Canadian universities and colleges have yet to release any figures about expected losses from coronavirus, but in other countries, estimates are popping up.  So, how bad might it get?

Let’s start with the assumption that institutions in jurisdictions where institutions are supported mainly or entirely by government funds are the ones that are going to suffer the least.  I have yet to hear of any government anywhere making cuts in public funding to higher education during the emergency (ok, Alberta, but those cuts were announced prior to the emergency, if barely), so they look pretty good, for the moment.  A couple of years from now, as governments start to pull back on public finances to pay for the massive costs of the crisis, it may be a different story.  We’ll see.

Now, the outlier/caveat here is the United States.  Public institutions – which educated about three-quarters of all students in the US – are funded by state governments, and state government finances are cratering.  More importantly, unlike pretty much every other government on earth, US states are not permitted to run deficits: which means this cratering is likely to turn quickly into massive budget cuts. How high is hard to tell at the moment because the full federal response to the crisis is not yet complete.  There was the $2 trillion bailout passed by Congress last month that contained about $14 billion for higher education (of which $6 billion is student aid and the remainder is aid to institutions) and another $150 billion for states (who might use some of that money for education). However, it is possible that states get more money from the federal government when Congress returns from recess later this month.    But put it this way, combined with declines in out-of-state and international student numbers, things do not look good for the sector.  Moody’s has put the entire sector on a negative outlook.  Roughly 300 institutions have already instituted hiring freezes. 

The canaries in the coal mine for this whole thing were, of course, New Zealand and Australia.  Neither is yet suffering from government cutbacks, but both rely on significant income from international students (Australia more so than New Zealand) especially from China, and the timing of the virus and the start of the school year meant that – unlike North American institutions – they started losing students right away.  New Zealand universities declared in February that they could lose NZ $300 million from lost student income from coronavirus; my understanding is that this estimate has risen considerably in the last six weeks, perhaps in part because international students are demanding partial tuition refunds given the reduced quality of education.

Across the Tasman Sea, Universities Australia is forecasting a drop in revenues of A$3-4.5 billion thanks to the inability to bring international students into the country.  Based on individual university claims (UNW: $600m, Monash: $500m, Sydney: $470m) it seems the real number might be higher than that. The Australian government has guaranteed that its funding to institutions for domestic students will be identical to last year’s even if enrolments don’t appear; at the same time, it is also offering a nine-figure package for institutions to offer new micro-credentials during the crisis in areas where it considers the country to have a skill deficit.  But it appears to have specifically excluded universities from the Australian equivalent of our Emergency Wage Benefit, which means universities may be forced to eat that entire revenue loss.  Some predict job losses sector-wide in the 21,000-range (and that’s not even including anything on the vocational research side).

Maybe the country closest to Canada’s situation is the UK.  Its four nations mirror our ten provinces in the sense that different parts of the country fund higher education differently, and so have different levels of vulnerability to changes in international student flows.  Also, like Canada, it has a fall intake and so has not yet had a big hit to its international student income: the damage comes in September if international students decide not to enrol.  And yet, the UK sector is screaming for billions in assistance, based on projections of 80-100% losses in international student enrolment which…seems like an overreaction.  Also, the fact that the main bailout ask is to double the UK equivalent of tri-council grants is…what? Really?  Genuinely bizarre.  And more than a teensy bit opportunistic.

So how does this compare to Canada?  Hard to say.  No one in Canada has produced any numbers on lost revenue, increased costs, etc.  Broadly speaking, though, I think there are two things we can say about the financial cost of all this.  First, the countries that are most vulnerable in the short term are those that are most dependent on international student tuition fees.  But this does not mean they are the most vulnerable overall: as the crisis recedes, international students will come back, but government support may be pulled back.  In other words, everyone may be equally hurt: it’s just a question of timing.

Second, the extent of the hurt depends critically on how long the crisis lasts and – in the Northern hemisphere at least – what happens in September.  If, by what increasingly feels like will need to take a miracle, everything is copacetic in September then the cost of this crisis will be relatively small.  But every month it drags on, the costs get higher.  Time – and the ability to adopt whatever measures are necessary to maintain enrolment (mainly but not exclusively international students) – are the key variables here.