Bubbles are bursting everywhere and America’s most prestigious export — higher education — won’t be immune. Universities are like landlocked cruise ships: places with all-you-can-eat buffets and plenty of beer, but almost no way of social distancing.
Many colleges are considering running online classes into the autumn and beyond. But that requires additional resources that most are ill equipped to afford. Even before coronavirus, 30 per cent of colleges tracked by rating agency Moody’s were running deficits, while 15 per cent of public universities had less than 90 days of cash on hand.
Now, with colleges shuttered, revenues reduced, endowment investments plunging, and the added struggle of shifting from physical to virtual education, Moody’s has downgraded the entire sector to negative from stable. The American Council on Education believes revenues in higher education will decline by $23bn over the next academic year. In one survey this week, 57 per cent of university presidents said they planned to lay off staff. Half said they would merge or eliminate some programmes, while 64 per cent said that long-term financial viability was their most pressing issue. It’s very likely we are about to see the hollowing out of America’s university system.