There's a big change coming to higher education as a result of the Coronavirus. Perhaps too many changes to list here, but here are a few thoughts separated in order of likelihood, from most likely to most unknown.
Rather than construct a cohesive flowing essay at this point, I'm just throwing ideas on the page as 'half-finished work.' I'll need to come back to this list after a while and see how things are transpiring. I will admit that I'm taking a bit of a darker tone than I have in the past on this issue - perhaps it's just my mood while writing plus the thinking I've been doing over the last few days on this.
University Budgets: University budgets are being cut and frozen all over the world due to knock-on effects of sending students home and uncertain futures. Carnage will truly hit the balance sheets when endowments are wrecked (more on this later).
University Personnel: Hiring and Salary freezes across the board. Yale, Brown, Stanford, and Duke have announced hiring and salary freezes. As have the Colorado School of Mines and state school systems of Ohio, Pennsylvania, and others.
Student Learning: Online as default for foreseeable future. Doubtful students are returning to college campuses across the world before September (at the earliest). Across Africa, South America, and the Indian Subcontinent, students are back in January. Antibody certificates are necessary for students to resume classes. Zoom and other online tools will get better and better and users will become more accustomed to their flaws. Exams are cancelled or re-scheduled, including the SAT, ACT, AP, ALevels, GSCE, etc. More students than ever before drop out as they are not naturally autodidacts nor has anyone taught them to be that way. Learning self-paced online is appealing at the start but ultimately unproductive for them.
Parent Concerns: Parents cannot believe they are paying $40,000 USD to have their son or daughter learn at home in their pajamas with their computer on the couch. Short-term, parents will become disillusioned with remote learning, though they'll listen to their kids who will say that the learning isn't so bad, but it's their friends they really miss. Parents take a short-term financial 'hit' but many hold a grudge against the university and hope that it's paid back in some way later on.
Job Prospects: Internships are cancelled and offers are rescinded for many students across the globe. Summer internships that are supposed to take place remotely turn into WFH research projects with weekly calls with a 'mentor' in the companies so that the companies can maintain loose touch and hopefully hire the students later on. Oxford and Stanford students perform $10/hr virtual assistant-level research tasks but still get to write 'Bain Capital' or 'Nestle' on their resume. It's a win-win.
Changes That Seem Pretty Obvious Will Happen
University Budgets: Get absolutely hammered. Most draw down between 20-40% in the year 2020. Considering the favorite asset classes of endowments are public equities, venture capital and private equity, and hedge funds, expect to see most endowments fall precipitously. Universities really don't know how much they've lost until Q3, when their portfolio manager gets the latest mark-to-market valuations from their private equity partners. Harvard's world-leading endowment that grew anemically from 38BB USB to 40BB USD since the Great Financial Crisis drops below 30BB. Some bailout money gets tossed to Universities way, but it's not enough. Marketing budgets of universities get slashed, but 'success fees' and school recruitment companies see a booming 3-5 year window of work as fixed costs get replaced by variable costs.
Parent Concerns: International students will think twice before going abroad, especially to USA where the government is bungling the handling of these coronavirus cases. Demand still persists in the long run. International students write plenty of op-eds damning the schools for not handling the crisis properly and kicking them to the curb when help was needed most. It ultimately becomes a no-win situation where parents wish the schools did more, schools wish the government did more, and the government is getting barraged by requests from everyone. Gridlock with a few exceptions of some Scandinavian countries.
Student Learning: Universities relax admissions requirements for applications in 2020 and beyond. More universities follow the University of California system by allowing pass/fail grading models in lieu of letter grades and allowing complete applications with no standardized tests. Test scores in the top 10% help the applicant - otherwise it's a push. College Board freaks out. Begins to move money from their offshore tax haven back into the US.
Job Preparedness: Recruiting from college campuses changes drastically. Online career fairs become the new norm, work-based learning models increase, and internships will have fewer 'guaranteed return offers,' for the next few years. Similarly, universities rely on online recruitment fairs for international applicants and pinch pennies on overseas flights. Companies have just laid off between 10-25% of their workforce (on average) in North America and slightly less other places. They are eager to hire college grads but reduce starting salaries below previous expectations. It doesn't matter. College grads take the jobs happily.
