Q&A with incoming and outgoing heads of the Northeast’s regional accreditor

The current president of Oglethorpe University in Atlanta will jump into the field of accreditation.

Lawrence M. Schall will be the next president of the New England Commission of Higher Education, the accreditor announced Wednesday. The move ties up the next steps for two leaders who’d previously announced departures from their current jobs. Schall said last year that he planned to step down this summer as Oglethorpe’s president, while NECHE’s president, Barbara Brittingham, announced in September that she planned to retire in July.

It will be a big change for both. Schall has led Oglethorpe for 15 years and is credited with bolstering the future of the private college, which had been struggling. Brittingham has been with NECHE since 2000, serving as its president since 2006.

This moment is one of changes for accreditation. The coronavirus pandemic prompted the Department of Education to temporarily accept accreditation for brick-and-mortar programs that transitioned to distance education in the middle of the semester. New rules allow regional accreditors to accredit colleges and universities outside their home areas.

Meanwhile, private colleges’ and universities’ financial viability is of high concern as the pandemic exacerbates pre-existing enrollment pressures, particularly in New England. That’s an important development for NECHE, which has found itself at the center of discussions over when information about struggling colleges should be made public, particularly as Massachusetts last year put in place a new law intended to stave off unexpected college closures.

Schall and Brittingham took questions in separate phone interviews about the changes, the state of accreditation and the future of NECHE. The conversations are below, edited for clarity and length.

Lawrence M. Schall

Q: What attracted you to this job at this moment?

A: It wasn’t because I didn’t like being president of Oglethorpe. It was because I really wanted to look for a sort of broader platform where I can continue to be engaged with the big issues around higher education, but on a broader scale. I made the decision to leave without a job -- without knowing what that platform would be or whether I’d find it.

I’ve got a good friend who leads a pretty prominent institution in the Northeast who called me one day and asked, do I know Barbara Brittingham? I didn’t know her, but she was leaving and they were going to start a search.

I had a lot of friends who worked in higher ed in New England and began reaching out to them, and the message was extraordinarily consistent. Tremendous respect for Barbara, for the staff, for the work that was happening. And then I began to do my homework.

It’s where higher education began. The diversity of institutions is really extraordinary, from the best in the world, top ranked in the world, to extraordinarily good community colleges and then all of the small independents that look like Oglethorpe or like Oglethorpe looked at some point.

Q: Oglethorpe is accredited by the Southern Association of Colleges and Schools Commission on Colleges. Whenever someone talks about SACS, they always bring up a plan that everyone on campus is supposed to know.

A: The QEP. The quality enhancement plan.

Q: Should everyone in the Northeast start knowing what a QEP is as well?

A: No. The QEP is designed as part of the process. Accreditors -- it’s not a single mission. One is to assess and weigh in on the quality of the education being provided and student success. Another is to encourage institutions to improve, to have this continuous improvement. And then the third is [to be] answerable to the public. And each of them requires, I think, a little bit of different assessment.

The QEP is sort of the quality-enhancement piece, and it’s interesting. Going through the 10-year reaffirmation is a bear, and it’s at best a 24-month process that engages everybody. It’s a major commitment.

For some people, it’s like something we need to get through, and in other cases it’s a chance to step back and do self-assessment and have peers come in and help you do that. We’ve been through two QEPs. The first one, back in 2007, this was when we were having such financial issues that it didn’t add a lot of value. It was hard for us to focus on it because we were so focused on survival. But when 2017 came along, I think we came up with an extraordinary change in our advising structure, a pretty revolutionary change. That’s made a huge difference.

So it’s not that the QEP is going to travel north, but every one of the accreditors has a similar role in helping an institution figure out what it is they can do better or do differently.

Q: When we talk about accreditation in the Northeast, NECHE has been in the thick of discussions about financial responsibility, especially after the sudden closure of Mount Ida College outside Boston in 2018. Can you share any thoughts on what you’ll be doing on that front?

A: It’s among the big issues. I wouldn’t rank them, necessarily, but it’s a big one.

My sense is that what the pandemic has done is accelerate existing trends. It didn’t really necessarily create new ones, but it accelerated ones that were already visible. So the move to some kind of more remote learning is a trend that has accelerated. The financial precariousness of a number of small private institutions -- it’s accelerated that risk. The issues that the public institutions and systems are having in the Northeast: declining numbers of students, the smaller branches of the public institutions are struggling.

And then you’ve got immediate damage from having to shut down this spring and trying to make decisions about the fall and how long this is going to last. It puts added pressure on everybody.

State budgets aren’t going to be going up. So, yeah, it’s going to be, I think, a busy couple of years.

Q: After the Department of Education temporarily suspended rules about online delivery for the pandemic, will there be eventual quality-assurance fallout that accreditors will have to address?

A: The rules were suspended in the spring. They’ve been suspended for the fall semester again. But it’s not like accrediting agencies don’t have experience in assessing remote and distance learning. They’ve been doing that for years.

This is a substantive change issue. There are going to be, I think, a very heavy set of substantive change requests coming from schools that maybe only had one online program, and now they want to have six -- or had none and now they are trying to move to some blended format -- and schools changing calendars.

The commission meets a couple times a year. I think there’s going to have to be some thought given to how you handle in a thoughtful way, maybe a crush of requests. I don’t know.

It’s not like we’re going to have to start doing something we’ve never assessed before. It’s just the quantity is going to be different.

Q: Speed is an important issue. If I were to list criticisms I hear about accreditors generally, speed and transparency would be high. Is ability to handle a large number of requests quickly enough a concern?

A: I don’t know the specifics of the speed issue in New England. I would say SACS has changed quite a bit with regard to how responsive they are to substantive requests and what’s considered to be substantive and what’s not. We just asked for approval [at Oglethorpe] for a couple new programs that came back more quickly then we thought they’d come back.

In New England, we don’t have a big staff, which is interesting. It’s 11 of us and me, for 220-some institutions.

On transparency, if I go back to 2007, when I went through the accreditation with SACS, I’d probably have been the first in line to complain about transparency. It was like, I knew we were not doing well financially. I can figure that out. Tell me what it is that we need to do to meet the financial responsibility standard, because it’s a very vague standard. You have to have the financial resources to execute your mission.

But SACS ended up putting out almost an FAQ about financial standards, which I think ended up being really helpful.

This is not the NECHE staff that makes these decisions or even does the visits. There are volunteers. I think NECHE’s got a pretty sophisticated training system for these volunteers, and then it comes before the commission.

So, based on the conversations I’ve had with probably a half dozen of my colleagues who work in New England, I heard only positive things about NECHE. "Responsive" was a word I just keep hearing. You ask a question, you get an answer.

Q: Another national change is going to allow regional accreditors to expand beyond their traditional turf. Should we expect you to start courting California institutions?

A: That’s a commission decision. I’ve sort of walked in without a particular opinion on it. I think the Western accreditor is the only one that, so far, has indicated they will accept applications from outside the region.

I’m agnostic at this point. We also accredit about a dozen American schools abroad -- international schools. That’s another thing we’ll probably have to look at. There was a whole set of changes and regulations which ended up being negotiated, and I think most people found them accessible.

Q: Do you worry about others moving in on your territory?

A: It’s not on my top list of worries. I think we continue to serve our members well, continue to have the reputation we have, and I don’t think it will be an issue.

Q: Do you have other worries or priorities you’d like to highlight?

A: One thing. The strength of the American system is in its diversity, and when the economy collapses as it has, and families and students are pushed to the edge and stretched thin, the pressure tends to be on the institutions that serve students for whom higher education is the way to live the American dream.

And so I think everyone needs to be attentive. The top schools with a lot of money are going to be under tremendous pressure. They’re not going out of business. But I think the schools that serve disadvantaged students who did not come from wealth are schools you want to work closely with to ensure that the quality is there but they don’t disappear. I think we all ought to be worried about that.

You’ve seen in New England a fair amount of closures and mergers. That’s going to continue. And that pace will probably pick up. Any time a school closes or loses its identity through a merger, it’s got a dramatic impact on faculty, staff, students, alumni, but also the communities that these schools support.

You’ve seen some of these things that have happened in ways that could be better and then you’ve seen some that happened pretty gracefully -- students are taken care of in the best way and faculty find another home. NECHE’s got a role to play in that process.

Q: Are recent sudden collapses enough reason to be skeptical about the self-regulation aspect of accreditation -- can the sector police itself and address risky or bad actors?

A: On the nonprofit side, you’ve got a long history of accreditation serving the public well and serving students well.

