Accelerated Online Learning and University Struggles
University finances were already precarious after years are debt-fueled building and declining enrollments. For enrollments they did secure, the tuition discounts were often substantial.
John Cochrane, an Economics Professor at Stanford has published an inside look at what budget shortfalls and furloughs look like at Stanford. AT STANFORD. That should give you pause. One of the wealthiest, most successful, most in-demand schools on the planet is struggling. The most interesting section is about college endowments. If you lose a conservative economics professor... that's saying something. He writes:
Wait a minute, we have cuts and freezes too -- just like 2009 (and just as Harvard, Chicago, and all the other big private universities did in 2009). What the heck is going on? How can you have $30 billion in the bank and budget cuts and salary freezes?
Right away, you can tell that the private equity and real estate is completely illiquid. My understanding from other sources is that the rest of it is all actively managed and highly illiquid. The Stanford management company (for a fee) sends its investments to managers who, for a fee, buy the actual investments, which are mostly illiquid. A colleague guesstimates the fees at $700 million dollars.
Will students come back to campus in September?
With Facebook declaring that they won't reopen their corporate campus until 2021 and Amazon has delayed reopening until October 1st, the likelihood that college will resume any sort of normal in the fall looks unrealistic. A few professors have already taken to the internet and stated: Don't start school this fall.
Edmit, co-founded by Sabrina Manville, has an eye-opening dataset on college financials. Yes, this is the same information that caused an uproar back in the fall when they planned to press publish. You can find it all here.
What are the takeaways?
Before Covid 30% of colleges tracked by Moody's were running deficits. Now, The American Council on Education, believes revenues will decline by $23B billion in the next academic year.
90% of parents aren't comfortable with their children returning to the existing state of learning experience.
International students were a huge boon for US and UK universities in recent years. These students would pay full price and came in droves. No longer. Visa offices are shut, and international travel looks uncertain. This will severely strain University finances.
Udemy, the online course provider, has illuminated some of its data on what the world is learning at home. It's (of course, self-serving) statistics include:
425% increase in enrollments for consumers
55% increase in course creation by instructors
80% increase in usage from businesses and governments
They also saw a big consumption increase in 'telecommuting', 'virtual teams' and 'AWS Certified Solutions Architect'. They saw 55% growth in course creation lead by 'office productivity' at 159%, 'health and fitness' at 84%, and 'IT & software' at 77%.
A high school student wrote an op-ed in the NYTimes on how distance learning helps her focus and learn more. The direct-from-the-classroom perspective illuminates that so much of what is 'school' is about classroom management and teacher attempts to correct student behavior. A college professor advocates for more hybrid learning models in Wired as well. This will become a popular refrain.
The Future of Work becomes Work by Allison Baum, a longtime education investor, is a thoughtful take several post-Covid changes, all of which were already existing trends. She writes:
Universal adoption of the flipped workplace
Rise of contractors and project-based work
Accelerated implementation of automation
The next generation of B2C education platforms
Mental health goes mainstream