The Economic Fallout: Higher Education post Covid-19

Which sector of the economy do you think is being worst hit by the coronavirus? Aviation, transport, entertainment, real estate, retail, textile or hospitality industry?

You may have chosen your option. But I can tell you here that you are all mistaken, and need to do some serious study and rethink on this important question.

One sector, which has been the worst hit because of this global pandemic and a sector which we tend to ignore or underrate is, ladies and gentlemen, education.

Many of us don’t think of education as a part of the economy. The course of academia actually is surely above such squalid considerations as money and finance. Money is the lifeline of education – endowments from wealthy alumni, catering and accommodation fees, conferences, and the biggest of the lot – attracting lots of fee-paying students every year. Money does play a vital role in education too. It is as important a part of the economy as any other sector that you must have thought about, in the question above.

So where do we stand now? Is the future of international study and academic careers under a threat of a whole new order? Is the e -learning or distance education the new world order of education?  Will this threat, be it bio-technological or pandemics, in the end, be human-enforced?

Higher education has in the past, remained a strong part of economy in India, but unfortunately, today, it plunges into an economic recession with few precedents in an uncharted territory. The current pandemic, and the series of lockdowns, has unleashed chaos on educational institutions, with uncertainty looming large on the horizon still. With colleges and universities shut, and no certainty on the days ahead, both international and domestic students have suffered.

For decades, higher education in the private sector has been the best business model to bring thousands of students together from across the country, and around the world, to sit together for full academic years and to innovate and to discuss. The trouble for the education sector is that it is uniquely vulnerable to the coronavirus pandemic.

As a result, although we continue to refer to ‘public institutions’, education remains to a large extent, self-funded by the private sector. The privatization of higher education is now in a verge of crumbling by the great recession despite the fact that the private sector rally round in supplementing the governmental efforts in higher education. Between 2008 and 2018, higher education in private institutions increased by 37 percent. This shifted the burden of higher education away from state and central governments. But in the absence of any subsidy for the free or subsidized fee concessions seat matrix, it has also become a big burden for the students and the parents.

While increases in the tuition fees helped allay the loss of government funding, the privatization of education resulted in the commoditization of students. As a result, following the 2008 recession, administrators took on more and more debt to make their campuses appealing to the would-be students. Universities and colleges across the nation began building attractive new dorms, lavish stadiums, and innovative classrooms with state-of-the-art technology. And in the process, by 2017, private institutions owed a staggering debt. Unfortunately, the enrolment failed to keep pace. And with the expenditures remaining fixed, many institutions were left with unmanageable debt.

Spiralling costs of higher education is not the only reason for the parents to fail to accumulate

adequate money for their children’s education. A shortfall can occur because of a change in the nature of the goal too. The study loan has increased the burden on students and parents. This is because of the absence of Government support in the national budget for free education baring public institutions in the higher education sector, as is provided in the constitution for ‘Right to Education’. Many of the final year students who are passing out today, are debt ridden and without any certainty for employment. And today, with the pandemic and the circumstances, many of the students have been forced to return to their native places, leaving their places of study and work.

Loans are likely to remain a mainstay of financial aid programs, so as interest rates begin to rise for the first time in years, foreshadowing higher future payments, the problems faced by students who borrow as well as the barriers confronted by those who are averse to borrowing are only liable to increase.

The stories can be startling: for students and recent graduates, repayment of education loans has become a problem because hiring has almost come to a standstill. Institutions that are financially dependent on international students are also affected, given the disease’s broad and indeterminate impact on global mobility. Even if international air travel were to fully resume this year, and most universities reopen for on-campus classes, it remains sceptic, the time it may take for the international students to feel confident enough to pursue education in the country viewing the current global pandemic. However, evidence suggests that spikes in enrolment may be short-lived or non-existent this time around.

To make matters worse, institutions endowments face tough years ahead, further limiting what administrators will be able to do internally to manage budget crises. As is customary, administrators will pass hiring freezes, reduce travel, and forgo cost of living adjustments for faculty and staff. But this time around, draconian budget measures are unlikely to right the ship.

Without significant government intervention, institutions of higher education will suffer unprecedented hardship in the months and years to come. The cost of supporting colleges and universities through this period will be enormous, but the cost of losing institutions of higher education altogether, would be even higher.

