Because colleges and universities are losing revenue due to Covid-19 (coronavirus) shutdowns, I suspect that full pay students will enjoy a significant boost in admissions next application cycle as schools need to replace lost revenue.
Colleges and universities are refunding money to students sent home and may cancel summer programs, study abroad programs, and other revenue generators such as summer sports camps. This lack of revenue may push many financially strained colleges over the edge.
Online courses and online degrees are also likely to be the primary beneficiaries in addition to full pay applicants. Traditional on-campus programs are shifting to online courses due to health concerns. Once one is equipped for, and exposed to, online courses this could initiate a decline of the traditional on-campus college experience.
Covid-19 combined with the high cost of higher education as evidenced by the student loan crisis and with increased remote learning capabilities may change higher education forever.
How many schools are on the edge where their budget might dictate a temporary change from need-blind to need-aware for next year? Probably not many. I’m guessing that “windfall” far overstates the advantage of full-pay in highly-selective college admissions, even in next year’s admission season. (Full-payers are not holding their breath…)
Refunds are in the neighborhood of 3500 or so per on-campus-living student, depending on the college and individual room and board costs; roughly a quarter of the annual room and board. Compare to 75k COA, that’s a 4.5% loss. (No refunds for tuition.) No clue what the move to online is costing.
I’m only speculating, but have thought many of the same things…including that full pay students will have an even greater advantage the next cycle (and maybe beyond).
Those from ‘known’ high schools may also have more of an advantage…especially if schools relax the requirement for counselor and/or teacher recs next year, for example.
Online schools (reputable non-profits) were already growing quickly…and that will probably continue…the rate of growth may certainly speed up due to the pandemic.
OTOH, the reality is that the small LACs that will likely be most affected serve a very small percentage of the total number of college students. Most students already attend their local CC, or in-state public.
Rationalization and consolidation in higher ed will continue to happen, and this pandemic seems like it will speed up that process. Time will tell, should be interesting.
Many universities will lose revenue due to cancellation of professional and continuing education conferences held on campus.
P.S. Apparently USA Today newspaper has an article this morning which discusses the economic effect of coronavirus on many financially struggling colleges and this was a topic of discussion this morning on CNN.
Even prominant National Universites such as Northwestern University are experiencing a cash flow crunch which prior to the onset of Covid-19 led to the drawdown of endowment funds to finance ongoing operations. (Northwestern University has the 9th largest endowment in the nation totaling about $10 billion.)
If a super wealthy school like Northwestern University has to unexpectedly resort to the use of endowment funds to finance ongoing operations prior to the negative financial effects of the coronavirus, then the other 3,500 + four year degree granting institutions are likely to face significant financial hurdles as a result of the recent & ongoing shutdown due to health concerns.
The question is…how many 2021-2022 students will not be able to return to college in the fall because of lost parent wages, and an inability to pay. Going along with that, how many matriculation decisions will have finances as a much more significant consideration than in the past.
Another consideration for all parties is the concern about a second wave of Covid-19 in the Fall. This may prompt many applicants to consider low cost local options or to more fully investigate online degree options.
It would be interesting to hear from an upcoming full pay applicant such as @homerdog if these developments will cause her family & her daughter to rethink their targeted schools and their use of an ED option.
Is “full pay status” the new “hook”, or even “super-hook”, at the most selective and elite colleges in the country ?
While it is unlikely to affect admissions priorities at a handful of ultra wealthy schools (Harvard, Stanford, Yale, Princeton, MIT & Williams College among a few others), it almost certainly will affect admissions’ decisions at most non-top-10 ranked colleges and universities.
Pricing of online degree programs is likely to become more competitive due to increased efficiences & increased competition–especially so in light of the attention on the student loan crisis in this country.
I agree that full pay applicants will enjoy even more significant advantages in the upcoming cycle than they already do.
One thing to keep an eye on will be the hits to endowments, which may well be as bad or worse than during the 2008 crisis. All risk assets have been hit extremely hard already, including all credit sensitive debt (at least on a spread adjusted basis). There have been huge liquidations of risk parity positions in the last few weeks, indicating that many macro hedge funds popular among the clubby endowment managers were caught flatfooted (e.g. Bridgewater down more than 20% YTD). Currency translation effects mean that foreign holdings will be a disaster in USD terms, and not very good even if hedged. Very few managers will have had the foresight to overweight long treasuries (about the only asset class that has done extremely well), as the current fiscal endowment year began with a universal consensus that rates would rise (always a silly bet on a risk-adjusted basis, as the United States is now tracking the experience of Japan post-1990 almost to the “t”).
TL:DR - many many colleges will be in trouble next year unless they radically realign their spending. I have little faith that they can.
I think that whoever told me in another thread that community colleges and local regional colleges are going to get tons of people choosing them over higher ranked schools, I think you are right. I think some higher-priced schools might end up less competitive this year and might allow in more from the wait list than usual years. I hope not but I fear some schools may go belly up financially as well.
@Publisher I guess I’ve thought about this a little bit but I don’t know if the full pay bump will be enough to convince us to skip ED. Remember, D still doesn’t have an SAT test so I’ll be waiting to see if schools on her list announce anything about going TO for this coming year. Right now, I’m thinking that maybe using ED and being full pay could really give her an advantage with need aware schools but I think most of the schools on her list are need blind.
One positive thing about having a 2020 is that we are going to get to watch how each school on the list handles this virus situation. I’m already watching the responses from the top five or so schools on her list to see how well they communicate with their students.
And I think the schools with the biggest endowments will figure this all out. I have a column on our spreadsheet for endowment. It’s becoming even more important.
I would still maintain that “hook” and “super-hook” way overstate the full-pay advantage for high school class of 2021 at selective schools in the 20-50+ range. (I have kids in this situation.) Would be fascinated to hear more to prove me wrong, maybe open up more possibilities, but I do not see their reaches/ED choices changing based on potential increased chances from the full-pay factor. At most, it merely adds to the level of uncertainty in chance-estimating.
If anyone has particular schools in mind where they think full pay might make a bigger difference than before, say for an applicant on the edge, I’m sure that class of 2021 parents would be interested to see guesses on that, attempts to make a list.
I would start with all the need aware LACs and small(ish) universities in the 20-100 range. I agree it makes chance-estimating and categorizing more difficult.
@Mwfan1921 - Because I do not believe that need blind is truly need blind. Schools can of course always adjust the “proxies” for full pay - legacy, favored ECs, certain preference groups, etc. - on the fly, and that inures to the benefit of the full pay applicants.
Also, I am not fully convinced that even at the individual applicant level, schools are need blind. There is too long a history of outright lying by adcoms going back to the 1970s (generally in the context of affirmative action) to accord the universities unquestioning deference.
Seems many proxies may not be accurate considering the stock market is down 30%, meaning lots of families that live in x zip code, or are legacies, or play lacrosse, etc…groups that may have had a historically high percentage of full pays… might not be so this fall.