There is tremendous strain coming and has been coming around demographics but also access and cost. And from the conversations I’ve had with Barbara and understanding the way the system works there, you can always point to a case where maybe it should have acted six months earlier or a year earlier. But for the most part, the schools that are at risk, NECHE knows them. The schools know that NECHE knows them.

From what I can gather, there’s a lot of transparency between NECHE and the state and institutions that are at risk.

Q: What did we miss?

A: You know, there are parts of this job I think I’m very, very well prepared for, and being the president of an independent institution that almost went under is a great preparation for part of this job. I’m obviously comfortable dealing with the public and have operated in a pretty transparent way, have dealt with state and local and federal officials. There’s lots of the job I think will feel familiar and then there are a bunch of parts of the job that will be new, and I’ll have to rely on my staff.

What sort of draws me to this, going back to where we started, is walking into something which is not going to be easy. In difficult times it is critically important work. How it’s done matters. Having your member institutions have faith that your processes are well intentioned and well designed and then having the public have confidence in it, working with state legislatures, it’s just complicated. That’s what I think makes it really interesting and really important and gets me to leave an Atlanta winter and go to a Boston winter.

Barbara Brittingham

Q: Looking back, what would you highlight as achievements or things of which you’re proud during your tenure?

A: One of the things I’m happy with in terms of leaving it to my successor is the commission. It is now and it has been an extraordinary group of volunteers. As time has gone on, their work has gotten more demanding, and they are dedicated and they listen to each other.

They represent a great array of mission and size and capacity of institutions and public members. The chair-elect is a public member, and we’ve recently added a couple of trustee members. So it’s a very diverse group not only demographically but in terms of their role and backgrounds.

As I watch them make decisions, I am impressed with them and very, very grateful, and also grateful to our volunteers on the teams, most of whom are from New England. But about one of every six team members or chairs is somebody outside of New England.

They do very good work. It’s been gratifying to me to have been at this work for long enough to see institutions develop, to watch leadership in action, as it were.

Q: The other side of that question is whether you wish you could have done something differently or better in the past.

A: You always wish you could do it better.

The commission has taken some actions recently to increase the amount of information it makes available to the public about commission actions and about what it finds at an institution. I think that is something that will continue. It has become and will continue to be important because of the very challenging times that institutions not only in New England, but certainly in New England, will face.

New England is having quite a decline in demographics of traditional-aged students, and then you add the virus on top of it, and there are going to be real challenges. The commission is going to see independent institutions [that] hopefully can find a way to merge in time and not, as some have recently, lose their accreditation and have to close. Vermont is a good example. They had three institutions close last year, and they’ve got one now that’s going to be merging and no longer be in Vermont.

That’s very hard on the local communities.

At the same time, the commission increasingly has been and will be, I think, mindful of what effects the demographics and the virus and state funding are having and will have on public institutions.

Q: Will you tell your successor and the commission to keep an eye on anything in particular going forward?

A: If you look back at the 2008 Higher Education Act, the way it is written, it assumes that you either have distance education, in which case you’re taking everything online, or you’re sitting in a classroom. I think one of the things that’s going to come out of this semester is a blurring of that distinction.

There will still be classes and programs taught entirely face-to-face and taught entirely online. But a lot of what I’m hearing makes me think that the combinations are going to be increasingly interesting.

I know some institutions that, for example, are fitting out more of their classrooms so that some of the students will be in the classroom and some of the students won’t be. If a student has to drop out or go home or something happens, the student doesn’t have to drop out of the semester, necessarily.

That’s just one example, but I think the combinations going forward are going to be really interesting.

Q: Is quality assurance a source of stress right now, given the sudden move to remote offerings this spring?

A: I think it varies all over the place. There are institutions -- Southern New Hampshire is a great example -- that have an on-ground component but almost all of the students are online. So that was not a big deal for them, really.

Then you’ve got institutions that were entirely on ground, and interestingly, some of those institutions have faculty members who have taught distance education and were trained at places that have a lot of experience in it. So they could help their colleagues.

Our commission is having a retreat later this month, and part of what they’re going to be thinking about is what happens after the fall for institutions that want approval or general approval to teach online and how can the commission modify its process so that it recognizes the experience that institutions are getting this semester and will get, presumably many of them, in the fall semester. But make sure that what they’re approving is distance education and not just remote education -- remote education being Zoom classes, for example, that were designed to be on ground and now just happen to be Zoomed out.

Q: How might the federal regulations allowing regional accreditors to expand beyond their traditional geography affect NECHE?

A: I don’t know and I’m not sure we’ll know right away. Our commission is aware of that, but they haven’t talked about it yet. I thought this is a good one to leave for my successor.

Q: Would you like to say anything else?

A: This is a great job, and I told people all along that it’s such a good job I was confident the search committee would find someone so wonderful that in a couple of years people would say, “What was the name of that woman who used to do that job?”

If you’re a higher ed junkie -- and I am -- if you’re at it long enough, you get to see storylines develop within individual institutions and in some cases within state systems and with coalitions and with the federal government. I will miss it. It’s good timing, but I’ll miss the storylines and I’ll certainly miss the people.

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Q&A with author of book on models for independent colleges

Mary B. Marcy’s new book was published at a tough time.

Different formats of the book, The Small College Imperative (Stylus Publishing), launched in February and March of this year, just as the coronavirus pandemic seized attention across the country and U.S. higher education. But that doesn’t mean the book from Marcy, who is the president of Dominican University of California, should be ignored. It contains insight into the pressures bearing down on small colleges and deep discussion of models that might help them in the future.

Marcy answered questions by phone last week about the book and what’s changed since she wrote it. The following conversation has been edited for length and clarity.

Q: What prompted you to write this book?

A: It was actually a few years ago at our annual Board of Trustees retreat, and the board was asking me to talk about where Dominican sits in the larger higher education environment and how I was hoping to position us. I realized it would be helpful to not just say, “Oh, there are public colleges and private colleges.” It was more helpful to say, “This is the landscape and different ways to respond, and here is what we’re trying to do.”

Like any good academic, I started thinking really deeply about what independent and small colleges are doing to respond to external challenges, and so I initially presented this notion of five different models to the board. And out of that conversation, as can often happen in a good discussion, I realized there was actually a lot more to pursue.

Q: Would you change anything or add anything now that the pandemic has shaken so much of higher education?

A: I had the great timing of putting a book out right as the pandemic hit. It was perfect.

Q: A lot of people are spending more time reading, at least.

A: That’s true. Good point.

I will probably do some kind of new foreword or afterword this summer, when I have a little bit more time to reflect. But what I would say right now is I think the questions that it raises and some of the framework, I absolutely stand by.

What I would do is explore some of the areas in more depth. Specifically, I think the space for different kinds of partnerships and consortia is going to have more legs and more interest as we move forward. I asked a series of questions about not just what are places doing, but how do you do it. Given the pressure that the pandemic is bringing to bear on all institutions, I think I would probably spend a little more time on at least some of the ways other places have done it.

The third thing is, I think implied in the book is that some campuses are really reinforcing and almost doubling down on their residential nature. Others are really looking to use technology more and more, focused on outreach to other constituencies that may not be as in residence.

I think that probably can merit some more analysis as well in a pandemic-influenced world.

Q: We hear a lot about consortia, yet it’s one of those ideas that always seems to be undercovered or underdiscussed. Do you have any idea why it’s hard to talk about?

A: When I wrote the book, I was like, “This needs attention.” But it’s a chapter that almost didn’t make it in, because it is such a fast-moving space right now in independent higher ed. I almost didn’t put it in there because it felt like whatever I wrote would be having trouble catching up.

I’m happy to say that’s not true. I think what is there captures a rapidly shifting landscape. Having said that, there are a couple of reasons I think we’re not hearing a lot about it. One is there are a lot of things that are in their infancy. So in the book I talked about the lower-cost models for independent colleges consortium. That’s expanded now pretty significantly into a broader initiative.

So it’s moving quickly. It’s a really interesting space. It’s still a relatively new space, so it’s shifting quickly and then hard to hear about, because you can’t say, “This is exactly what’s happening now.”

I guess the other thing I would say is it is hard. Consortia and partnerships are hard, and you run into the most basic things that can get in the way of success. Everybody wants to partner in an online environment in one way or another. What’s the first question that’s asked? Well, usually, it’s, “What’s your course management system? And whose are we going to use, and how do we reconcile them?”

Our systems are built up for freestanding institutions. And so consortia, even though they also can be very attractive, challenge those systems.

