74% of colleges are facing financial challenges, according to a new survey of higher ed professionals

Mills College campus in Oakland, Ca., as seen on Monday July 10, 2017.
San Francisco Chronicle/Hearst Newspapers via Getty Images | Hearst Newspapers | Getty Images

The coronavirus pandemic has created a range of challenges for colleges across the country. Schools have been forced to close and re-open their physical campuses, invest in remote instruction and build significant testing and vaccination operations. And adjusting to these challenges can be expensive.

Now, in a recently released survey of over 700 higher education professionals by the Association of American Colleges and Universities, 74% of respondents said the most significant challenge facing their school is financial constraints. 

Smaller schools were more likely to report these concerns. A significant 79% of schools with fewer than 5,000 students said financial constraints are a significant challenge, compared to 52% of those from schools with more than 30,000 students. 

Source: Association of American Colleges and Universities

Plus, 60% of respondents indicated they are very concerned about the overall financial stability of their institution and 79% said they worry about meeting the increased financial aid needs of students because of the pandemic, across all sizes of schools.

According to Citizens' Annual Student Lending survey, 56% of college students and their parents expect their costs (including tuition, room and board, meal plans, travel and activities) to increase this year by $8,700, on average.

For years now, education analysts such as late Harvard Business School professor Clayton Christensen, have predicted that as much as half of U.S. colleges and universities would close in part due to dropping enrollment numbers because of an aging population (known as the enrollment crunch), as well as technological disruption. 

When the coronavirus pandemic began closing college campuses during the 2020 academic year, many predicted financial challenges facing schools would cause some colleges to close. 

"The trend of colleges closing absolutely has been accelerated. Without significant state or federal intervention, we're going to see a lot of colleges close," Aaron Rasmussen, co-founder of MasterClass told CNBC Make It in June 2020. "We were expecting that over the next five years there would be many colleges closing, partly just due to the enrollment crunch, but we're projecting that that's going to be happening much, much more quickly and it will probably exceed the enrollment crunched by quite a bit."

"A number of institutions just won't survive this," added Ken Simek, a partner at management consulting firm Mercer and leads the organization's higher education consulting operations. "They'll either merge with other institutions or close their doors altogether."

Since then, schools such as Mills College, in Oakland, California and Concordia College, in Bronxville, New York have announced that they will close. Mills, a historically women's college announced it would continue as an institute promoting women's leadership, rather than grant degrees.

Even schools with large endowments such as Stanford University, say they were financially forced to let go of workers because of the pandemic.

To be sure, finances are not the only concern facing higher education professionals. 

The majority of those surveyed (70%) said they believe increasing diversity at their school should be a top priority and 56% said their campus had experienced an incident of hate (such as hate speech) in the last year. 

Improving student retention and completion was also a top priority among the majority of those surveyed. According to the National Center for Education Statistics, just 41% of first-time full-time college students earn a bachelor's degree in four years, and only 59% earn a bachelor's in six years, leaving millions of Americans with student loans and no degree to show for their debt.

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