Calls for universities to refund room and boarding fees will cripple their ability to maintain operations according to S&P Global rates. The demands come after most universities in the US shut down due to coronavirus.
There is an increasing demand for universities to refund room, board and other fees after universities were placed on lockdown due to coronavirus. This comes amidst efforts by these universities to restructure their classes and move them online so that education and exams can still continue during the crisis.
Calls for room and boarding fees refund
The calls for refunds are growing louder with each passing day and some universities such as the University of California, San Diego, have said they will refund full housing fees for the spring quarter. Other universities such as Ohio State University and Nebraska State College System have indicated they will only refund a part of the fees paid.
In addition to these refunds, universities have also invested heavily in new infrastructure to accommodate migration to online classes. Factoring all these with demand for refunds, the universities are finding it hard to balance their balance sheet without taking a financial hit.
Universities struggling to refund
A major concern that a lot of universities is that they cannot raise enough funds to continue running the universities. This is especially evident in small universities and colleges, which have indicated that a huge chunk of their revenue will be lost during this pandemic lockdown.
The University of Maine System, which has already closed its door and moved to virtual learning, indicated in a letter to Congress that they expected a $20 million loss in revenue due to the lockdown. The letter went ahead to explain that a huge chunk of that loss, $13 million, was due to a refund of rooms and boarding fees.
Loss of revenues
Therefore, the ability to refund boarding fees would greatly depend on the financial capacity of these universities are. For comparison, the room and boarding fees at Harvard university only accounts for 4 percent of their revenue.
Jessica Wood, a senior director and education sector for S&P Global rates, estimated that in 150 public universities, the room and boarding fees accounted for a median of 9 percent. In private universities, the data showed 250 universities had a median of 11 percent.
The calls for refunding these fees, therefore, will mean universities losing a major source of their income. This will affect their ability to offer quality services to their students and would also cripple their ability to admit new students in these schools.
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