June 17, 2020
by Maxime André, Coordinator for the New England office of the Institut des Amériques (hosted at Boston College) and PhD student in Political Science at Sciences Po Lyon.
The greater Boston region houses some of the most prestigious universities in the world. Harvard University and Massachusetts Institute of Technology are right at the forefront since the beginning of the health crisis because of their research on a COVID-19 vaccine.
This media exposure however tends to hide the fragile situation that a large majority of higher education insitutions are finding themselves. Indeed, the health crisis has not spared American universities, public or private.
Though it would have been interesting to look at all the institutions, for purposes of clarity and being concise, this article will focus on Massachusetts private universities, and specifically on the private doctoral universities, as classified by the Carnegie Foundation. Why Massachusetts? As the New England coordinator located at Boston College - a medium-sized private doctoral university - I was able to closely follow the progress of the institution's situation and compare it to similar universities in Massachusetts. Why focus on private universities? Where do the private institutions get their resources from, their economic model and the relationship they have with the government is very different from public universities. In particular, while public universities largely depend on state funds, private universities, normally, totally rely on the economic activity of their campus and on the registration fees of their students.
Massachusetts universities have, for the most part, closed their doors around March 11, 2020 and progressively organized the courses on-line. In these circumstances, a huge issue which many of these institutions have to deal with is managing their residence halls. Worried about not being able to ensure a healthy environment, universities announced that all students residing on campus would have to leave their rooms as soon as possible. Yet, these campuses, very different from those found in France, often house thousands of students. On March 11, Boston College's Vice-President of Student Affairs invited over 7300 students to prepare their departure and leave their residence in less than 4 days . Of course, exceptions were made for the international students who could not return to their country because of health restrictions, or on a case by case basis for those students who didn't have any alternatives, but on April 15, only 290 residents were still living at the Boston College campus.
These exceptional measures pushed universities to refund rents that had been paid in advance until the end of the health crisis. For Boston College, also, these refunds came to over 23 million dollars. Though, in this specific case, the president of the University quickly declared that his institution had "sufficient financial reserves" to handle these large expenses , not all institutions are as robust. To better understand the diverse financial situations of these universities, here are a few useful points of reference.
In Massachusetts, a number of private universities have significant treasury that they can utilize in exceptional circumstances. Where do these funds come from? First of all, registration fees, students having to pay on average 27 000 dollars for one year to study in Massachusetts. These fees cover tuition, but also numerous additional services (library, sports facilities, etc.) that are offered by these institutions. And of course, since the universities have quickly shifted to on-line teaching and closed the campuses, the university infrastructures are no longer available. The unavailability of these services, financed with student fees, has consequences. For example, Northeastern University is currently being sued in the Massachusetts Court by one of its students, forcing the institution to plan for another wave of refunds . More generally, though some of the state's private universities say they are strong enough financially to withstand such a crisis, not knowing how long the pandemic will be is a huge source of worry.
All the more so that, though universities can currently pay a large part of these unexpected expenses, there is doubt as to their ability to fill their coffers in the Fall. This worry is what is at the heart of the discussions held by 14 college presidents of the Massachusetts Higher Education Working Group whose mission is to come up with a reopening plan for the member universities . The drop in American and international student registrations for the 2020 Fall semester, which most institutions expect, is particularly worrisome. As for the American students, the coronavirus crisis has been synonymous for many with a loss of jobs on which they were counting on to finance their courses. This pool of American students seems to specifically impact public universities who in fact offer reduced registration fees for students who are residents of the state. As for the international students, uncertainty due to American border closings, the health crisis and the inability of institutions to provide teaching and services; will probably make them hesitate to register for next Fall. Yet, the greater Boston hosted over 75 000 international students in 2018, giving the town over 3 billion dollars in earnings . Without this major input, private universities may need to adopt a stringent budget policy, the magnitude and later the consequences of which will be varied according to each one's treasury. Hampshire College in Massachusetts for example has expressed doubt as to its capacity to pay its employees, including professors, if in the months ahead there is no sign of reopening universities . The institutions' reopening plan to be done in 4 phases for the 2020 Fall semester, presented by the Higher Education Working Group to Governor Charlie Baker, was done specifically to avoid this downfall .