Q: From our perspective as outsiders looking in, it can take more time to figure out what’s going on in consortia, because there are more moving parts than there are in a single institution.

A: And that’s one of the things that most small colleges don’t really have a lot of. Even though the attraction is there, with these kinds of partnerships, in some ways, the risk is greater, too. It’s not always the financial resources, but the time to build this. How much energy and how much institutional space do we have to put behind this?

Q: To bring us back to the pandemic, does it have you thinking about any different questions related to college finances?

A: I think higher education can’t be the great equalizer if it just serves a small portion of the population. And I think one of the most underappreciated aspects of a lot of independent higher ed is how many first-generation students, Pell-eligible students, underrepresented students have been successful in these institutions.

Whether that can continue to be the case with a high-tuition, high-aid model, I don’t know. The question you asked earlier, what I would change or what I would add, the space I really wanted to explore more deeply and I still would like to is the kind of alternative ways to finance higher education and independent higher education.

But the truth is, there aren’t a lot of other models out there for independent higher education. And some of them, like income-share agreements and so on, are really interesting, but they also have their own challenges, including right now in a recession where they’re dependent on up-front cash in order for investors to be paid later. Well, if people don’t have up-front cash, that’s a challenge.

I wish there was a nice straightforward answer to how you finance all of this.

But I do think the pandemic is going to push those issues of equity, access and financial models very intensely.

Q: Will key shifts you outline in the book -- college-age demographics, extreme stress on the business model, shifting market demands for different disciplines and a rapid evolution in educational technology -- remain important to watch?

A: Absolutely. It’s not so much what I would change. It’s where I would dive in deeper.

I think the questions are the right questions. The pace is going to be faster. The speed at which they hit and affect institutions is going to be much quicker.

Q: You also identified five models of innovation in higher education -- traditional, integrated, distinctive program, expansion and distributed. Do those hold as well?

A: I think they’re really useful frameworks. I would say something I talk about in the book and perhaps should have emphasized more is they’re not discrete. This is not an IKEA, put-it-together kind of kit.

They are frameworks for understanding ways to address the challenges that independent colleges face, and so a lot of folks I’ve talked to are saying, “We look a lot like a distinctive program, or we’re doing a little bit of expansion, too.”

I think that’s healthy. I’d also say they’re not all equal degrees of difficulty to adopt or equally valid for every institution. So the five models I almost think, as I get feedback from people and talk to colleagues, are almost like a bell curve, where traditional is a fantastic space if you can stay there, but it’s hard to stay there for everybody. And then the distributed model is really impressive to see, but there’s a reason there is only one institution used as an example of that model in the book. It’s an entirely different approach to education, really.

Those are kind of the bookends, and there is a lot of movement among the spaces in the center.

Q: What did we miss?

A: I wish I had talked a bit more about why it matters, why the institutions matter.

I think they matter if we care about educational equity. I think they matter if we care about the economic health of our communities.

They are often the mainstay for communities. I think it matters if we care about civic engagement and rebuilding our society now, because that’s what these institutions do.

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College leaders consider exigency as summer nears, but drawbacks may outweigh benefits in many cases

Colleges and universities across the country have taken a variety of steps to slash budgets in order to alleviate financial squeezes brought on by the coronavirus pandemic.

Administrative pay cuts. Reduced pay for faculty and employees. Faculty hiring freezes. Furloughs. Wide-ranging layoffs. Eliminating academic colleges.

So far, only a few institutions have taken the step of declaring financial exigency, which enables institutions to lay off tenured faculty members under American Association of University Professors guidelines. Lincoln University in Missouri did so this month. Central Washington University did it in March, as did Missouri Western State University.

The lack of declarations could be about to change. At least some colleges and universities have begun looking into what it would mean to declare exigency, according to sources who speak frequently with college presidents or consult with administrators.

Interest in the topic raises the question of whether a wave of exigencies could be on its way as colleges seek further staffing cuts in order to alleviate still-sinking budget projections. Staffing is often estimated to account for at least 60 percent of a typical college’s expense budget. Tenured faculty members make up a critical part of most colleges’ employee base.

Widespread exigency declarations may still be unlikely, according to experts. Researching exigency procedures is an administrator doing his or her homework, but following through with formal action can seem like a high-stakes gamble.

That’s because "exigency" is a fraught term that could broadcast to the public that an institution is in trouble.

Still, colleges and universities have signaled that they’re willing to take other steps to make deep cuts without a formal exigency declaration. That’s sparking concern from the AAUP, which argues exigency rules exist in part to protect academic freedom.

With current conditions being what they are, the best question to ask may not be whether a large number of institutions will soon declare exigency. It might be if they’ll decide exigency is the best way to make necessary cuts.

“Right now, it’s an option on the table,” said Steven F. Agran, managing director at Carl Marks Advisors, who leads the firm’s higher education group. “It’s a process to create a financially stable school given what’s gone on, given all the unknowns and given what the last 20 years have created in fixed cost structures at schools. And you really need an approach that is cumulative of all of the stakeholders.”

Arguments Around Exigency

Lincoln University in Missouri is following an exigency process. The president of the historically black university, Jerald Jones Woolfolk, wrote in a letter sent to university constituents that the collective bargaining agreement between Lincoln and its faculty requires an exigency declaration in order to start discussions about cutting faculty numbers.

“The situation we are facing at Lincoln is no worse than that being faced by public universities across the state and nation as a result of COVID-19,” Woolfolk wrote. “The major difference is the fact that we are only one of two universities in Missouri with a unionized faculty, the other being Harris-Stowe State University. The non-unionized universities can, and have been, laying off faculty and staff with no need to issue a similar notice of financial condition because they do not have a contract provision that requires such notice. This provision in our union contract prevents us from making similar layoff decisions without prior notice or input.”

Prior notice is one reason an exigency declaration is important to groups representing faculty members.

The faculty should be involved in the declaration of exigency, said Hans-Joerg Tiede, AAUP senior program officer and researcher. Administrations should provide faculty members with information so that faculty senates can accept that situations are dire enough for layoffs of faculty members with tenure or de facto tenure to be on the table.

Under exigency, the faculty should be involved in identifying those affected by any appointment terminations, Tiede added. Exigency guidelines can also provide due process protections, like giving terminated faculty members the right to file grievances, as well as other provisions like adequate notice and severance pay.

The AAUP has raised concerns that some boards and administrations are suspending protocols to be followed under faculty handbooks, sometimes by triggering force majeure, act of God or extraordinary circumstances provisions allowing for extreme action to be taken.

“Votes to basically no longer have the faculty handbook be enforced, where the faculty handbook may have some reasonably good procedures for how layoffs can be handled, are disconcerting,” Tiede said. “It seems they’re doing this to bypass these sorts of safeguards that exist for a reason: for the protection of tenure, which ultimately exists to protect academic freedom.”

But colleges and universities have reasons to avoid exigency declarations, according to Simon Barker, managing partner of Blue Moon Consulting Group, which is a reputational risk management and crisis consulting firm with a focus area in higher education.

“We have to make these painful cuts to remain a viable institution but do it in a way that doesn’t concern incoming students or returning students or alumni about the viability of the enterprise,” Barker said.

In that sense, exigency can be seen as a hammer -- a powerful tool, but one that can be clumsy if used in the wrong circumstance. It effectively has leaders declaring that an entire college or university is at risk unless fundamental changes are put in place.

In higher education, where many institutions’ fortunes turn on the whims of 18-year-olds and their parents, some fear such a declaration could be a self-fulfilling prophecy.

“The question is, ‘What is your actual state?’” Barker said. “If it is a Hail Mary and the enterprise really is about to go down, then why not? But if it’s a tactic to try to pressure faculty or AAUP, I don’t think it will work, because they will just look at that and view it as a tactic.”

Different experts disagree on the extent of reputational risk tied to exigency or any large-scale cuts in higher education. There can be risk in not declaring exigency in cases of major coronavirus-driven restructuring if an institution is seen as circumventing long-established procedures.

Even after some faculty members are laid off, others will remain. That suggests thinking hard about the way layoffs are conducted and the mechanisms used.

“I think you probably can get further by being more collaborative,” Barker said. “It’s a lot easier to make hard decisions if people understand the facts.”

Still, some believe the public will be more forgiving of institutions that take major steps to align their business models with current conditions, no matter what specific mechanism they use.

“It’s not like you’re the only person who is announcing a furlough,” said Brian Tierney, CEO of Brian Communications, a strategic communications agency based in Philadelphia. “The things that are feared in higher ed are a reality in every other industry.”

