a COVID-19 survey by the Institute of International Education (IIE). About 100,000 Chinese students who were in China for their Lunar New Year holidays were unable to return to Australia due to the pandemic enforced travel bans. In the UK, about 60 percent of Chinese students who have already applied to study in the UK next year are either likely to cancel their plans or have yet to decide, as per a survey by Matt Durnin, regional Head of Research and Consultancy, East Asia at the British Council.
These numbers are highly relevant to evaluate the probable future of higher education as China is the largest source of international students in the world. And international students contribute tremendously to the global economy through their enrolments as well as their accommodation costs overseas. For example, in 2018, international students contributed $39 billion to the U.S..; $37.6 billion to Australia.
India comes second to China. About 70 percent of prospective international students from India want to continue with their applications to study abroad, according to a survey by Yocket, a Mumbai-based EdTech startup.
In such a crisis, international students also suffer more.
Academically, every student suffers equally, but economically, it’s different.
This is a myth.
Every student doesn’t suffer equally academically. Some are well-equipped with technology for online learning; some may lack technology; some proper internet connection. Some may be fortunate enough to have enough savings, taking away the toll of worrying about survival.
This panic hampers mental health. Lack of mental clarity will indefinitely hurt academically.
Accommodation is always cheaper at home country when the income source is out of the question. Data shows that international students contribute more from accommodation expenses and similar living expenses than they do from their tuition fees.
Meaning that, accomodation triumphs tuition fees.A highly relevant aspect. In April, Australian Prime Minister Scott Morrison stated that foreign students in financial difficulty should leave. The infamous speech garnished a lot of criticism, citing that Australia should not be ‘biting the hand that feeds it.’
Because, once the coronavirus transmission is subdued, the competition for international students will be of massive importance; one which has been in action long before the pandemic. Australia has lost points in this regard.
Meanwhile, other countries are using strategic plans such as easing immigration rules. For example, Canada has permitted international students planning to begin studies in Canada for spring 2020, to complete up to 50 percent of their courses online — a mitigating measure away from travel bans from their home countries.
More surveys will follow. For the time being, the logical answer each survey points towards is E-learning. But it has its own caveats.
Going offline: a new kind of ‘dropping out’
As the majority of the universities are shut down physically, they are opting for online learning, and students are justified in asking for a price cut on their tuition fees. The expensive fees seemed to be for the ‘college experiences’ of falling in love, partying in dorm rooms, and so forth besides the course itself.
The debate of online learning versus traditional learning carries on now more than ever before. Professors, including some outdated from modern technology, are trying their utmost to learn to operate online software. Most of the students who have access to the required technology will attend classes. However, most universities are lacking a proper system to even carry out the basics such as taking attendance.
Absency, in the pre-coronavirus era, used to occur frequently in high numbers for several causes. So did dropouts. Now, most of the world’s educational institutions are physically closed, and courses have been compelled to move online. Once, majorly used to browse social media, is now forced to share the screen time with their respective professors.
But the caveat is that more students than previously are missing class.Some don’t log in; some don’t complete assignments; and so forth.
Most of the absence come from low-income students, who lack access to home computers and stable internet connection — or lack thereof in its totality.
Generating participation is also more difficult than it is inside a normal classroom. But online, it’s even more so.
Online classrooms might do for now, but it is unlikely to ever replace traditional classrooms.
Collapse or revolution? Conclusion.
The Covid-19 pandemic will ensure many of the small institutions to collapse entirely by disrupting the cash flow. Meanwhile, the future of the bigger ones remains in doubt. Cannibalism: the financially strong one consume the weak.
The three aspects — uncertainty in enrolments, unsustainable debt levels, and growth in online courses — have a massive role to play for the future of higher education. International competition does matter as well.
At the moment, in shaping the new world order, China is regarded as one of the top countries. It has already started to reopen its economy. It has provided strict guidelines to its schools and universities on how to physically reopen in an ‘orderly manner’.
Before the pandemic, Xi Jinping dedicated measures to improve education at all levels in China and envisioned producing at least 40 world-class universities by mid-century (the figure will rise to 16 by 2030). In 2018, two universities from China (Peking University and Tsinghua University)ranked inside the World University Rankings (Times Highers, 2018) top 30; outranking several prestigious institutions in Europe and the US.
If China finds a way to retain its Chinese students against overseas countries — taking advantage of this pandemic and travel bans around the globe — higher education won’t be the only thing that gets revolutionized. The world economy will too.
As previously mentioned: In 2018, international students contributed $39b to the U.S.; Australia, $37.6b. Of those figures, Chinese students alone contribute approximately about $13b to the U.S.;$12.1b to Australia.
China has an immense opportunity here: to promote its universities against online lectures amid lockdown elsewhere. As with the US-China trade war, China has the upper hand during this lockdown. The future of Economies and Higher Education will be affected by how China grasps this opportunity.