Higher education is key for the post-COVID recovery

The United States economy is in free fall. Businesses have closed and people have been laid off. Unemployment could reach 30%, and if it does there are predictions that an additional 15% of the population will fall into poverty. Inequality will grow mightily with significant impact on disadvantaged groups. And this comes at a time when the US economy was already in the midst of a transition period related to work.

When the economy was booming in September, there was already a dramatic shift in the structure of available jobs under way, with a growing need for training and education to match a changing labour market. As one Berkeley economist has noted: “The pandemic and subsequent recovery will accelerate the ongoing digitalisation and automation of work – trends that have eroded middle-skill jobs while increasing high-skill jobs during the last two decades and contributed to the stagnation of median wages and rising income inequality.”

In California, a pre-virus study by the McKinsey Global Instituteprojected job growth through 2030 for health professionals, STEM (science, technology, engineering and mathematics) areas, alternative energy, professional jobs in service fields including managers, and in education – all fields requiring some higher education or graduate degrees. 

Before the realities of the pandemic, big declines were already predicted for office clerks, retail salespeople, farmworkers, cashiers, food workers, waiters, secretaries and administrative assistants.

What will the near- and long-term post-coronavirus economy look like, including the transitional period to some form of new normal? One conclusion seems reasonable: Americans will generally need greater access to higher education and vocational training programmes, not less, even if it includes a more online, more socially distant experience.

Historically, when economies enter recessions bordering on depressions, the demand and need for higher education increases. There are many reasons to think this will again prove the rule.

Higher education is a generally highly productive path for redirecting large swaths of the unemployed – many of whom are in jobs that may not exist in the not so distant future – to upskill. Providing for accessible and affordable post-secondary education is also generally a better usage of tax dollars then simply paying for unemployment, particularly if the economy is in a long slide downward.

The question for the US, and states like California which represents the world’s fifth largest economy, is what forms of higher education, and which institutions, are needed to meet changing labour market demands and to promote socio-economic mobility?

The impact of COVID-19

Make no mistake about it, the COVID-19 virus will have a devastating impact on much of America’s higher education system. Without a major mitigation, like quickly discovering an effective therapeutic or vaccine, mass testing and a new strategic infusion of federal and state dollars, the landscape of the nation’s colleges and universities may be forever changed.

Particularly at four-year institutions, enrolment means revenue. In the midst of the short-term economic and social shock of stay-at-home orders and the difficulties of containing the virus, there are estimates that universities and colleges will experience at least a 15% reduction in enrolment. 

Many students will likely decline to enrol in the autumn and new students will consider delaying their college educations – that is, if they can actually have students on their campuses taking traditional or online courses. 

The US is also the number one destination for international students.

But that market will shrink as students decide not to travel to the land with the most virus cases and deaths and where immigrants are often vilified by the current president. Some estimate that US colleges and universities will see a 25% or more drop in the enrolment of international students in the autumn.

Almost all institutions are anticipating substantial losses in revenue. Tuition income will nose-dive. Some students are already demanding a discount in light of the severe economic recession, particularly if they find that continuing their education means taking fully online courses at the most expensive private four-year institutions. 

In the midst and shock of unemployment rates that could reach north of 25%, higher education may also seem like a luxury for many, at least at first.

In the meantime, many smaller private institutions will likely close or need to merge. Many not-for-profit privates were already in financial trouble – some 30% were already running operating deficits. There are also demographic shifts in which the number of 18-year-olds is declining in many states.

Some state campuses, most of which are part of the larger public system, may also close or become satellites to the larger publics. 

I sense that a large portion of the for-profits, many that were already facing charges of poor quality, extremely high attrition rates and exploiting students largely from lower-income groups, will close as their primary purpose is to generate income for shareholders. Federal subsidies to these institutions, via federal Pell Grants and loan programmes, and their low graduation rates, have driven much of the student debt problem.

At the same time, many public universities and two-year community colleges will likely become more attractive alternatives for students who decide to attend locally and are looking for lower costs than most of the not-for-profit and for-profit schools. But this will come at a time when most of the public universities will also be absorbing large scale declines in state funding. 

It would seem that the capacity of two-year public colleges to enrol students in the short- and long-term will decline exactly when the demand rises.

The role of higher education in recovery

One might confidently speculate that the short-term decline in enrolment will be followed by an increase in demand for higher education, depending on the response and flexibility of major public and private post-secondary institutions and the amount, shape and structure of state and federal aid.

Right now, every state, every public institution and most businesses are looking for greater funding support from the federal government. It’s a complicated national emergency and no one really knows how deep the federal pockets can go and what length of time it will take for the new normal to emerge.

Higher education institutions, and massive state systems like the State University of New York, the University of California and the California State University, are only one among many constituencies in line asking for relief funding. Thus far, colleges and universities are not really on the radar in Washington and state capitals. 

What it will take is a recognition by state governors and lawmakers that higher education has an ongoing and crucial role to play in fostering socio-economic mobility, innovation and economic recovery.

But additional federal and state investment must also include a significant rethink about the organisation of state higher education systems that include public and private institutions, about greater usage of online platforms and about where the federal government and state governments should invest.

For now, it’s ‘all hands on deck’ as campuses all across America, and indeed the world, attempt to deal with immediate issues like testing, if and how to open in the autumn and what role there should be for online education.

Soon, however, the long-term health and revised deliverables of higher education need to emerge as a public policy debate.

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