The COVID-19 pandemic and ensuing recession have put enormous financial strain on higher education institutions. A recent survey of more than 120 chief business officers (CBOs) found that public and private nonprofit institutions reported combined losses ranging up to 45% of their operating budget in the current fiscal year, with the median at 20%.
In response, the federal government has, in the last 14 months, provided historical levels of funding – more than $77 billion – through coronavirus relief measures and the American Rescue Plan Act, and more may be on the way through the Biden Administration’s American Jobs Plan and American Families Plan. But nearly a third of those same CBOs reported that their total federal relief packages were insufficient to cover their losses.
The federal funds may, however, act as a bridge and a lifeline to a stronger, more resilient future if institutions use the funding to drive innovation and invest strategically, rather than plug holes and return to “business as usual.” Coming out of the pandemic, higher education institutions have an opportunity to make meaningful changes to their business models and to reinvent how they deliver education, what kinds of experiences and engagement they create with their students, and how they bring the workforce – faculty and staff – back to campus in the “next normal.”
As one university president put it during a recent roundtable discussion co-hosted by EY-Parthenon and Inside Higher Ed, “The funds did not solve the problems that existed pre-pandemic, but they bought us time. It’s up to us how we use that time.”
In the survey, CBOs expressed interest in fundamental transformation through several avenues, including reimagining ways of learning; rethinking how to engage students, faculty and staff; considering cost optimization opportunities through focusing on the core higher education mission; and increasing outsourcing and public-private partnerships.
For many institutions, the nearly overnight shift to online instruction in March 2020 was their first exposure to digital instruction at scale. CBOs expect to lean into this medium on a permanent basis: more than half of respondents reported that adding or expanding online programs is the most significant area of change at their institutions over the next one to three years. More than one-third of survey respondents anticipate increasing enrollments in hybrid programs, and more than one-fourth anticipate increasing enrollments in fully online programs. In order to support this shift to hybrid and online learning, more than 90% of CBOs indicated that their institutions increased budget allocation to classroom technology and digital instruction tools in the current fiscal year, and they expect to continue increasing these budgets over the next three to five years.
As higher education institutions expand hybrid and online learning opportunities, there will likely be new challenges around supporting students, particularly low-income and first-generation students. While online or remote interactions may not be intended to displace all in-person interactions, one key lesson learned is that they can be leveraged to enhance the experience. As one president at a small, private, not-for-profit institution with a highly diverse student body remarked, “My institution has seen an increase in retention rates for first-generation students since moving courses and student services online.”