The (Deferred) Class of 2020 - OZY | A Modern Media Company

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Increasing deferrals could upend the financial model of universities — and limit college options for the class of 2021.

By Sandya Kola

  • Colleges and experts expect a steep increase in deferrals this year.
  • That will hurt schools’ finances — and could partly choke the access pipeline for high schoolers who graduate next year.

When Chloe Aquino was accepted into the graduate program at the Berklee College of Music campus in Valencia, Spain, she imagined she would spend the final weeks of this summer preparing for the thrill of studying internationally and breathing in the fresh air of the Mediterranean Sea. Instead, she’s struggling to obtain a student visa while facing travel restrictions, preparing to potentially attend classes from the four walls of her bedroom, and grappling with that defining decision: whether to attend college now, or later.

Aquino isn’t alone. As the coronavirus pandemic continues to rage and many colleges stay largely online, a growing number of students are choosing to defer higher education instead of accepting a remote college experience unlike anything they’ve grown up dreaming of. And that’s sparking a chain reaction affecting the finances of colleges and the chances of college aspirants next year.

Polling in May by the student analytics firm College Reaction shows that 4 percent of all college-going students plan to withdraw from school temporarily. Typically, colleges see a deferral rate at around 1 or 2 percent from accepted students — but this year, experts expect that number to be significantly higher, says Craig Goebel, a principal at the higher education consulting firm Art & Science Group.

Before this, I never really considered it … and I think it has been very helpful.

Preston Carlson, Stanford student who took a leave of absence in the spring

Typically, university administrators use college deposits — minimum fees students send in to secure their place at a university after receiving an acceptance letter — to forecast the size of their incoming class. Those enrollment numbers in turn are a key determinant of the annual revenue colleges earn and shape how they allocate resources. However, those are no longer reliable indicators: A study by Art & Science Group shows 12 percent of students who’ve paid up have since decided they no longer plan to pursue full-time, four-year college this fall. In effect, school finance departments this year are flying blind.

“Your deposit rate is really the only thing you have to go on,” says Jamie Ealy, a senior associate at Art & Science Group, who used to work in admissions offices at West Virginia University and Berea College in Kentucky.

In the long term, education experts say that reduced enrollments will likely increase the wealth gap between institutions with deep pockets that can weather this storm, and those that do not have the same financial flexibility. And the impact of deferrals could be felt next year too. If the number of deferred applicants who queue up to join college in 2021 is significantly larger than usual, that cuts into the number of seats available for fresh high school graduates next year.

Already, some students who took a leave of absence when classes moved online in the spring because of the pandemic say they’re happy they made that decision. “Before this, I never really considered it … and I think it has been very helpful,” says Preston Carlson, a student at Stanford University who’ll be returning in the fall.

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As COVID-19 forces colleges to switch to online instruction, many students are choosing instead to skip a year.

Colleges and universities are dealing with this crisis in different ways. Some are telling students that they cannot defer and will have to reapply if they don’t enroll soon. Others, including the University of North Carolina system, are developing worst-case scenario plans, where drops in enrollment could lead to employee furloughs, faculty cuts and suspended athletic programs. Tuition resets — a one-time reduction in tuition usually accompanied by cuts in financial aid — are also on the table for some schools.

The key for universities, Goebel says, is to think not just of the “here and now” but of what the future could bring. Educational institutions may need to rethink their pricing strategy amid a recession, particularly as families grapple with long-term income insecurity. While dealing with cuts, schools will need to pinpoint — and then double down on — what truly differentiates them from the competition while cutting the fluff. “In the future, you can see a lot of students going straight for the bare essentials. Almost like cord cutters for TV — you just take exactly what you need,” says Cyrus Beschloss, founder and CEO of College Reaction.

Most experts believe students will eventually want to return to the in-person classes, sporting events and social calendar that we associate with university life. “Our research shows that one thing students want is the typical on-campus college experience,” Ealy says. So it’s understandable that colleges are loathe to give up their physical model and fully shift online — also because it’s those in-person memories that often drive alumni to donate to campuses long after their college days.

None of that helps students currently trapped with the anxiety of deciding whether to defer or not. For some, such as Aquino, higher education might be losing its appeal altogether. “Personally, how I see it now, I would think that just taking up a job would be more effective in the long run,” she says. That dreamy Mediterranean breeze will have to remain a dream deferred.

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