Commentary on the college “death spiral”

Steven Hayward:

I’ve been tempted to tweak my liberal friends with the mischievous thought that COVID-19 is actually a Trump five-dimensional chess plot to destroy universities, unionized K-12 public education, and Hollywood (since TV and movie production is largely shut down too).

Colleges and universities were already facing mounting financial pressure because enrollment is steadily declining and certain to get much worse in the coming decade (the result of falling birthrates back at the time of the housing crash in 2008-09). Add to this the financial hit they are taking right now because of the virus, on top of the huge loss this year of foreign students who typically pay full tuition rates and subsidize other students, and a large number of colleges and universities face a serious risk of insolvency. (There are  many colleges for whom a large foreign student enrollment—especially Chinese students—is a key part of their business model.) This week it is reported that 20 percent of Harvard freshmen are deferring a year; at other colleges, the rate of students saying they aren’t returning runs as high as 40 percent. At places further down the food chain than Harvard, how many students will decide not to go to college at all a year from now?

Now add today’s news that major college football isn’t going to happen, and you have the making of a death spiral for many colleges. Even schools that aren’t football powerhouses like Ohio State are going to take a huge hit from this, as football even at second-tier universities is still a money maker. Ticket sales and TV revenues are one thing; football, and to a lesser extent basketball, are huge magnets for alumni donations, and if there’s no football, there’s no fancy skybox game day parties for college presidents to schmooze donors. And since huge football revenues cross-subsidize all the other sports, look for the sports portfolios of many colleges to collapse. Some schools, like Stanford, have already cut a large number of sports.