It’s possible institutions that care about their status with faculty face more reputational risk from making cuts without declaring exigency than from declaring it.

“You don’t have to declare exigency to take all of the necessary steps to make severe budget cuts,” said Larry Ladd, a senior consultant at the Association of Governing Boards of Universities and Colleges. “If you want to be consistent with AAUP standards, you have to declare exigency.”

Predictions for the Future, Lessons From the Past

Ladd expects exigency to become a bigger factor as spring turns to summer and as institutions transition from the scramble of finishing out a semester disrupted by the coronavirus outbreak to planning for operating under a new normal.

“Institutions have a strong will to survive, just like we do,” Ladd said.

Ladd was chair of the board at Meadville Lombard Theological School in Chicago when, facing significant budget deficits, it declared financial exigency about a decade ago. The institution’s president at the time, Lee Barker, looked back on the experience and offered some reflections.

The exigency process was expensive, according to Lee Barker, who was president at the theological school from 2003 until retiring last year. It required him to be resilient as a leader -- he couldn’t allow himself to feel defeated by the exigency declaration. And he was thankful for support from the theological school’s donors as he worked to put in place necessary changes.

Communicating that the exigency was part of a larger plan was important for Meadville Lombard, Lee Barker said. Leaders had to acknowledge that some jobs being eliminated wouldn’t be done in the future, and they had to acknowledge downsides to the changes being put in place.

“I think that one of the things that happens very often is leaders become cheerleaders for whatever plan they have without acknowledging there is a downside to every big change,” he said.

Looking forward, it’s possible that tensions will mount as boards and presidents see looming financial disaster but faculty members want to follow normal processes, according to Susan Resneck Pierce, president emerita of the University of Puget Sound and president of SRP Consulting.

“It is that which will lead, I think, more than anything else to declarations of financial exigency,” she said in an email.

Even if they aren’t quick to think of exigency on their own, many leaders seem to be willing to discuss it when prompted, others say.

Larry Goldstein is the president of Campus Strategies LLC, a management consulting firm focused on higher education. The majority of institutional leaders Goldstein speaks with are willing to talk about exigency, he said.

“It’s one of the tools they can pull out if the situation gets worse than they anticipate,” Goldstein said. “Almost every institution, in one form or another, is doing scenario planning -- ‘what are we going to do if this happens?’”

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Public and private measures of colleges’ financial strength spark more discussion

Efforts to clearly quantify colleges’ and universities’ financial health are back in the limelight amid two developments at the end of this week -- one relating to regulatory oversight and the other focused on students and families as consumers.

A regulatory body for postsecondary distance education on Wednesday decided to keep using a federal financial composite score over higher education associations’ objections. And a start-up company that last year was beaten back from releasing estimates of individual private nonprofit colleges’ years left before closing is publishing a new, modified version of its findings.

The regulatory development came from the National Council for State Authorization Reciprocity Agreements, or NC-SARA, a group creating common interstate standards under which postsecondary distance education operates. NC-SARA’s board voted to keep using federal financial composite scores as a factor in determining whether institutions are eligible to be members of the group.

That vote came after college leaders pushed to suspend the federal government’s and NC-SARA’s use of the financial responsibility score amid worries about the way institutions’ scores will be hurt by coronavirus-related financial stresses. The federal score has long been criticized as being too backward-looking, too focused on cash and too easy to game, but interested parties have not agreed on a replacement.

The consumer-focused development comes from Edmit, a start-up advising company that in November planned to release findings from a financial model projecting how many years private nonprofit colleges had until they would run out of money and likely close. It backed off after threats of legal action from some colleges. The company is releasing a new version of its findings that takes into account coronavirus-related financial stresses while avoiding a controversial element of last year’s plan -- showing each college’s estimated years to closure.

Now, the company’s findings categorize institutions as being at high, medium or low risk of closure. Institutions deemed at high risk were found to be in danger of depleting their net assets within six years, a period that lines up with the time it takes many students to graduate with bachelor’s degrees.

Edmit did not release information on individual institutions before posting the data. It provided a high-level summary of findings to Inside Higher Ed under strict embargo terms limiting what could be shared externally before the data’s publication.

The summary of findings shows closure risks under two projections: one that did not take into account coronavirus-related disruptions and a new projection incorporating financial hits from the pandemic.

The pandemic projection, which the company is using going forward, estimated COVID-19 will decrease colleges’ tuition revenue by 10 percent in a first year and 20 percent in a second year, cut investment returns by 20 percent, and cause institutions to lower their salary expenses by 10 percent. Data for the projections come from the federal government’s Integrated Postsecondary Education Data System.

Under the baseline, noncoronavirus projection, 235 institutions would have been considered at high risk. Another 215 would have been at medium risk and 485 at low risk.

High-risk institutions spike in number by 47 percent under the pandemic projection. That means 345 institutions are at high risk of closure within six years, 110 more than in the pre-pandemic projection.

Under the pandemic projection, another 207 institutions were deemed at medium risk, and 385 institutions were estimated to have a low risk of closure. The number of institutions at low risk of closure dropped by 100 between models, or 21 percent.

Edmit planned to present information on individual institutions’ risk through a search mechanism allowing users to seek information on a single college or university. Information on risk of closure was to be presented alongside other key pieces of information like an institution’s experience with distance education or its reliance on international students.

The company’s founders made several changes to the data and their planned presentation after an outcry and legal threats forced them to scrap the release of their findings in the fall.

“We continued to work independently and have come up, after talking to a number of different stakeholders, with a way we think provides consumers with the guidance and information they need to make more informed decisions about their college enrollment choices,” said Nick Ducoff, the company’s co-founder and CEO (and an occasional opinion contributor to Inside Higher Ed). “It also hopefully alleviates some of the concerns some of the colleges may have had.”

Criticisms and Defenses Abound

Critics of efforts to show consumers a metric quantifying colleges’ financial outlook often point out that no measure will ever be perfect. Any number of events can change the likely course of history, and any number of factors can make a college stronger than it appears in its audited financial statements.

A popular program can take off, bringing new enrollment and positive attention. A major donor can provide a much-needed infusion of money. Or a global pandemic can hit, draining cash reserves, throwing into question the number of students attending college and making online education a critical competency.

So anyone developing a metric has to ask how specific it can be. They need to weigh the answer to that question against the reality that the future will always be uncertain.

“When we talk to consumers and families, they talk in terms of risk,” said Sabrina Manville, Edmit's co-founder. “It was more important for us to provide a sense of risk profile than to predict a number of years that a college has.”

Edmit isn’t the only nongovernment actor examining colleges’ and universities’ financial prospects. Earlier this year, a group of respected academics published The College Stress Test, a book that provided a framework for calculating market stress scores for colleges and universities.

The authors generated scores for more than 2,000 institutions but didn’t include a list of those scores in the book. Instead, they focused on different market factors and strategies college leaders might be able to use to change institutions’ fortunes.

At least one higher ed strategy consulting firm has since started advertising a service helping college leaders calculate their market stress scores using the book’s framework.

Robert Zemsky is a University of Pennsylvania higher education professor and one of the book’s authors. Before the coronavirus pandemic, he estimated 100 private liberal arts colleges would close over the next five years, but he recently told The Wall Street Journal that 200 could now close in the next year.

In the current environment, the issue facing colleges with 1,500 or fewer students enrolled is how much they can shrink and continue to function, Zemsky said in an interview Thursday. He also emphasized how much the models underlying college operations are changing.

If social distancing requirements mean residential colleges can only enroll one person per dorm room, it will cut sharply into housing revenue. Classes will have to be taught very differently if lecture halls can’t be filled as much as they were previously.

“The old way of running the models doesn’t make sense,” Zemsky said.

Few if any experts will say the future is clear for higher education at this moment. But at least some who’ve seen Edmit’s model say it’s in the right ballpark. The methods used seem reasonable, according to Robert Kelchen, associate professor of higher education at Seton Hall University.

“The assumptions for revenue losses may even be conservative, but colleges will also try to cut expenses by more if the revenues go down,” Kelchen said.

To some, pandemic-related stresses are likely to hit hardest those institutions that were already weak. The coronavirus is exacerbating existing market challenges while adding new ones.

Trace Urdan is managing director at Tyton Partners, a strategy consulting and investment banking firm. He has no formal connection to Edmit, but the company’s latest work has been described to him.

From a consumer standpoint, mounting market pressures suggest a need for more disclosure, not less, Urdan said. Student populations were already expected to grow less affluent in the coming years, potentially constraining revenue sources for institutions that were already straining to balance budgets.