Changes That Might Be Less Obvious
University Finances: The trend of mid-sized liberal arts schools going out of business will accelerate. Top brands and state-funded schools do fine. Colleges with between 1000 - 3000 students that are not household names go under. Schools seek to diversify business models, but for many it will be too late. Record number of universities close or merge in 2021 and 2022. They cannot handle the debt financing loads from the rapid 'arms race' expansion in the 2010s of building seven swimming pools per student and since their endowments have largely disappeared, the Boards of Trustees would rather close or merge than preside over a decade-long hideous decline of a walking dead college. "There's no glory in a slow death," they say. Mergers are hasty and tough. Banks make good fees but the real winner are the top-ranked schools, which further consolidate their market leadership.
University Personnel: Lost jobs are replaced by technology, rarely re-hires. Accenture develops a world-leading Education IT consulting group and 'streamlines workflows' with ease. Most of the people let go will be lower-level or mid-level administration. Clerical work handed over directly to software or part-time employed students (in work-study programs to pay off student loans).
Student Learning: Standardized tests continue to lose their shine, but don't disappear. School administrators have zero idea how to effectively grade the 2020 Advanced Placement (AP) exams, which are now 45-minute take-home open-book open-internet exams. Students in Shanghai might take the test at 12 midnight while students in New York City take them at noon and students in Hawaii take them at 6am. It's a complete mockery of the former test and college admissions officers know it. Students from nice backgrounds crush the exams with pre-written essay outlines provided to them by tutors. The College Board, in saying they are "confident that the vast majority of higher ed institutions will award college credit as they have in the past," are wrong. Universities apologize to the students, who have no choice but to understand.
Student Financing: Fewer students than ever can afford college because. their family's money was wiped out during the Great Coronavirus Crisis of 2020. More students consider Income Share Agreements (ISAs) - submitting a percentage of future earnings to a school rather than pay tuition. Lambda School, despite tough press in 2019, makes a comeback. Colleges begin seriously looking at ISAs and partner with large financial institutions to offer them. A decade later it comes back to bite everyone in the rear when these loans are the securitized, collateralized, and sold - but structural growth for most of these students will stagnate in the 2020s. The BBBs drop to junk. The bonds crater. The financial contagion isn't huge, but it still ripples across universities. International Students: Face more difficulty applying from China as colleges (much like companies) diversify their supply chains away from China and India (combined 50% of international students) towards other SEAsian nations and especially African nations. More Asian students flock to Europe. But it goes both ways - China, who has the dream to be the number one host of international school students in the world to grow their soft power also sees a decline in students willing to study abroad in the near term. They increase scholarship opportunities and heavily subsidize central Asian and African nations to send students. Student mobility does not recover for a few years.
Tech: Becomes a central component of every university's leadership team if it was not already. A tech-entrepreneur-turned-university CTO is on the cover of Forbes Magazine in 2021 or 2022. Safeguarding and data privacy become a much bigger deal and some schools shun Zoom based on its recent privacy issues. Microsoft wins the edtech battle (more on this later). Data privacy companies focusing on educational institutions becomes a massive new business segment for F500 IT service providers.
More Controversial Opinions
Teachers: Don't get paid much more, but they should. After coronavirus homeschooling days, parents realize how much work being a teacher is. There are clamors and calls for teachers to have their salaries increased, but when push comes to shove, state budgets have already decreased due to lower employment and tax collection in 2020 and 2021 and it doesn't happen. Graduate student protests do not abate, but more are found to take their place.
University Enrollment: Bucking the historical counter-cyclical trend, offline university applications drop. While classic economics would tell you that opportunity costs of higher education are lowest during a recession (which they are) and that graduating with an advanced degree coming out of a recession is a good idea (which it is), no recession in history has had as many alternatives to higher ed. Vocational training, ISA programs, and online degrees all soar as fewer Millennials want to take on debt for an unknown outcome. They're sick and tired of owing people money and they want to make their own.
University Presidents: Are called testify before Congress in the US as 'Big Ed' nearly replaces 'Big Tech' as the slow motion train wreck of the year in 2021. Student loans aren't forgiven (though Bernie might want it), but certain lefty senators and reps begin drafting a bill to create price ceilings for university tuition (in relative or absolute terms according to federal guidelines). The University subsidiary of Harvard's hedge fund gathers its Ivy sisters and brothers in protest, but they're all in the best position anyways. Ultimately the bill doesn't hit the floor until 2022-2023 and isn't passed, but it's a scare for many, setting the stage for further calls to nationalize more of US education institutions in the 2030s as the pendulum continues to swing left.
