Published by Inside Higher Ed
Students across the country are making hurried plans to move out of their dorm rooms as the number of campus closures over coronavirus concerns skyrocketed past 200 Thursday.
Away from their dorms and dining halls, many students and parents are wondering if and when they’ll be refunded room and board fees.
But for colleges relying on such fees -- called auxiliary fees -- to support their operating revenue, refunds could be devastating.
“Every residential college and university in America relies on that auxiliary revenue stream. It is baked into the budget,” W. Joseph King, president of Lyon College and co-author of How to Run a College, said in an email. “Significant refunds will cause real problems at many institutions. It will just be worse for those with tighter or deficit budgets.”
Auxiliary services are becoming an increasingly important part of colleges’ operating revenue, especially for private, four-year institutions.
“Most colleges run their own housing. It is usually their biggest source of auxiliary revenue,” King wrote. “Assuming the residence hall is paid for, the net auxiliary revenue can be substantial. Even if it is financed, there is usually a positive revenue stream.”
Smith College, a women’s liberal arts college in Northampton, Mass., with approximately 2,400 students, is requiring all students to move out of on-campus housing by March 20. Smith said it will offer prorated room and board refunds. In fiscal year 2018, Smith collected $40.4 million in residence and dining fees -- about 16.5 percent of its total operating revenue. (This paragraph has been updated to include the correct date by which Smith students must move out of on-campus housing.)
Amherst College also announced Tuesday it would refund room and board fees for students who left campus. Room and board revenue made up nearly 9 percent of Amherst’s operating revenue in fiscal 2018.
“Refunds are a sticky business since they are definitely not in the budget. Any significant refunding will create a budget hole,” King said. “It just depends on how it is prorated. Most institutions have policies about refunds (or no refunds) if a student withdraws. Few (if any) have closure policies.”
Private universities are also collecting less net revenue per student from tuition and fees than they used to, according to Craig Goebel, principal at Art & Science Group, a higher education consulting and research firm.
“There’s much steeper discounting going on at private colleges and universities,” he said, noting that the average discount rate for private institutions is 50 percent. If the college is already under financial stress, “this could be disastrous,” Goebel said.
…