Universities are fighting to survive financial meltdown

The debasement of the Lebanese currency by 90% in less than two years is hitting the ability of universities to pay staff, and students to pay fees. Faculty are leaving, there is hardly any electricity and fuel, and the country’s position as the educational hub of the Middle East is in doubt.

“We are in a survival mode... We cannot contemplate another year of this upheaval,” the Lebanese American University’s (LAU) media and public relations office told University World News by email. “The outlook of our university is hand in hand with the outlook for the country... Without the generosity and support of our friends, we cannot survive (much) longer.”

Since October 2019, Lebanon has been on a slippery downward slope. Following nationwide protests against the government, banks enacted informal capital controls, limiting withdrawals, while the currency has depreciated. The Lebanese lira, which was fixed to the US dollar at LL1,500, has since reached over LL20,000 on the black market.

“The whole population’s accounts are on hold, and honestly, this is a rip off and a crime. The university cannot access our funds here, and we have to depend on our endowment based outside Lebanon,” said Dr Elias Warrak, president of the University of Balamand.

Tuition revenue value decimated

For the country’s 48 universities and higher education establishments, the biggest problem is financial. While student enrolment has not declined despite the multiple crises, university revenues have plummeted. LAU stated that it has “lost about 90% of its tuition-based revenues in terms of value”.

For many students, paying fees, which in the case of the American University of Beirut (AUB) and LAU are over US$12,000 a year for undergraduate courses, has become untenable.

To prevent a drop in student numbers, LAU increased its financial aid budget from US$50 million to US$80 million. “Now, more than 75% of LAU students are benefiting from financial aid assistance,” wrote LAU.

Universities have had to adjust tuition fees, with Balamand in September fixing fees at LL2,950 to the dollar. “That is less than 10% of the real dollar value on the black market. It is a big dilemma to adjust the tuition [fees], as we can’t really increase it, but we have to adjust the financial structure of the university to pay faculty and staff,” said Warrak.

With salaries declining by 90%, faculty at many institutions have gone abroad. “We are really struggling to keep our elite faculty members. Unfortunately, what is making things worse is that foreign universities, whether intentionally or not, are fishing for our elite faculty members,” said Warrak.

AUB, which was founded in 1866 and is accredited in the United States, laid off 850 staff, equivalent to 14% of its 5,800 employees, in 2020.

To try to retain faculty, universities like AUB have started to pay 35% of salaries in US dollars. LAU is paying in dollars and increased salaries in lira. “However, the context and the surrounding factors have been truly formidable and we have nonetheless seen about 15% to 20% of faculty attrition. The Beirut port explosion has also been a major security cataclysm that pushed some of our stars to contemplate other countries,” wrote LAU.

On 4 August 2020, the world’s largest explosion since the atomic bombs were dropped on Hiroshima and Nagasaki, tore through the capital, killing more than 200 people and causing damage estimated at more than US$15 billion. On top of damage to universities and faculty leaving, the blast scared off students, with AUB reporting a decline in enrolment of nearly 600 students.

Fuel crisis piles on problems

A further “cherry on the cake”, said Warrak, in addition to the COVID-19 pandemic and Lebanon’s crises, has been the shortage of fuel and electricity this year due to the shortage of foreign currency to pay for imports. While Lebanon has had electricity problems for decades, diesel fuel generators were used during power cuts, but are now being rationed.

“We had to shut down all the air conditioning at Balamand to decrease consumption by 40% to 50%, which is not easy when it’s over 30 degrees Celsius,” said Warrak. Power was redirected to keep servers and medical facilities running. The university is looking into solar power to keep the lights on.

LAU shut down its Beirut campus in August to stockpile energy for the autumn semester. “This has been an ordeal to find a sustainable level of fuel to operate the two campuses and two medical centres, as the amount of energy consumed is staggering. There’s only so many energy-saving measures we can introduce,” wrote LAU.

In July, the presidents of 11 universities appealed to the government to allow banks to release institutions’ funds and give them preferred status. “We asked them to treat universities like they treat companies that bring fuel to the country, or anything that is considered crucial,” said Warrak. The appeal fell on deaf ears.

With the autumn semester looming, universities want students to return to campus after hiatuses due to lockdowns and other measures to restrict the spread of COVID-19 over the past year and a half. LAU is opening just four days a week to save on fuel, while Balamand intended to have on-site teaching.

“Due to the fuel shortage and inability of students to commute, we’ve gone with online teaching but even that is really challenging as students don’t have fuel for generators or have internet connections to do their courses,” said Warrak.

The financial crisis has also impacted universities’ ability to pay for software and academic libraries. “They have to be paid in US dollars, so that is another challenge we are facing, to keep our academic standards,” said Warrak.

With the Lebanese government failing to tackle the crises, universities are “preparing for the worst”, he added.

“Shutting down universities is a possibility. We are definitely not in that position now, and hopefully not in the coming years, but we may be forced to shut down some of our programmes to maintain the main faculty. It is a major crisis not just universities but for the whole country,” said Warrak.