Universities need government support to survive COVID-19

There is abundant literature on how higher education institutions have adapted to the challenges posed by the need to decrease the spread of COVID-19, as well as the challenges that students, teachers and administrative staff have had to face.

The abrupt transition from face-to-face education to emergency remote education has provoked concern about the quality of education. Students and parents were tolerant during the first months of the crisis, but now are starting to be more demanding.

Faced with the gradual resumption of normal activities and the reopening of economies, educational institutions at all levels are exploring how to resume classroom activities in a context where there is still no vaccine or treatment to protect against the disease.

Most universities anticipate new restrictions on campus and a reduction in the occupancy of buildings and classrooms, among other measures. The improvement in the quality of remote education and the adaptation of physical spaces will come at a significant cost for most institutions.

Student requests

In Latin America, students from Colombia, Chile, Ecuador and Peru, among others, have demanded the reduction of tuition and fees, arguing economic difficulties, limited use of university facilities and, in some cases, a decline in programme quality. In Colombia, the hashtag #MatrículaCero (#TuitionZero) went viral during the first week of May.

Many students have warned that they will not be able to afford tuition fees for the next semester because they or their parents have lost their jobs. In Colombia, universities foresee a significant decrease in enrolment that some estimate could reach 50%.

A study by ASCUN, the Association of Colombian Universities, reported that between 12% and 22% of students would not return to classes in the second semester of 2020.

Complicated national responses

Higher education institutions are offering discounted tuition. Private universities in Colombia have announced reductions of between 25% and 30%; others that only offered a 10% reduction have been met by a wave of discontented students.

The university council at the public University of Magdalena considered, and then rejected, granting completely free tuition for the second half of 2020. It ended up granting only a 50% discount to all its face-to-face and distance undergraduate students and a 25% reduction to graduate students.

By contrast, the State University System (consisting of all the public universities in Colombia) asserted that using university budgets to provide discounts to the students would be “dangerous”.

In Chile, universities are evaluating how to make student payments more flexible. The University of Chile has delayed the obligation on students to provide a promissory note for the value of the annual fee, and the Catholic University of Chile has relaxed payment obligations for students affected by the crisis.

In Peru, the Superintendency of Higher Education (SUNEDU) and the National Institute for the Defence of Competition and Protection of Intellectual Property (INDECOPI) have urged private universities to reschedule tuition payments. Some had already done so. The Pontifical Catholic University of Peru has suspended the scheduled tuition fee increase for this year and the University of Lima has dropped late payment fees.

In sum, higher education institutions face a situation of increasing costs and decreasing income. In order to accommodate this challenge, institutions have had to explore how to reduce their expenses or use their own resources (most of them do not have endowments) to address these issues.

The two main sources of university expenses are the physical estate and personnel. Although usage of a physical estate has been reduced, there hasn’t been a significant decrease in maintenance costs. It is not clear that a reduction in personnel will compensate for revenue losses or cover the additional expenses that institutions will have to incur.

To complicate the situation further, in many countries, lay-offs and contract suspensions have been prohibited, at least temporarily. And in a scenario of limited face-to-face education, as anticipated for this semester, at least some members of faculty who were not needed in the previous semester will be needed again.

Requests for government support

Higher education institutions in several countries are demanding support from their governments. In Colombia, a group of private universities has requested access to loans similar to those awarded to companies, an expansion of quotas for student loans through ICETEX (a government-owned bank that provides student loans) and relief payment plans on Findeter debts (a credit institution defined as a development bank).

A similar request was raised by the Colombian Association of Student Representatives in Higher Education (ACREES).

In Peru, the Federation of Private Institutions of Higher Education (FIPES) asked for government intervention to provide financial support to students, stressing that universities had already made efforts to help students, but that those efforts had been insufficient to address their needs.

Meantime, the government of Ecuador has cut the budget for the 32 public universities and polytechnic schools by US$98 million. According to the government, the cut was necessary because 80% of the university allocation depends on VAT and income tax and slowing economic activity has diminished those revenues.

The Ministry of Education in Chile rejected a package of measures proposed by the Council of Rectors of Chilean Universities (CRUCH) to address the current crisis. Subsequently, the Chamber of Deputies passed a bill authored by a group of opposition MPs that would suspend the collection of tuition and fees in public and private higher education institutions, thus depriving institutions of critical income. Not surprisingly, this bill encountered strong opposition from universities, as well as the executive branch, who claimed the bill was unconstitutional. The bill, which is still under consideration, will be reviewed by the Finance and Education Commissions.

In contrast, during the first week of June, the government of Colombia announced a series of actions to support higher education, including tuition aid for vulnerable undergraduates, access to credit for public and private higher education institutions; and new credit lines for higher education institutions through Findeter.

Governments should provide support

Due to their inability to absorb the economic effects of the pandemic, many sectors have turned to their government. But financial resources from governments have also been affected. The closure of non-essential sectors has had repercussions on foreign trade, taxation and other sources of financial resources.

Given the likelihood of a global recession, governments must identify measures to avert or reduce its effects. Several sectors will require immediate assistance. The allocation of state resources should be directed to sectors which will have the greatest impact when it comes to economic stabilisation.

In addition to the traditional role of higher education in the production and socialisation of knowledge, there are other practical considerations that justify the attention of government and additional resources. One is to preserve and improve employment levels. Higher education institutions generate direct and indirect employment and launch countless economic activities beyond their campus.

The reduction of unemployment by enrolling a significant percentage of people of working age and keeping them out of the labour market has been largely undervalued.

Strengthening credit mechanisms aimed at keeping students enrolled and ensuring that higher education institutions stay afloat during the crisis should not be seen as being about public welfare, but as an investment in economic stability and sustainability in the medium and long term.

Higher education institutions have incurred expenses in the course of transitioning to remote education and will soon incur additional expenses to adapt to the safe, limited face-to-face teaching anticipated for the immediate future.

Meanwhile, students affected by the crisis in terms of fees and the quality of services received are demanding discounts on tuition.

The government is the last resort for many institutions. It is clear that, in the midst of this crisis, everyone will have to make sacrifices, but, for the well-being of societies, it is essential that government support includes higher education institutions.

Iván Francisco Pacheco is an independent consultant and research fellow of the Center for International Higher Education of Boston College, United States. He is also editor of Revista ESAL. E-mail: ivanfpacheco@gmail.com.