Even colleges that are not closing abruptly -- that is, the overwhelming majority of all U.S. colleges and universities -- are still going through an incredibly painful process of cuts and budget adjustments.

“The notion that there should be some kind of easy tool for parents and families,” Urdan said. “It’s a product whose time has come, for sure.”

Still, some of higher ed’s defenders have pushed back on the idea that private companies can develop a financial responsibility metric that isn’t self-serving. Even if modeling is drawn from public data, models require assumptions that can be skewed toward one conclusion or another.

But nothing prevents colleges from being self-serving in a debate. Leaders who believe in their institution’s mission would have reason to try to prevent new financial metrics from surfacing. They wouldn’t want predictions of a college’s closure to scare off students and become a self-fulfilling prophecy.

“If you’re experiencing financial challenges and you are trying to claw your way out of it, having somebody flag you in the red zone is not going to help your issues,” Urdan said.

Government-Backed Scores to Settle

The discussion about privately developed metrics is different than the one unfolding in parallel about federal financial responsibility composite scores.

Any privately developed and marketed metric is likely to be consumer focused, affecting how families make decisions in a competitive market. On the other hand, the idea of suspending or changing the federal scoring system can impact what colleges are allowed to do, whether they receive additional federal oversight and whether they need to secure access to credit in order to receive federal financial aid funds.

“In the short-term, suspending the financial responsibility standards will prevent a potential disruption for students studying via distance education,” wrote the leaders of the National Association of Independent Colleges and Universities and the American Council on Education in a March 23 letter urging a waiver of financial responsibility standards for three years.

Any institution with too low a score would be disqualified from participating in the NC-SARA compact, meaning it couldn’t offer distance education to out-of-state institutions at the very time when the COVID-19 pandemic forced students to study from home, they wrote.

“In the long-term, the near total loss of auxiliary revenue at many independent institutions of higher education could force leaders at private nonprofit colleges and universities to consider extraordinary financial decisions immediately regarding employment, student services, or other essential functions in order to make passing scores for the end of the fiscal year,” the letter continued. “Many private nonprofit colleges and universities are expending significant resources and do not have the institutional reserves necessary to weather the current economic storm without a significant impact to their institutional composite score.”

After its board voted to keep the scores, NC-SARA walked the line between affirming financial standards and agreeing that changes to the current metric are needed.

“Now more than ever, NC-SARA has a responsibility to maintain strong standards to assure the quality of interstate distance learning, and keeping watch over the financial health of institutions is an important accountability pillar that will remain a key part of our evaluative process,” said the organization’s CEO, Lori Williams, in a statement. “The NC-SARA Board voted to continue our use of the federal financial composite scores while reiterating our call for the Department of Education to explore new and enhanced standards to better evaluate institutions’ financial standing.”

The financial responsibility score is an “imperfect metric to evaluate the entire sector,” Barbara Mistick, president of NAICU, said in an interview Thursday. Leaders need to find a new measure, she said.

“There is interest across the board to make improvements to a reliable federal metric so that it’s not left up to regional accreditors or left up to state-by-state systems,” Mistick said. “The only way to really resolve this is to have a negotiated rule-making session. That’s the fix that we need.”

How High Are the Stakes Right Now?

The debate over finding the right metrics, who should develop them and what they should be used for is wrapped up in the question of how much colleges and universities are threatened at the moment.

Mistick argued that colleges and universities have more staying power than skeptics acknowledge.

“We have survived other pandemics, we have survived world wars, we have survived recessions, we have survived depressions,” Mistick said. “The idea that everything is going to fall off the cliff tomorrow -- I think that’s an unreasonable amount of angst or fear.”

To be sure, college closures affecting many students have tended to be collapses of large for-profit chains. Private institutions closing this year have been relatively small in size, affecting hundreds of students. For example, Holy Family College in Wisconsin, which announced this week that it will close, enrolled roughly 450 students.

But families affected by closures may care less about the strength of the sector than they do about their own experiences.

Students affected by colleges closing are emotionally attached to the institutions shutting down, according to Heather Maietta, an associate program director and associate professor of higher education administration at Regis College. Maietta has been researching students who are forced to transfer because their colleges close, students she calls forced transfer students.

Such students go through stages of grief, she said in an email.

Would more transparency around financial viability help?

“The short answer is yes,” Maietta said. “In our research, the majority of the forced transfer students we interviewed were searching for receiving institutions similar in size, scope, and culture to their sending institution. In several of these instances, the institutions being considered may themselves be in questionable financial status. Yet it was clear from the interviews the students were unaware of the financial standing, nor had they researched or asked about the financial vitality of the receiving institutions. Students simply do not know how to retrieve this information, nor are they even aware they should be asking financial questions.”

Challenges are likely to be even steeper for those unfamiliar with navigating higher education, like first-generation students, she added.

Still, deciding whether more financial transparency is necessary, or what form it should take, remains elusive.

“Transparency is difficult to do in practice because colleges push back so hard,” said Kelchen, of Seton Hall. “I understand why they push back against things like the financial responsibility score that look at how they were performing three years ago. On the other hand, colleges can’t keep fighting efforts that are trying to use the best data available, because for students and families, this is a major decision about where they go to college. They want to know: Will the college still be around in two years, four years or six years?”

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What are some of the key decision points colleges face?

The novel coronavirus pandemic converted many college and university leaders into fans of scenario planning.

It’s easy to see why. The fast-shifting landscape and massive changes to core campus operations beg for a mechanism that allows board members, presidents, top administrators and deans to prepare for vastly different futures. Many have attested to scenario planning’s usefulness, whether they outline three or 15 different scenarios for the future.

But at some point, leaders need to switch from planning to making decisions about which scenarios to follow.

Making choices tied to one decision point doesn’t preclude future choices changing as more information comes available. In such an unsettled time, the scenarios are always changing, experts stressed. The decision points are, too.

“Our scenarios must be robust, must be clear as daylight, and we must be willing to make adjustments to decisions that we make in real time,” said Benjamin Ola Akande, assistant vice chancellor for international affairs, Africa, and associate director of the Global Health Center at Washington University in St. Louis, who this month was named president of Champlain College in Vermont.

In conversations over the last week, leaders and the consultants they work with outlined some of the most important decision points they’re watching. Those points are explained below, grouped loosely by whether they’re tied to a specific date on the calendar or other condition. Many lend themselves to decisions about whether to reopen for the fall or not. But they may still be pertinent even for colleges that have made that decision and must still plot other scenarios, such as whether to shuffle the academic calendar or make major operational restructuring decisions.

Points in Time

Pre-May 1 Admissions Milestones: Early indicators showed the COVID-19 pandemic generating cause for concern as competitive colleges built their classes for next year.

Recent private polling indicated that one in six students who’d planned to attend four-year colleges no longer plan to do so. Other surveys led a firm to conclude that four-year colleges may lose as many as a fifth of students. Many families reported losing income amid the coronavirus, and existing college students pushed back on the idea of paying full price to traditional in-person colleges for remote instruction should campuses be unable to reopen in the fall.

So it’s no surprise that college leaders report making various decisions based on how their spring admissions seasons were taking shape. Those decisions include pricing actions like freezes or even cuts to tuition. Some changed the way they communicate with prospective students, emphasizing how colleges have supported students who were being sent home for the spring semester or accommodated students with flexible grading policies.

Some may find it too cynical to suggest admissions considerations factored into colleges beginning to announce plans to reopen for the fall semester this week, during the run-up to deposit day on May 1. But in the last week or so, some colleges have grown much more aggressive about communicating their intention to reopen, and leaders made clear that many campuses need to reopen in the fall to secure their own futures.

“The basic business model for most colleges and universities is simple -- tuition comes due twice a year at the beginning of each semester,” wrote Brown University’s president, Christina Paxson, in a Sunday opinion piece for The New York Times. “Most colleges and universities are tuition dependent. Remaining closed in the fall means losing as much as half of our revenue.”

And at least one community college in Northern California connected student decisions to an announcement that it will stick with distance learning in the fall.

“We want students to know what they’re signing up for,” Sierra College spokesperson Josh Morgan said, according to CBS Sacramento.

May 1 and June 1 Decision Days: Many colleges pushed their decision days -- the dates by which high school seniors committing to attend must submit deposits -- back from the traditional May 1 to June 1. Experts anticipate both dates will be important for colleges and universities that need to count their freshman classes and decide on next steps.

