Meanwhile, Feldman says, colleges are spending more money to invest in technology that will allow students and faculty to meet online, and IT workers are putting in overtime to help faculty navigate online-learning tools.

As for the dorms, classrooms, gyms, and other facilities sitting empty, colleges still have to maintain the buildings and their campuses in order to have them ready for students when they do eventually open their doors again.

“It’s not like they’re going to rent out the buildings,” says Sandy Baum, a senior fellow at the Urban Institute and former professor of economics at Skidmore College who authored the 2016 book Student Debt: Rhetoric and Realities of Higher Education Financing. “People have this idea that it must be cheaper to teach online than to teach at a brick-and-mortar school. It’s not cheaper to do high-quality online education.”

A number of colleges have agreed to prorate room and board for the spring semester, as well as to refund student activities fees, acknowledging aspects of higher education which students are clearly unable to participate in from home. But students aren’t likely to recoup tuition, which colleges spend on faculty and administrative salaries and benefits as well as things like dormitories, bookstores, hospital libraries, and computer labs.

Supply and demand

That said, economists say that colleges and universities will likely make another set of calculations for the fall, informed by the familiar model of supply and demand.

The pandemic hasn’t changed the supply of available spots in colleges and universities. But demand for those spots may well drop in the fall over both financial and health concerns.

“A lot of parents will tell kids, ‘We don’t know what health situation is, why live in an infested dorm when you could stay at home and do online classes,’” says Rich Vedder, a professor emeritus of economics at Ohio University and author of the 2019 book Restoring the Promise: Higher Education in America.

In order to cope with the decline in demand, colleges might have to offer some kind of discount in order to entice more students. That likely means bigger scholarships and more financial aid, some of which may be funded by the $14 billion in federal emergency aid given to US higher-education institutions.

“Even though finances are horrible and the schools would love to raise tuition to offset that, it’s not feasible to do so,” Vedder says. “I think there’s going to be a lot of discounting from conventional sticker prices.”

Keeping a higher sticker price while allowing the typical student to pay far less tuition is in line with the broader trend among liberal-arts schools in particular. As of last year, the average private college in the US was offering tuition discounts of close to 50% in the form of grants and scholarships.

Colleges with massive endowments, like Harvard, Yale, Stanford, and the University of Pennsylvania, can afford to offer up big discounts. But many other schools will have to deeply slash their own costs in order to adjust for any decrease in demand, which could mean everything from laying off administrative and support staff and instating hiring freezes to increasing class sizes and faculty teaching loads. For some, all that cost-cutting still won’t be enough.

“A lot of colleges are really totally tuition-dependent,” says Baum. “Some of them are not gonna make it.” Indeed, the pandemic has put an estimated 20% of US colleges and universities in severe financial peril. And if enough schools are forced to shutter their doors because of the pandemic, the supply of higher-education slots available in the US may wind up dwindling after all.

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