New England Facing Economic Blow If Higher Education Institutions Can’t Recover from COVID

The full impact of COVID-19 on colleges and universities across New England is still to be seen, and a new report by the Federal Reserve Bank of Boston’s New England Public Policy Center warns of “potential consequences for the local economies of the cities and towns that depend heavily on higher education” across the region, and that “extended campus shutdowns and pandemic-induced enrollment declines could force some institutions that already are on shaky financial ground to close altogether.”

The report predicts that “continued disruption to the higher education sector could threaten even financially strong institutions,” stating that “it is unclear now how they will address the revenue losses from refunds for the spring semester and the losses they could incur if enrollment declines or if the fall semester is canceled or moved online.”

Raising additional red flags regarding the financial stability of institutions across the region, the report points out that “as the fallout from the pandemic continues, projections for state tax revenues in New England have fallen substantially, which could jeopardize some of the funding for these and other public institutions unless policymakers prioritize higher education.”

Noting that “the absence of students and campus activities is a major blow to local businesses,” the analysis found that:

·         In New England cities and towns whose economies are heavily reliant on higher education, 45 percent of wages and 38 percent of jobs come directly from the local colleges and universities.

·         There are 71 financially vulnerable higher education institutions in New England; each has experienced enrollment decline for the last decade and has a limited endowment.

·         There are 19 cities and towns in New England that are heavily reliant on a financially vulnerable college or university.  Six are in Maine, five in Massachusetts, three in Vermont and New Hampshire, and one in Rhode Island and Connecticut.

The potential impacts are national in scope, but New England has its share of vulnerabilities.  In New England, higher education has above-average importance for the regional economy, the report indicated, accounting for 3.4 percent of total employment compared with 2.5 percent nationwide.

New England is home to 208 public and private nonprofit colleges and universities, which are located in 119 different cities and towns across the region. More than half of the institutions saw their enrollment decline between 2008 and 2018, a trend that the coronavirus aftermath is likely to exacerbate.

The American Council on Education predicted earlier this year that at the national level, college enrollment will drop a total of 15 percent for the 2020–2021 school year.  Recent guidance by the federal government regarding international students attending universities and colleges in the U.S., which would prevent their entry to this country if their academic program is not running on campus, could further reduce that projected drop.

The goal of the report, “College Towns and COVID-19:  The Impact on New England,” was to “help better understand the number of New England communities that could be at risk of economic harm from major disruptions to the higher education sector due to the COVID-19 pandemic.” The report notes that Moody’s Investors Service recently declared that due to the pandemic, the outlook for the higher education sector is changing from stable to negative. By one college advising company’s estimate, before the COVID-19 outbreak, 13 institutions across New England were at risk of closing within the next six years; the company has since increased the count to 25.

Looking ahead to the fall, the report points out that “advocates of in-person classes claim that testing, tracing, and separating students are essential elements to any opening plans. They concede that opening campuses and then sending students home if there is another outbreak would not be feasible, and allowing normal dormitory living, crowded lecture halls, and large social gatherings would be irresponsible, and likely prohibited in many states.”

In addition, the report suggests, “testing only those students, faculty, and staff with symptoms would not be sufficient. Regular testing of all students and employees is the only way to prevent the disease from being spread by those who are asymptomatic.”

Numerous institutions in Connecticut have indicated that students will return to campus in the fall, but for a shortened semester (with on-campus classes often ending at the Thanksgiving break) and with significant limitations and reductions in gatherings on campus in just about every setting. 

In a June 30 message to the University of Connecticut community, officials confirmed that “UConn will reopen in the fall, as planned, with courses being offered in-person, online, or as a hybrid of the two. In keeping with state guidelines and gating conditions, very significant safety protocols and modifications will be implemented to help support the health of our community.”  Similarly, the Connecticut State Colleges and Universities (CSCU) system has announced that “classes at the colleges and universities will be delivered in a variety of on ground, online, remote, hybrid and flexible course design models,” with detailed plans being developed during the summer, targeting an end-of-August start of the semester.