“If we wanted to timeline it, I do think May 1 is still going to be an important milestone,” said Peter Stokes, managing director at the consulting firm Huron’s education strategy and operations group. “The information we get there will be very telling.”

Mid-June: Once the new, later June 1 decision day has passed, some admissions experts suggested colleges and universities will turn their full attention to retaining rising sophomores, juniors and seniors, as well as avoiding summer melt among incoming freshmen. Feedback they receive could filter into decisions about additional retention actions or even cost-cutting.

Annual board meetings: Most colleges and universities close their fiscal years at the end of June. It would seem to be a natural time for major decisions to be made as boards hold regular meetings at the end of the year.

That may happen in some cases. But in the current crisis, engaged boards aren’t always waiting for end-of-the-year meetings to make decisions that are critical.

“Boards are meeting more frequently in order to consider information,” said Merrill Schwartz, senior vice president for content strategy and development at the Association of Governing Boards of Universities and Colleges. “Decision points are very much on everyone’s mind.”

Cutoff dates: Major undertakings like reopening campuses for all students come with deadlines driven by logistics. It simply takes time to bring back staff members and prepare campuses for a fall of in-person instruction. For example, Radford University in Virginia said plans to reopen in the fall will require select employees to return before the state is scheduled to lift a shelter-in-place order June 10.

How much time varies from campus to campus. But leaders have likely reverse-engineered a cutoff date by which they’ll have to make certain major decisions.

“There’s going to come a point where we’re going to have to make a decision about when we are going to physically be on campus, because we have to gear up,” said Thomas Galligan, interim president at Louisiana State University. “But other than that, our decision points are substantive, and safety is our guidepost.”

This type of deadline is more about closing off scenarios. Leaders could move to keep open their options long before it’s clear whether in-person classes can actually resume.

“The question becomes, ‘What do you think is likely to happen, and given what you think is likely to happen, how achievable is it in the space of May, June, July, August, to be ready?’” Stokes said. “If you want to be there by fall, you’ve got to be running right now. That’s not something you can put off for a couple of weeks.”

Government and Regulatory Decisions

Elected officials: One of the biggest decision points comes when elected officials make their own decisions. But the landscape here is highly complex.

When do governors lift stay-at-home orders? Do mayors or local officials ban large gatherings, preventing large lecture classes in the process? Do any health officials place restrictions on dormitory living? What about travel restrictions?

“Think about if you do have residential students,” said Nicholas Santilli, senior director for learning strategy at the Society for College and University Planning, who has been developing a scenario planning guide intended to help colleges recover after the pandemic. “You decide to open up on a particular date. But what happens if there is still a quarantine order in place for individuals traveling across state lines?”

Most college leaders appear to be focused more on conditions than dates, Santilli said.

Health-care officials: Guidance from health-care officials and the Centers for Disease Control and Prevention will play a big part in helping colleges decide whether they can reopen for in-person instruction at any point and how to do so.

Any information about how facilities need to be cleaned will be taken into account. So too will guidelines for distancing and detailed plans for phased reopening within states.

“We’re still on a stay-at-home order,” said Galligan, of LSU. “Once our governor lifts that stay-at-home order, in part we’ll be coming back in phases, and getting to the next phase is going to depend in part on not only what the governor does and CDC recommends, but on staying safe for two weeks under the previous phase.”

Changing Data and Conditions

Watching states open for business: Experts suggested colleges and universities will closely watch the experiences of states that are slowly reopening their economies, like Georgia, Florida and Texas.

Spiking infection rates, or consumers who refuse to go out, would suggest very different courses of action for higher education than would an orderly return to business as usual.

Texas governor Greg Abbott has detailed plans to reopen restaurants and other businesses starting Friday. The state’s higher ed leaders will be watching -- likely along with leaders in other states.

“In the timeline that Governor Abbott laid out, we’re all going to be monitoring the next couple of weeks very closely as they start to open up certain kinds of businesses,” said Harrison Keller, commissioner of higher education for Texas. “There is going to be a lot of attention around May 18 for updated guidance coming out. It could come out sooner if it’s necessary and appropriate. But that will be an important date for us in Texas as we see what happens over the next couple of weeks.”

Some higher ed leaders may balk at the idea that decisions about students should be informed in any way by the experiences of, say, reopening restaurants. But economists see some parallels. Some predict more long-term pain if restaurants or colleges reopen too soon, only to have infection rates spike and consumer confidence plunge further.

“Think about it from the standpoint of the student or prospective student,” said Roland Rust, a professor at the University of Maryland’s school of business, during a Thursday conference call. “Economic problems combined with behavioral problems of students not wanting to be here, those combine to be a very tough problem to solve.”

While the experience of one state or region may inform decisions in others, experts caution that wise courses of action will still vary between different areas.

Health care and medical factors: How widespread does testing become? What’s the likelihood that a vaccine is developed in a year? What is happening to infection and death rates nationwide? What is happening to infection and death rates within a certain region?

Changing answers to all those questions will trigger different decisions.

“We’ll know a lot more in 30 days,” said Galligan, of LSU. “We’re just going to try and keep up with the knowledge and public health data.”

State finances: The state funding picture will be critical to public institutions and many private institutions across the country.

It’s no secret that the economic collapse prompted by the pandemic has slashed state tax revenue while ramping up costs such as unemployment insurance. And as experts at the State Higher Education Executive Officers association have taken to saying, higher education tends to be the wheel upon which state budgets are balanced.

How and when states change their spending plans could have ramifications for the types of spending and tuition decisions public colleges and universities need to make. It will also affect many private institutions in states with financial aid programs for students. Think of private colleges and universities in Illinois, which suffered several years ago when a state budget impasse prevented regular disbursement of grants under the state’s Monetary Award Program.

Institutional factors: Scenarios available to colleges will change as various institutional factors and capacities evolve. Such factors include the capacity to quarantine students on campus should an outbreak occur, institutions’ ability to maintain a strong online or remote education over time, labor levels and how much of a financial cushion exists, experts said.

For example, if a large number of faculty members who have health concerns balk at the idea of teaching in person in the fall, it becomes much harder to bring students back to campus without making major changes. But if faculty members take the lead in developing strong online or remote options, an institution’s decision making may become easier.

When others act: Generally speaking, higher education leaders like to know what everyone else is doing before they make a decision themselves.

“One of the things our members have been asking us for information about is how other institutions are handling the situation,” said Schwartz, of AGB. “It isn’t the same for a big public university system as it is for a small college in a rural area. They want to know how other institutions ‘like us’ are handling a situation. When are they making the decision? What are they doing about tuition? What are their expectations about fall enrollment? How are they handling clinical courses of study?”

Institutions generally follow peers or more prestigious institutions, experts said. They don’t usually follow the lead of an institution considered to be less prestigious.

One new working paper looks at about 1,400 colleges and universities that decided to transition to online instruction between early March and early April. Six in 10 colleges in the data set closed between March 10 and 13, said one of its authors, Christopher R. Marsicano, a visiting assistant professor in the department of educational studies at Davidson College.

“That doesn’t just happen,” he said in email. “Either there was some serious coordination, or they are all looking to each other for guidance.”

One decision point is always “when others act,” said Marsicano, who stressed that the paper’s findings are preliminary.

Order of Importance

The above list isn’t meant to be comprehensive.

It doesn’t take into account many factors colleges and universities are weighing, nor does it touch on the wide range of scenarios different types of institution will be planning. State and local funding levels may be more important for community colleges than for elite research institutions, for instance.

The same developments might stress institutions in different ways, as well. It’s possible students will see uncertainty and eschew high-priced private colleges in lieu of a year of taking general education requirements at community colleges. And only some community colleges in well-populated or wealthy areas may see a surge in student interest. Others in hard-hit parts of the country may see declines in interest.

Still, experts suggest many institutions follow a rough framework as they move from scenario planning to decision point. First, ask what to do in each scenario. Then ask about cutoff dates for making operational decisions. Finally, ask when the market needs to know about a decision, said David Strauss, a principal at Art & Science Group, a Baltimore-based consulting firm.

When thinking about decision points, many experts observed that leaders sometimes fall into wishful thinking. Only time will tell whether they break that pattern during this crisis.

“The knee-jerk or hopeful planning versus the empirically based planning is fascinating,” Strauss said. “And it mirrors what institutions do on the larger strategic questions when we’re not in the midst of COVID-19.”

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Tuition freezes and cuts show colleges and universities are face downward price pressure amid coronavirus crisis

The coronavirus outbreak placed sudden downward pressure on the price of attending college this spring, as students being sent home from on-campus programs demanded room and board refunds and in some cases filed lawsuits seeking partial tuition rebates.

