How college campuses are approaching reopening plans amid coronavirus

CampusReform.org Editor-in-Chief Cabot Phillips joins Yahoo Finance’s Zack Guzman to discuss why opening-up campuses amid the coronavirus pandemic may not be a one-size-fits-all approach.

Video Transcript

ZACK GUZMAN: Today, we're going to be digging into the way that colleges are grappling with the coronavirus shut down and uncertainties that have come with it when they try and prepare what the upcoming calendar year might look like after already shifting to, in many cases, conducting virtual graduation ceremonies. And we look at what could happen here next year. Some colleges weighing in and saying everything should be fine since things are opening up right now, but there are always some lingering question marks.

And for more on that, I want to bring on the Editor-in-Chief of CampusReform.org and friend of the show, Cabot Phillips joins us right now. And Cabot, I mean, when we look at this, there's a lot up in the air when we think about incoming freshmen to colleges right now. And we heard some schools potentially even maybe pushing out their online classes into next year. So what's your take? And what have you been hearing from a lot of them across the country?

CABOT PHILLIPS: Yeah, well, in talking to a lot of universities around the country, they feel pressure right now to open back up because students, the fact-- the reality is, have not been satisfied with their online learning experiences. We've seen 20-plus schools actually be sued by students, saying that they want their tuition money back because it's not what they paid for. And actually, 74% of students in recent polling showing that they're not satisfied with the quality of online learning.

And so universities are starting to feel pressure saying, well, if we keep it all online, we might just have students starting to drop off, maybe take gap years. And obviously, they can't have that at a time when they're in dire need of cash right now. So right now in the universities that we've talked to and-- around the country, the general consensus seems to be that they're going to move forward with bringing students back to campus in the fall, but they're going to be taking a variety of measures to try and make sure it's as safe as possible.

A few of those measures we've seen at Purdue, which I think is doing a great job of that. President Mitch Daniels announcing a series of measures, saying they're going to be reducing larger classes, breaking them up into smaller classes. They're going to be staggering class times so that each class is getting out at five-to-10-minute intervals so students aren't walking by each other. They're using on-campus labs for quick results on testing so they can prevent hot spots and breaking up. And they're limiting outdoor events and indoor events as well.

So I think that's going to be kind of the general consensus on what schools are doing, trying to limit as much of the in-person experience as possible while still being able to bring students back. Because if they aren't able to offer that in-campus traditional campus experience, I think a lot of students are not going to pay $40,000 a year to just sit in a dorm room and take all their classes online. And we've seen that reflected in polling data. And so I think schools are feeling the pressure to-- to bring students back.

ZACK GUZMAN: Yeah, not a lot of people are happy with that. If you talk to any student, really, out there because it's just not exactly the same atmosphere. You can make the argument that classes aren't actually even the reason why a lot of people go to college out there.

When we look at the economic impacts here, Cabot, across the board, clearly, some colleges will be feeling the hit a little bit harder because it's a pretty significant chunk here when we think about some schools and the revenues made up through sports as well-- as well as the academic side, when you look at some of these bigger state universities, especially. So what's-- what's the impact in how maybe some schools might be looking at the decision differently than some other smaller private colleges?

CABOT PHILLIPS: Yeah, well, the larger schools, you bring up, athletically, that is going to be a huge hit for them, especially if there are, you know, even if the sports happen, if no fans are coming in, that's going to play a large role. And if you take a school like University of Alabama, for example, a billion dollars of their budget every year is comprised of, you know, revenue from the football program. So there are a lot of schools like that, where they not only finance a lot of things on campus with revenue from sports, but they're able to finance entire other sports programs that don't make any money with earnings from football, basketball, baseball, things like that. So schools certainly going to be pressuring the NCAA to get sports back on, obviously, if things are, you know, in line with what health professionals are saying.

I think as schools are responding to this, there's two options here. One, I think, is to start finding ways to cut back more on their budget the way that most families are doing around the country right now. And talking with a few schools, there are chances right now of cutting some administrative positions. Right now, 24% of all school spending goes towards administrative costs. That's non-academic administrative spending.

So that's probably going to be the first spot you start to see schools canceling. We've seen places out in California where universities there with the UC system have cut 20% of their employees there. They furloughed them. So I think that's going to be what we're going to start to see.

ZACK GUZMAN: Yeah.

CABOT PHILLIPS: But the fact is, schools cannot count on the same amount of revenues they have in the past because of all the circumstances with the virus. And I think students, there is a huge risk that students just say, I'm going to take a year or two off because this experience is not what I was promised, and I'll just wait for things to cool down.

ZACK GUZMAN: But that's the other key thing here too, right? I mean, you're obviously clued into students themselves. We've been talking about the colleges and their tough decisions here. But on the student side, it's tough to think of a graduating class that's getting a shorter end of the stick here than the class of 2020, when you think about virtual graduations, but also coming out at a time where the unemployment rate is the highest that we've seen since the Great Depression.

I mean, I laugh because it's just crazy to think about how quickly it accelerated here. But I mean, we haven't seen a job market this tough since maybe going back to the class that graduated in '08, '09. I mean, what have you been hearing from students who are just saying, maybe-- maybe I do need to take either-- and maybe I go to grad school or what are the plans now?

CABOT PHILLIPS: Yeah. Well, there's kind of a breakdown where you've got these students that are getting ready to enter undergrad, graduating high school seniors, they're incredibly hesitant right now. Recent surveys showed 10 and 1/2% of graduating high school seniors are saying that they are no longer going to college in the fall because of all the uncertainty financially, as well as the APY. So you've got one in 10 students.

That number actually jumps up to 22% of graduating high school seniors who say they will not go to college in the fall if classes are all online or the majority online. So universities are in trouble there. But then you've got the other breakdown of there's actually going to be an increase in grad school attendees if what happened in 2007, 2008, '09 is any indication of what happens now. In times of economic uncertainty, people try to find ways to increase their marketability, increase their ability to get jobs, so they go back for grad school.

In the '07, '08 recession, there was actually a 16% increase in the number of people seeking online graduate degrees. So I think that could be actually an area where we see a boom of people going into higher education are for those grad degrees. But universities right now are trying to find ways to lure students next year because they know all this is going on.

We've seen schools come up with innovative solutions, saying, hey-- there was a school up in Maine that said, we're going to 100% guarantee you that you will find a job when you graduate, so they're pulling all the strings there. Other schools saying, we're going to offer more a la cart ways of paying for your degree, so you can only pay for the things you want. Save money, you don't have to pay for access to the library, the gymnasium, things like that.

And so I think schools are going to have to find ways to adapt from a market perspective. If they're offering the exact same-- or the same price or even some case-- in some cases increasing tuition with a, you know, an inferior product, then I think students are simply going to stay home, as we've seen in the polling. But they are in a very tough spot, but there is a breakdown of graduating seniors in high school versus people that are in the job market now unemployed, and they're trying to find ways to distinguish themselves, so going back for grad school.

ZACK GUZMAN: Yeah, for sure. I mean, just a tough-- tough environment for them. And you know, freezing loan payments is one thing, but might not be enough if there's not a job on the other side to incentivize you going to college, for sure. But Cabot Phillips, CampusReform.org Editor-in-Chief. Appreciate you taking the time, man. Stay safe out there.

CABOT PHILLIPS: Thanks so much, Zack.