Professors at Universities: In a quiet and deliberately unpublicized shift, universities begin more clearly bifurcating their professorial duties between lecturing and researching. The lecturers actually love teaching and students, while the researchers prefer writing and climbing stairs of the ivory tower. There are some cross-overs and 100 new Jordan Peterson-esque professors break into the spotlight over the next decade for a combination of their rhetorical skills and research backgrounds, maximized enhanced in technicolor through an array of digital delivery platforms. Netflix either starts selling lecture courses or they buy MasterClass (or a competitor) and do the same. The professors are handsomely compensated but most choose to remain at the universities anyways for prestige, safety, and networking.
Assessments become THE bottleneck: Universities begin to create a more personalized admissions and applications process and more schools remove themselves from the Common App. UChicago and Brown, among others, begin requiring 100% personalized applications that are so unique to those schools they pretty much self-select the students who are a good fit. Students are encouraged to learn more about the uniqueness of schools earlier on in the process and the college counseling business goes even younger, extending fees further.
Some Universities Change Their Business: Major universities become big customers of Bain, McKinsey, BCG, and Accenture (who do the gigs not for top-tier rates, but so they can be in the room with Board Members who then hire them at Pepsico and IBM. Board Member and donor interviews are taken completed very thoroughly during these engagements, over glasses of 18-year Macallan). The number one finding for every cookie-cutter engagement is that the business model of colleges over-indexes towards fixed costs when variable costs 'clearly would have lead schools to weather the coronavirus storm better.' Although hindsight is 20/20, Universities are generally on board with these recommendations and generate a greater percentage of their revenues from licensing deals, online education programs, and leveraging facilities for off-cycle programs. Some even sell themselves or create fancy deal structures to join F500 companies and turn campuses into training facilities for young workers and offer joint degrees. JPMorgan, Amazon, and Berkshire Hathaway begin a low-fee two-year Medical Technology and Finance Master's Program on the campus of a previously well-known mid-tier liberal arts school. They plan to skim the top 25% of the class for their own firms and share the remaining 75% with competitors. Year one of the program is over-enrolled by a factor of five.
MBA Programs: Continue to see declining enrollments from domestic applicants but increasing enrollments from international applicants. Curriculum gets co-created with companies directly, who want an even closer touchpoint with top talent (see above). Fees go up slightly. Frequency of trips to Vegas and Cabo stay roughly the same.
VR: Picks up steam. Live sporting events and concerts are still preferable to classroom lectures in VR. The first real 'platform hit' draws millions to buy Oculus's latest release. EDU use-cases still take more time to develop, but are consistently improving. Public speaking and presentation software is first killer-app that defines a new discipline in schools.
Microsoft: Becomes the biggest 'edtech' company around. They package Microsoft Office (platform standard) with LinkedIn (platform standard), which is now bundled with Lynda and re-branded as LinkedIn Learning. Azure cloud hosting plus massively-improved suite of Skype and Teams and Office 365 Suite and Sharepoint creates a unique 'all-in-one' purchase for CIOs and CTOs at universities and high schools. They hate themselves for being 'so corporate,' but they love themselves for making their own jobs much easier. Teachers still insist on using a different platform in every classroom because each teacher loves a different one. This does not ever change. Google's chromebook strategy (mirroring Apple's hardware invasion of schools, just 10 years too late) doesn't truly pan out, although adoption numbers look good at first glance. School districts listen to the squeaky wheels about China, privacy, and ads-first business models - Microsoft doesn't make money off ads while Google and Facebook do. Apple, Slack, and Zoom simply don't have the full ecosystem. Small businesses and individuals continue to use Zoom - the company continues to thrive. But Microsoft is the big winner and owns the entire student-to-professional pipeline. Microsoft and Amazon go head-to-head to become first two trillion-dollar US tech company. Microsoft wins by a nose because Bezos is more interested in going to space with Blue Origin.
Anyways, that's quite a long list of things that might or might not happen.
Let's check in twelve and thirty six months from now and see how far off I was!