At first glance, it may look like a short-term disruption that will resolve itself once the public health threat is over and students can go back to campus. Some of the immediate pricing pressure stems from questions about whether students are willing to pay as much for temporary online substitutes as they will for an in-person education.

But as the crisis stretches on and prospects for in-person education this fall remain shrouded in uncertainty, it’s becoming increasingly clear that the pandemic is exacerbating a larger squeeze on college prices.

Even before the coronavirus hit, many colleges and universities were finding it difficult to collect enough money from students to meet rising costs. The traditional bread and butter for four-year campuses, wealthy white high school graduates, were expected to decline in number in parts of the country in coming years. And many families struggled to pay full price for big-ticket items like higher education after the uneven recovery from the Great Recession failed to lift all incomes equally.

Now, families face a second massive economic disruption in a dozen years, even as colleges don’t know when they’ll be able to say for sure whether they will be continuing remote education in the fall or bringing students back on campus. Speculation runs rampant that student behavior will change, with some sitting out the year and others enrolling in low-cost options or colleges close to home.

The disruption comes shortly after a federal investigation prompted changes to admissions counselors’ code of ethics -- changes that on their own were expected to significantly increase recruiting competition. That leaves many colleges scrambling to provide financial aid packages large enough to keep existing students enrolled or to convince new students to enroll for the first time in the fall, whether or not campuses open.

“We’re just being inundated with conversations coming at us in waves,” said Bill Hall, founder and president of Applied Policy Research Inc., a consulting firm based in Minnesota. “‘What do we do about the rest of the spring term? How do we prepare ourselves for any wave of money which we’re adding into packaging? Then what are the criteria we use for taking an appeal?’ And then, finally, we’re at the point where people are asking, ‘What if this goes into the fall?’”

Last week, the pricing pressures burst into full view as several colleges and universities across the country announced actions ranging from tuition freezes to steep cuts to options allowing students to defer tuition payments until well after the fall semester.

The College of William & Mary announced it would roll back a planned 3 percent increase for new in-state undergraduates arriving in fall 2020. Instead, the prestigious college in Virginia expects to hold tuition and mandatory fees unchanged for all students next year. Halfway across the country, Kansas City University took a similar step, announcing a tuition freeze and killing its own planned 3 percent tuition increase.

Christopher Newport University in Virginia announced it will not increase tuition, fees and room and board for 2020-21. Delaware Valley University in Pennsylvania froze undergraduate tuition and fees.

The University System of Maine launched a program targeted at students affected by the coronavirus outbreak. Under the program, called the Maine Welcome, the system promised resident tuition status to “any successful U.S. college student or law student displaced by a COVID-19-related permanent closure of a U.S. institution of higher education.” In Ohio, Franciscan University of Steubenville rolled out a plan covering 100 percent of fall 2020 tuition for new on-campus undergraduates, after scholarships and grants.

Davidson College in North Carolina unveiled an option allowing students and families to defer payment for the fall semester for up to a year. The prominent college in North Carolina will issue bills for the fall semester in July, but all students except for seniors will be able to defer payment until August 2021. Seniors who are graduating next spring will be able to defer until April 1.

Perhaps more significant than any other move was one announced by Southern New Hampshire University, a private nonprofit with massive online enrollment and scale.

It announced plans to cut tuition for campus-based learning models by 61 percent by 2021, down to $10,000 per year. Southern New Hampshire is also offering scholarships for all incoming freshmen enrolling on campus that will cover the full cost of their first-year tuition.

Those incoming freshmen are expected to live on campus but take courses online, allowing them to participate in the experiential side of the institution. Then they can continue with the $10,000 on-campus rate in their sophomore years, when new models based on online, hybrid or project-based modalities are expected to be ready.

‘We’re Looking at Everything’

Southern New Hampshire University looks like few others because of its size, scale and online capabilities. In normal times, the private nonprofit reported 3,000 on-campus students and 135,000 students studying online.

That massive enrollment helps make possible pricing experiments that might be difficult for smaller colleges and universities. Still, Southern New Hampshire’s tuition changes are connected to the larger environment.

The university is acknowledging that freshmen are enrolling in an uncertain time by providing full-tuition scholarships for those enrolling in on-campus programs this fall.

“We really de-risk for those first-year students,” said Paul LeBlanc, Southern New Hampshire’s president. “We think this turns out to be exactly the right strategy at exactly the right time.”

Southern New Hampshire had been working toward rolling out the new model in 2023, LeBlanc said. Then the pandemic hit. Current high school seniors don’t have the luxury of waiting a few years, so the university accelerated its plans.

“It’s not our timing of choice, but it’s what we need to do,” LeBlanc said. “This is not a response to the challenges of September 2020. It’s actually much more a response to the recession and this astonishing level of unemployment.”

LeBlanc cautions against seeing Southern New Hampshire’s announcement solely as a single-year pricing move. It’s paired with significant efforts to improve pedagogy and rethink assumptions about the way on-campus education works. Even though it’s being put in place on an accelerated schedule, the university has been laying the groundwork for quite some time.

“We’re looking at everything,” LeBlanc said. “We’re looking at the whole student life cycle. How do we leverage the kind of technology and platforms that we’ve built? How do we think differently about the structure and term of the academic year? Could we move to a 12-month academic year? Could we contemplate the student going around the calendar and graduating in two years, which removes two years of opportunity costs?”

That parallels something experts often say about pricing conversations: a college’s price is best considered in concert with market position, long-term strategy and developments in the broader higher education environment.

“There is downward pressure in pricing, but what we’re seeing is that what each institution should do is idiosyncratically different from what every other institution should do,” said David Strauss, a principal at Art & Science Group, a Baltimore-based consulting firm. “If you can’t afford to study and get the right answer, it’s usually the wrong answer over the long term.”

‘You Have to Be a Very Good Listener to the Market’

Signs of pricing pressure existed long before the coronavirus crisis exposed them.

The National Association of College and University Business Officers conducts an annual Tuition Discounting Study that looks at the sticker prices four-year private nonprofit colleges and universities post, the amount of financial aid they provide and the tuition discount rates that reveal what percentage of sticker prices institutions never actually collect from students. That study has also examined net tuition revenue -- the amount of money institutions do collect from students.

Net tuition revenue was largely flat in recent years, according to the 2018 discounting study, the most recent available. Across all types of private institutions in the study, net revenue per first-time, full-time freshman rose by just 0.4 percent without adjusting for inflation in 2018-19. It fell by 0.8 percent in 2017-18.

“I think there’s been downward pressure on price now for some years,” LeBlanc said. “It’s been a little bit masked for many privates because of the way it’s manifested in the discount rate. They have been effectively lowering their price without saying it publicly across many institutions.”

Even so, the current crisis is accelerating that pressure. Research is showing that students and families are thinking about staying closer to home than they normally would, according to Stephanie Dupaul, vice president for enrollment management at the University of Richmond.

“This is already the safety-focused generation; this will just increase that focus,” she said in an email. “And cost has become a significant factor as these high school students are now watching their parents go through a second economic crisis.”

Even well-off students seem likely to try to minimize risks in this environment, said Allen Koh, CEO of Cardinal Education, an education consulting firm that caters to wealthy families seeking admission to elite institutions.

“You’re going to start seeing an unprecedented number of kids who are going to college in the fall who will do summer school at a community college to try to get some general education requirements cheaply,” he said. “You’re going to see a lot more students take three years to graduate, and you may even see this impact medical schools and law schools.”

Different admissions officers and experts have theorized that well-off families could hedge their bets by putting down deposits at multiple colleges. Doing so would allow them to select the best option of price, prestige and location once the extent of pandemic-related shutdowns becomes clear for the fall, all while dodging traditional spring commitment deadlines.

It would also throw enrollment, yield and summer melt models into disarray over the summer, leaving some colleges without their most lucrative students on short notice.

Some experts also believe gap years could become more popular if students don’t want to take the risk of enrolling at all in an uncertain environment. Other students may scrap all plans to attend college, particularly if mounting financial troubles make higher education seem unattainable for first-generation students or those with little savings. Data show declining completion rates for the Free Application for Federal Student Aid, indicating that at least some students may be rethinking college attendance next year.

At the same time, students who would have been likely to attend prestigious second-tier institutions are now focused on entering the Ivy League, Koh said. Families that continue to have a large amount of wealth -- those that pay the full cost of tuition -- are always sought after. But they’re even more valuable to colleges today, when less wealthy students have larger financial needs and rising coronavirus-related costs are stretching budgets across the board.