The Massachusetts government's obvious unwillingness to help higher education institutions financially, they hoped for a sign from the Federal government to help them confront this crisis. It did come forward on Friday, March 27 when President Donald Trump signed the CARES Act, a multi-sector stimulus package of 2 000 billion dollars. This plan did include a 14 billion dollar budget for public and private universities. So, 82 higher education institutions were able to share around 270 million dollars in federal aid. For example, Amhearst College received over 18 million dollars, Northeastern University got 11 million, Harvard 8 and Boston College around 6 . How can these funds be used? It's both an essential and controversal question.
The law does require that 50% of the aid be used to refund the students, but the other half is definitely less regulated. It seems that, even if a thorough investigation is needed to confirm this, the millions of dollars have been used, by most universities, to compensate for the losses mentionned above and to help with the efforts being done to maintain all of the employees that could lose their jobs . But the grey area in the use of (even so) 50% of funds received - recruitment of personnel and the building or renovating of sports facilities being the only forbidden expenses - does leave the option for private and public institutions to finance numerous projects, new ones or on-going, some of which may have nothing to do with the health crisis .
Yet, as mentioned above, this stimulus plan is meant indiscriminately for both public and private universities. This choice from the Trump administration was strongly criticized. The lengthy article written by the journalist Erica Green in the New York Times for example condemns the Secretary of Education Betsy DeVos' strategy. She is being accused of instrumentalizing the CARES Act, of using it as a way to replenish the private institutions' budgets - a political project that has been blocked numerous times by the majority democratic Congress for several years - and to detour it from its main purpose. By playing with the fund distribution terms and conditions, the Secretary of Education would have discretly made it happen, private universities in fact having been surprised by the sums received . What were the terms and conditions? Each university's allotment was based on the number of scholarship students who were at the university, but also on those who were in the district where the institution was . Because of the geographic distribution of American universities, it is a fact that a lot of private institutions benefited from their cohabitation, within the same district, with public universities who have a lot of students on scholarships and received funds that were sometimes quite significant.
The COVID-19 crisis has shaken most of the stakeholders in American higher education. In Massachusetts, reknown for its concentration of prestigious institutions, the universities, like others, had to take drastic measures to safeguard the health of their campuses. More than places of learning, these campuses are also living spaces, consumer spaces, but also housing for thousands of students. This crisis was a painful reminder. Along the same lines, American universities' dependence on the international student market and the economic activity of university campuses have been brought to light. The ability of private universities to rise up from this crisis is not assured for all.
 Moore, Joy, “Letter to students from Joy Moore”, 03/11/2020, consulted on-line on 05/27/2020
 Leahy, William P., “Letter from the President”, 04/15/2020, consulted on-line on 05/28/2020
 Gavin, Christopher, “Grad student files class action lawsuit against Northeastern University over coronavirus shutdown”, in Boston.com (on-line), 05/04/2020, consulted on 05/27/2020
 Thys, Fred, “Massachusetts College Presidents Present Plan For Reopening Campuses in Fall”, in WBUR (on-line), 05/27/2020, consulted on 05/30/2020
 Shapiro, Ariela, “Coronavirus Pandemic Could Cause Troubled Mass Colleges To Close”, in DigBoston (on-line), 05/23/2020, consulted on 05/28/2020
 Carapezza, Kirk, "Struggling Colleges Face Financial Nightmare With Students and Classes Off Campus”, in WGBH (on-line), 074/072020, consulted on 05/26/2020
 Baxter Emily and Chan Yvonne, “Massachusetts Higher Education Working Group Issues Recommendations for Reopening Colleges and Universities”, in JDSUPRA (on-line), 06/02/2020, consulted on 06/03/2020
 US Department of Education, “Allocations for Section 18004(a)(1) of the CARES Act”, consulted on 06/02/2020
 Barnhart Jon, Le Duc Sarah, Nell Jackson and Tannous John, "Understanding the Federal Relief Package’s Impact on Higher Education Institutions”, in EAB (on-line), 04/02/2020, consulted on 04/29/2020
 Barnhart Jon, Le Duc Sarah, Nell Jackson and Tannous John, Ibid
 Green, Erica L., “DeVos Funnels Coronavirus Relief Funds to Favoured Private and Religious Schools”, in The New York Times" (on-line), 05/15/2020, consulted on 05/27/2020
 Barnum Matt, "Guidance from DeVos Means More Coronavirus Relief For Private Schools”, in Chalkbeat (on-line), 05/05/2020, consulted on 06/02/2020
Maxime André is the coordinator for the New England office of the Institut des Amériques (hosted at Boston College) and PhD student in Political Science at Sciences Po Lyon (Triangle). His thesis is on the co-production of public action between private organizations and public administrations in the 1920s and 1930s in the United States.