Colleges Face Double Jeopardy: '...For a large number of colleges, the timing for the coronavirus could not be worse, because many schools--before we even knew what COVID-19 was--already were teetering on the brink as they tried to recover from an earlier financial crisis'.

• Author: Haddad, John

IN THE TYPICAL YEAR at an American college, the financial picture achieves clarity right around this time. Offers of admission have been accepted by an incoming class, dormitory rooms and meal plans have been purchased, and returning students have registered for fall classes--but this is no typical year.

With the outbreak of the coronavirus, college financial officers find themselves in an unnerving state of uncertainty. They cannot be sure how many students will return to campus in the fall and, of those who do come back, they do not know how many will shift from full-time to part-time status given their reduced financial circumstances at home. International students present yet another wild card. Since they tend to pay the highest tuition and purchase the most services, any significant drop to a college's international enrollment is disastrous to its bottom line.

A black swan event like this always will present major challenges within higher education. However, for a large number of colleges, the timing for the coronavirus could not be worse, because many schools--before we even knew what COVID-19 was--already were teetering on the brink as they tried to recover from an earlier financial crisis.

Already in a weakened state, colleges now must contend with the social and economic disruption of the virus. We do not yet know how deep its damage will be, but it promises to be severe. Coping with two crises at once, colleges find themselves in a state of double jeopardy. How did we get here?

The root of the problem lies 20 years in our past. The span from 1999-2009 mostly was a good time to be in higher education. Few people then were predicting financial doom and gloom. Demographically, a spike in high school graduates meant that universities were flooded with applications, and the Federal student loan system, expanded in the 1990s, was in place and ready to help students who lacked savings. Yet, all was not rosy. There were, beneath the surface, ominous signs portending future trouble.

State governments had started to cut back on allocations, and many of the students streaming into colleges fit a different profile from those of previous generations: they arrived less prepared academically and borrowed more to cover costs, but good times have a way of masking deeper problems. In this case, the money kept rolling in as students, with access to aid and loans, always came up with the tuition. Noticing that students encountered no trouble paying...