Financial uncertainty looms for universities in Charlotte with quiet dorms and falling revenue

The coronavirus outbreak has severely altered college life and the preparation for it. But it has also weighed on the financial health of local colleges and universities.

Across the Charlotte region, higher education institutions are already experiencing declines in revenue as a result of the outbreak.

Some like Davidson College and UNC Charlotte have announced they’ll issue housing refunds to students who left campus. Others like Johnson & Wales University are anticipating some effect on enrollment. Senior leadership roles at Queens University of Charlotte have taken salary cuts.

Schools are trimming costs, but financial uncertainty looms. They don’t know how long dorms and classroom buildings will remain empty. They’re unsure how the outbreak will affect enrollment numbers, particularly among international students.

The higher education industry plays a major role in shaping Charlotte. It is a major employer — UNC Charlotte alone employs more than 3,000 on its faculty and staff. It also creates transit opportunities — UNC Charlotte worked with the city to bring the light rail extension to its campus. Graduates of Johnson & Wales, a world-renowned culinary school, have gone on to open and operate some of Charlotte’s most popular restaurants.

At private universities across the state, the outbreak has had a dramatic effect on endowments, says Hope Williams, president of the North Carolina Independent Colleges and Universities. NCICU represents three dozen private, nonprofit liberal arts schools across the state, such as Duke, Wake Forest, and Queens.

“Even with a balanced portfolio, investment returns are reduced significantly and that means less funding is available for student scholarships and for campus needs funded by endowments,” Williams says.

To assist students financially, Queens University of Charlotte announced the Queens Commitment initiative. Launched earlier this month in response to the virus, the effort provides any graduating CMS student an annual $10,000 scholarship to attend Queens.

So far, coronavirus hasn’t prompted a drop in either domestic or international enrollment, though, says Jennifer Johnson, the university’s vice president for admissions and marketing. In fact, the school is up in the number of students who have committed, compared with this time last year.

But Queens is preparing for economic headwinds. It’s too soon to tell what the full financial effect will be on the university, Johnson adds.

The school’s senior leadership team has voluntarily taken a pay cut, Johnson says. The savings from that should support the day-to-day operations of Queens.

“We have asked staff to curtail non-essential spending, carefully consider hiring decisions, and to think creatively about cost-saving ways to accomplish daily tasks,” Johnson says.

Elsewhere in North Carolina, the cost-cutting is more extreme. In Greensboro, Guilford College furloughed more than 130 full- and part-time employees through at least June 1.

The strain on higher education is widespread. Last month, Moody’s Investor Service downgraded the credit outlook for the higher education sector from stable to negative. Moody’s provides credit ratings, analysis, and financial research.

Immediate revenue declines will come from “auxiliary” operations such as parking and dining, since students have left campus, Moody’s notes. Longterm, uncertainty around enrollment is the biggest concern for college budgets.

Last month, the federal government set aside about $14 billion for colleges and universities in its coronavirus relief package. The hope is that it’ll help offset some of the financial strain from COVID-19.

At Davidson, the college refunded unused room and board dollars to families who paid. Students who relied on scholarships to pay their room and board received a food and housing credit of between $500 and $1,500, says Davidson spokesman Jay Pfeifer.

On April 21, Davidson announced that all students can defer their fall 2020 tuition payment for a full year. The college says it’ll decide later whether to extend this option for the spring 2021 semester.

College Board says it won’t administer in-person SATs or ACTs until June 6. As a result, Davidson says it’ll make SATs and ACTs optional for three years.

Davidson is among many schools in the area adjusting how it is handling admissions as a result of the coronavirus. Johnson & Wales University extended the deadline for new student deposits to June 1.

That’s when the school will have a better sense of the effect COVID-19 has had on admissions, says media relations director Melinda Law. For now, the effect is uncertain.

At UNC Charlotte, the outbreak doesn’t yet look like it has weighed on the size of the fall class. Commitments are up for new freshman and transfer students for the fall, says director of admissions Claire Kirby. Housing deposits are also up and nearing capacity.

Still, the outbreak has made the preparation process for the fall challenging. This is normally the time when transfer students, who make up half of UNCC’s undergraduate student body, meet with admissions counselors, current students, and faculty on campus.

“Spring is the worst time for any of this to happen,” Kirby says.

Like other schools, Johnson & Wales University moved its classes online last month. The school plans to resume labs for culinary and baking students this summer, with the lecture portion to be delivered online. Because of the pandemic, JWU also pushed back its commencement to August.

The school postponed some programs open to the community such as Sports Biz Camps and Project Scientist.

“We anticipate COVID-19 will have some impact on enrollment and our financial position, though it is too early to project what that will look like,” Law says.

To understand the effects of coronavirus on the college search process, the education research and consulting firm Maguire Associates recently surveyed thousands of prospective college students and their parents.

International students were nearly three times more likely to say they were considering postponing their enrollment, the survey found. (Thirty percent of international students say they considered pushing their enrollment to spring 2021 or fall 2021, compared with 11 percent of domestic students.)

Revenue from foreign students — from room and board to books — is a big source of funding that could stand to be disrupted. Foreign students pay around $39 billion a year to attend college in the United States, according to Bloomberg. 

“For those (international students) planning to enroll in the fall, this is holding up their visa process. Embassies are closed around the world,” says Kirby of UNC Charlotte.

“The likelihood that it’ll impact international students’ even being able to get here in the fall is significant.”

It’s too soon to tell yet how the coronavirus outbreak will sway foreign student enrollment overall in North Carolina. But it’s expected to decline at least partially at private schools, says Williams, the NCICU president.

At Johnson C. Smith University in Charlotte, the clearest harm stemming from the coronavirus is to its summer program, which will be all online. Enrollment for the summer term could be below budget by 20 percent, says spokeswoman Sherri Belfield.

In the interim, virtual tours and online classes are taking the place of the in-person experience at JCSU. But the school’s community hope that’s not a prolonged solution.

“Prospective students and their families are wondering when the University will be able to return to normal operations,” Belfield says. “Of course, most students prefer to experience campus life.”

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