Two-thirds of college and university presidents are confident their schools will be financially stable over the coming five years, but that confidence level drops off when the outlook is 10 years into the future, according to a survey by Inside Higher Ed that was taken before the ongoing Wuhan coronavirus crisis grabbed hold of the United States.
The survey comes as the Dow Jones Industrial Average seesaws daily between historic drops and dramatic leaps, ending March 17 more than 1,000 points higher than the previous day, to land at 21,237 after hovering above 29,000 just a month ago.
It also comes as many institutions of higher learning have banned classroom lectures and moved to remote online instruction to combat the virus. Schools such as Harvard, which has an endowment estimated at $41 billion, have also angered students by reportedly evicting them from campus housing with scant notice, often without indicating if they would be receiving pro-rated refunds.
The questionnaire was answered by 746 campus chief executives. It was conducted in January by Gallup, apparently before the Chinese pathogen reached U.S. soil, a public health challenge that experts say will force financial hardships on the education sector and the U.S. economy in general.
A record-high 69 percent of responding school leaders saw financial stability for their institutions over the coming five years, up from 66 percent the year before. Over a 10-year period, respondents said they expected financial stability but the percentage dropped to 57, unchanged from the year before.
This growing confidence has left some higher education finance professionals befuddled because there are storm clouds on the horizon in the form of limited funding by state governments, steady or declining enrollment at many schools, and a demographic shift that may reduce post-secondary enrollment in the next 10 years, according to Inside Higher Ed.
Although most colleges will survive the coming years, “there is a set of institutions—be it a tenth, a quarter, or more—that faces serious, if not existential, financial challenges,” the trade publication reported.
Jessica Wood, a senior director and education sector lead at S&P Global Ratings, a major bond ratings company, told the media outlet the large bloc of school leaders who said they were confident in their schools’ financial futures was “surprisingly optimistic.”
Many schools may feel good about their financial futures “coming off a few years of strong market returns and endowment growth, as well as low interest rates,” they “have also been investing in their campuses and programs—and so operating margins have been less robust recently than historically, even for stronger institutions.”
“Given potential for an economic slowdown and the exacerbation of [the coronavirus], along with the troubles facing the sector, our view is less optimistic.”
Another question in the survey asked school leaders to respond to the statement, “I could see my college closing or merging within five years.” Those who indicated they had a negative outlook over five years were five times likelier than those with a positive outlook to respond that they saw a merger or closure of their schools as a possibility. Those who indicated they had serious talks about merging were close to 10 times likelier to expect a merger or closure of their schools in the near future, the trade publication reported.
Although Democratic presidential candidate Bernie Sanders has proposed that all public colleges offer tuition-free education, college leaders don’t support the proposal.
Only 22 percent overall agreed with the statement, “I support the idea of free public college,” and private college presidents were 70 percent opposed, Inside Higher Ed reported.