And thus, we find ourselves at a crossroad, in which we can either renew our commitment to higher education across the nation or just be a spectator and see the industry crumble. As most of the higher education institutes are struggling to close the deep budget holes and  have also been pushed to the brink of collapse after the corona virus outbreak triggered financial losses over several crores of Indian rupees at some institutions.

As the education sector face an existential threat, scores of colleges are taking heavy hits due to the lockdown related losses. This includes fewer international and domestic student enrolments, less income from student accommodations, conferences and catering. They are also facing losses on long-term investments as most of the students are not paying semester fees or for housing and dining after the campuses closed last March.

The other constraints have also become a great barrier, with many parents and students now unable or unwilling to raise funds for an expensive education amid the current shift to digital or learning education off campus from home. As most of the prospective students fear that they will no longer be able to afford studying this academic year in campus-based education,  in the current economic conditions which are negatively affected by the pandemic.

Yet leaders from this industry say that this is only the starting of their troubles. Even if institutions reopen this fall, many worry large numbers of students will not return. There’s a widespread fear that an economic downturn will leave many students unable to afford tuition and universities are forecasting steep drop-offs among international and domestic students who may think twice about studying as soon as the pandemic comes to an end. Worried about health risks in various states and more students coming back to their own states, parents may forbid new students from studying at different states or at the top tier institution and at the  institutions of eminence. And if those enrolments drop significantly, the revenue loss would be another blow to the already fragile budgets of universities battered by the health emergency.

Dozens of institutions have instituted hiring freezes, and many are halting construction projects so they have enough money to pay their employees. But university heads say that the savings will only stretch so far, and many are asking the government for a second stimulus package to avoid deeper cuts. Many institutions draw from their endowments to pay for scholarships, faculty jobs and campus operations, but those reserves have taken deep losses as markets tumble.

Aside from travel restrictions and safety concerns, while higher education institutions might adapt sooner or later to the e-learning practices, it might take a relatively longer time to come to terms with the drastic changes in the student mobility for higher education. It is no longer a mystery that travel is a key factor in the spread of communicable disease. The repercussions of the COVID-19 pandemic will continue to produce pronounced changes in teaching and learning practices for all levels of education.

On the other hand, if the pandemic is prolonged, will distance learning be mainstreamed and become more ubiquitous even at the top institutions? Will it potentially increase the access to education and widening bottlenecks, thereby easing pressures to pursue alternative study options in the country? If there is a prolonged shift to distance learning, will this change be broadly accepted, or will distance education still be considered second rate, with elites opting for on-campus programs that include real cultural immersion experiences abroad, rather than studying ‘canned content’ in their bedrooms?

It is estimated that most of the private sector universities, educating around 58 per cent of students in the country with the most sought-after professional programs, would not be able to survive the coronavirus pandemic lockdown without a government bailout support. The government immediately announced a stimulus package to mitigate the impact of the coronavirus pandemic, asserting that the lockdown has resulted in a ‘massive economic disruption’. With restricted economic activities, the imperative for a quick and forceful economic support package for universities will bring higher education as we know it to the brink of collapse.

It also assumed that a ‘transformation fund’ should be established to support universities over the next two to three years to reshape and consolidate through federations and partnerships or potentially merge with other higher education institutions.

As the coronavirus continue to reorder our lives, few people have stopped to think about the consequences the crisis will have for higher education. But they should. With the coronavirus, and the economic crisis that it has spurred, the government must think of providing low-cost loans and guarantee universities some funding. Some of which are at a risk of collapse due to falls in international enrolments during the COVID-19 crisis.

There are many unanswered questions that this crisis continues to unfold. For instance, how will the education systems of countries be transformed by the crisis? To what extent will private institutions outside of public safety nets go belly-up, and by how much will public university budgets be slashed? Such factors could limit access to education and consequently drive more students out.

With all these questions spinning into mayhem, it’s difficult to predict how the international student mobility will now be like in our country. However, there are good reasons to believe that the current crisis may hasten the relative decline of the international study abroad too.  The universities will ultimately continue to bring students within the home country’s institutions to brace themselves—now more than ever—for significant changes in domestic student flows.

Hopefully, the world will lead to normalcy soon. It may bear the wound of the Coronavirus, but that is all we have now, to embrace.