In other words, wealthy families suddenly enjoy even more leverage than they had before. The most prestigious institutions in the country are most able to choose their students, so they are most able to shield themselves from pricing pressures.

“Very prestigious schools and schools with strong endowments, they won’t do anything on pricing for at least this admissions cycle, maybe two,” Koh said. “It’s hard to raise prices after a massive deduction. Plus, universities just have too many fixed costs.”

Still, universities of all types could feel at least a net revenue pinch because of uncertainty in international student enrollment. As wealth levels and the number of traditional high school graduates have leveled off in the United States, many colleges and universities leaned heavily on international enrollment, which produces a large number of students paying high prices.

Now, Koh asks if international students will be able to fly to the United States to attend college in the fall. Will the federal government grant them visas? Will they want to come?

All those pressures translate to difficulty for institutions that would normally be considered safe from enrollment and pricing shocks. That makes moves such as Davidson’s tuition deferral worth watching closely.

The deferral option at Davidson applies to tuition and fees as well as room and board for the fall. All or part of family contributions can be postponed. Davidson left open the possibility of expanding the deferred tuition option to the spring 2021 semester.

A Davidson spokesman declined to provide any estimates of financial costs associated with the deferral option being offered to students because of uncertainty. In emailed responses to questions, he emphasized the college’s community.

“The option to defer fall tuition springs from the sense of community that makes Davidson distinctive,” the spokesman wrote. “We share in each other’s celebrations and support each other in our struggles. This is an expression of who we are. The option to defer payments is an act to help our students and their families, to make it easier for students to return to -- or start -- their educational experience at Davidson.”

Depending on how it’s structured, such a deferral program could carry risks for students, families and colleges. It could mean families facing not one but two tuition bills next year, experts pointed out. If families can’t pay, any college offering a deferral plan will be left with a financial hit.

Even so, it’s one way to shift billing and address short-term market shocks.

Other colleges and universities that rely on the on-campus experience to attract students may not have the financial resources to spot families the cost of tuition for a significant period of time. Tuition-dependent small private liberal arts colleges that tout small class sizes and intimate campuses are scattered across the country. What happens if they’re unable to leverage that close community to attract new students in the fall?

What happens if the pandemic prevents students from returning to campus in the fall, prompting rising sophomores or juniors not to re-enroll? What if those students reason that paying a liberal arts tuition for an online experience makes no sense when they can just as easily pay a lower price point at a fully online college?

Melody Rose was the president of Marylhurst University outside of Portland, Ore., when it closed in 2018. She is now working on a book tentatively titled Achieving Graceful Transitions in Higher Education and is a senior consultant for the Association of Governing Boards of Universities and Colleges.

“I think if you’re a small private or public regional institution without a lot of investment capacity in an online pivot, and the very reason people select you -- the community, the intimacy of small in-person classes -- is gone, then you may be facing an existential crisis by fall of 2020,” Rose said.

Should the coronavirus force campuses to remain closed in the fall, long-term questions about pricing pressure may fade into the background in lieu of the newly burning question of for what, exactly, students at traditional campuses were really paying. Was it credit hours or the full in-person experience, rich with living among fellow students, taking part in activities and receiving a full slate of support services?

As much as some administrators may want to argue that students will be willing to pay full cost for a short-term remote learning substitute, the spate of class action lawsuits filed after students were sent home this spring suggests other scenarios.

For now, however, that question remains part of a larger environment of uncertainty that continues as spring admissions season enters its critical phase. Hundreds of universities have postponed decision day, when deposits are due, from May 1 to June 1. Coming days and weeks will still be crunch time, when many high school seniors will decide where to attend college after summer’s end.

“It’s difficult to feel very confident about how some of these key value points might play out, and that’s especially true in that competition for students,” said Peter Stokes, managing director at the consulting firm Huron’s education strategy and operations group. “You have to be a very good listener to the market in order to compete effectively in a highly dynamic situation.”

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Students File Class Action Seeking Tuition Reimbursement

Students attending Miami and Drexel universities are trying to take their respective institutions to court, arguing they should be reimbursed for costs including tuition after campuses closed due to the coronavirus pandemic.

It’s a significant development in the tensions over how much students who had been studying on campuses should pay for a semester suddenly upended by social distancing and classes shifting to online or remote instruction. Many colleges and universities have been offering refunds of fees, room and board. But leaders have generally resisted tuition refunds, often arguing that they are still delivering the core educational product for which tuition pays.

The Miami and Drexel students filed class-action lawsuits Wednesday in federal Court in South Carolina, Law360 reported. They’re being represented by a law firm based in the same state, Anastopoulo Law Firm LLC.

Students allege breach of contract and unjust enrichment. They seek unspecified damages, fees and costs.

They argue the universities prevented students from receiving the benefits of learning in person when they temporarily closed campus. The institutions are “still offering some level of academic instruction via online classes,” but students are nonetheless being deprived certain benefits, they argued.

The students argue that they chose to attend particular institutions based on advertising promoting on-campus experiences. In addition to instruction, tuition covers other services like computer labs, libraries and networking opportunities, they argued.

“Moreover, the value of any degree issued on the basis of online or pass/fail classes will be diminished” student complaints said, according to Law 360.

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AAMC Wants Better COVID-19 Data Collection Because of Health Disparities

The Association of American Medical Colleges is calling for a national standardized data collection system to accurately capture information about race, ethnicity, social conditions and environmental conditions affecting the spread of illness.

That call comes in light of the coronavirus pandemic laying bare social, economic and health inequities, the AAMC said in a news release. The association went on to recommend capturing community-level data showing the neighborhoods to which COVID-19 patients are discharged, because county and zip code data are not specific enough to capture communities likely to be affected.

Those on the forefront of the pandemic response, such as state health departments, local public health departments, private testing labs and hospitals, should be engaged to prevent systems from becoming unnecessarily burdened, according to the AAMC.

“While health inequities related to COVID-19 are most certainly developing in real-time, the fact is that our current data collection efforts are inadequate and do not give us a complete picture,” Dr. Ross McKinney, AAMC chief scientific officer, said in a statement.

AAMC leaders added that better data on the current outbreak will enable officials to prevent additional catastrophic outcomes for vulnerable communities experiencing health disparities.

“Black, Hispanic, and Native Americans, the poor, the homeless, immigrants, and people who are incarcerated find themselves with fewer economic resources and with physical health conditions that make them and their communities more vulnerable to illnesses like COVID-19,” said Dr. David A. Acosta,  AAMC chief diversity and inclusion officer, in a statement. 

Members of the association include all 155 accredited U.S. medical schools, 17 accredited Canadian medical schools, almost 400 major teaching hospitals and health systems and over 80 academic societies.

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Listing funds each college can expect to receive under the federal stimulus

The U.S. Department of Education on Thursday released how much each college and university will receive under the $14 billion set aside for higher education in the stimulus package Congress passed recently.

Funding levels are based on a complex formula weighted toward institutions enrolling large numbers of students who qualify for Pell Grants. The chart below reflects data the department released. It can be searched to find how much any individual college or university is expected to receive. Or click on the headings to sort the data.

Please note that the department excluded from this data institutions with no calculated allocation.

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Outbreak Hurts Higher Ed Worldwide for Next Year, Moody’s Says

Moody’s Investors Service expects the coronavirus outbreak to have a negative effect on higher education worldwide for the next year, it said in a report out today.

Universities will face lower student demand and lost income, according to the bond ratings agency. Public institutions in the United States are at higher risk than others around the world in part because of the potential for government funding cuts. Lower investment income could also affect U.S. universities disproportionately because investment income is a higher percentage of income for U.S. universities than it is for others around the globe.

"We expect rated universities in all of our current jurisdictions -- U.S., Canada, U.K., Australia, Singapore and Mexico -- to enroll fewer students for the next academic year than planned, due to the outbreak," said Jeanne Harrison, vice president and senior analyst at Moody’s, in a statement. "In addition, if campuses remain closed for part of the year, income from residence halls, catering, conferences and sporting events will be lower than budgeted. Endowment and gift income may also decline."

Ramifications for college and university credit quality depends on how long the outbreak lasts, Moody’s said. If campuses can reopen for the upcoming academic year, damage to demand and institutional budgets will be manageable.

Also important to watch are international student flows, which will depend largely on conditions within individual countries. Most universities Moody’s rates rely heavily on Chinese students, who are 23 percent of international students globally.

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