Personal Finance

Layoffs and lawsuits: Colleges resort to last-ditch efforts to stay afloat

Key Points
  • As colleges face extreme budget shortfalls, some schools are laying off staff, slashing salaries and reducing retirement benefits. 
  • But teachers are fighting back.
Colleges face lawsuits seeking tuition refunds, discounts
Colleges face lawsuits seeking tuition refunds, discounts

With declining enrollments, reduced giving and state funding cuts, colleges are resorting to last-ditch efforts to stay afloat.

Now teachers are the latest victims of extreme cost cutting.

The University of Akron, Boston University and the University of Arizona are just a few of the schools to lay off or furlough staff in response to the economic fallout from the coronavirus pandemic.

In addition, schools such as Duke, Georgetown, Northwestern, Trinity College and Boston University announced salary reductions or temporary cuts to retirement contributions to offset revenue losses from Covid-19.

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Usually, tenured professors have some employment protections, but that's not always the case. 

At Ohio University, even tenure-track faculty were worried they would receive non-renewal notices in the spring, although job cuts were limited to non-tenured faculty. 

The majority of all faculty members are now in non-tenured or non-tenure-track positions, a trend that has been growing over time, according to the American Council on Education, which means there is less job security today than ever before.

Still, not all faculty will accept these changes without a fight.

CUNY City College of Technology in New York.
Source: CUNY City Tech

After the City University of New York laid off nearly 3,000 adjunct professors and part-time staff, the union representing CUNY workers filed a federal lawsuit in the Southern District of New York. 

The union argued that the school violated the terms of the CARES Act by slashing staff.

"CUNY has been allocated CARES Act money but has not kept people employed to the greatest extent practicable," Barbara Bowen, president of the union, said in a statement. 

Despite the extreme toll, some college administrators say that higher education is in desperate need of an overhaul.

We have a collective responsibility to examine the high-tuition, high-aid model.
Leslie Davidson
vice president for enrollment management at Beloit College

Well before the Covid-19 crisis, years of cuts in state funding caused college tuition to skyrocket, leaving many families either with insurmountable student loan debt or unable to afford a higher education altogether.

Among the almost 70% of students who borrow for school, the typical senior now graduates with nearly $30,000 in loans, which has propelled outstanding student debt to a stunning $1.6 trillion.

"We have a collective responsibility to examine the high-tuition, high-aid model," said Leslie Davidson, vice president for enrollment management at Beloit College in Wisconsin.

"That model is becoming unsustainable and that's where the focus of attention needs to be."

Beloit College
Source: Beloit College

At Beloit, over 90% of students receive some sort financial aid, including scholarships, grants and loans.

Because so many families are under financial distress, the college recently launched a tuition-match program for students from six surrounding states, so undergrads can attend the private liberal arts college for the same price as their in-state public school.

"What we wanted to do was think about a response that would also have a lifespan beyond this particular moment," Davidson said.

"There's only so much institutions can do without state intervention," said Eddy Conroy, an associate director at the Hope Center for College, Community and Justice. 

Stanford University's Dave Dodson: We won't recover as quickly people think
Stanford University's Dave Dodson: We won't recover as quickly people think

"There's simply not money in the pot," he said. "That money has to come from the state or federal level."

As the financial situation worsens, university leaders are lobbying legislators for help.

Yet, it remains unclear whether more money will be set aside for higher education in the next coronavirus stimulus bill. (Here's what we do know about the next relief package.)

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