(Bloomberg Opinion) -- The coronavirus has already dealt a vicious blow to key sectors of the U.S. economy. If the pandemic drags on into the fall, though, it's likely to devastate yet another area that has so far escaped with minimal damage: higher education.
The problems confronting the nation's colleges and universities long predate today's crisis. But if current trends continue, the pandemic is likely to act as a catalyst for a historic reckoning that may transform the delivery of higher education in this country.
It's common knowledge that the cost of attending both public and private institutions has grown far faster than the rate of inflation over the past 40 years. Since 1980, the sticker price of tuition, room and board has more than doubled in inflation-adjusted dollars.
In 1971, for example, the average total of tuition, fees, room and board per year at private four-year institutions was $18,140 in today's dollars. Compare that to the average cost of attending now: $48,150. Likewise, that average at public institutions rose to $21,370 from $8,730 in the same period. This has fueled the much-publicized explosion of student-loan debt.
But colleges and universities have their own debt woes. Over the past 40 years, schools, particularly less selective ones, have fought ever harder to attract students. The conventional wisdom held that the best way to do so was to upgrade facilities, build new dormitories and student centers, and provide increasingly luxurious amenities. The result has been a flood of debt, with a growing proportion of revenue dedicated to servicing it.
This has made many of these schools more dependent on tuition dollars for their annual operating budgets (and fueled yet more hikes in the cost of attending). In 1999, tuition and fees provided 16 percent of total revenue at all public colleges and universities. Ten years later, that percentage had crept up to 22 percent. Private schools went to 40 percent from 29 percent in the same period.
These trends have only intensified in recent years: more building, more debt, higher tuition. Yet this happened in the face of declining enrollments. Enrollments have fallen by 11 percent nationally over the past eight years despite significant increases in the number of international students attending American colleges and universities. And that's not even factoring in the coming "baby bust," a demographic dip that will likely intensify this trend over the coming decade.
Taken together, these trends were spelling trouble for higher education before Covid-19. A recent survey of college and university trustees found that more than half were worried about the financial future of their institutions. And then the pandemic hit, along with the worst quarter for the stock market in well over a century. As a consequence, we're looking at a shakeout of epic proportions, particularly for the less selective, tuition-dependent institutions.
Imagine, for a moment, if August rolls around and the pandemic has abated but colleges and universities remain shuttered. This doesn't mean, though, that they can't operate: After all, professors across the country have spent the past few weeks putting classes online, teaching via Zoom, and otherwise adapting to the new normal. In theory, the nation's institutions of higher education can simply do the same come fall. And therein lies a problem.
When students shell out $50,000 a year to attend a school that admits a majority of applicants, they're paying for a lot more than professors. They're paying for the experience of college: dating, dorm life, fraternities and sororities, Frisbee on the quad - all the stuff that has come to define college for the past century or so. This is one reason, perhaps, that colleges and universities have spent so much money on amenities and extracurricular diversions, rather than actual education, in recent years.
But when education moves online, all of that disappears. Instead, you're left with a haggard-looking professor on Zoom. That's worth something, sure, but it isn't worth paying anything close to full freight. Parents who confront this reality come fall semester are going to quickly conclude that their children will need to settle for something more practical, like some online courses offered by a local branch of the state university.
This may be true even if schools reopen. As parents of high-school-age children recover from the pandemic and the job losses that have attended it, the logical choice for many - perhaps the only choice, given their financial circumstances - will be to hold off on the pricey residential college experience until things return to normal.
Brick-and-mortar colleges and universities, though, can't wait. They've got fixed costs: buildings and laboratories to maintain; faculty and staff to pay; debts to service; and many other expenses. Yes, some have endowments, but outside a handful of elite universities, these are rarely large, and they have already sustained significant damage over the past month. This will leave the hundreds of schools who have bet their futures on residential education in a serious bind.
Unlike so much of the workforce today, employees at these colleges and universities often spend their entire lives working for the same institution. They are the living embodiment of these institutions, participating fully in all the rituals that make college an experience. Get rid of them, and you have effectively destroyed investments in human capital built up over many decades.
The good news - relatively speaking - is that we have lived through closures of colleges and universities in the past. One recent survey of trends in higher education found other eras when schools went under at high rates: during the Civil War, the Great Depression and other periods of collective trauma. Some of these institutions disappeared altogether; some private schools became branches of expanding state systems of public education; others were absorbed by rival institutions.
That's likely to happen again. In fact, once the pandemic has past, we're likely to look back at this crisis as the moment when existing trends - declining enrollments, unsustainable debt levels, the growth of online courses - acquired a kind of hurricane force, fundamentally reshaping the landscape of higher education.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
Stephen Mihm, an associate professor of history at the University of Georgia, is a contributor to Bloomberg Opinion.
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