C's get degrees

MARKETS

• Economic data: U.S. retail sales fell a record 16.4% in April as lockdown measures pummeled consumer spending. Clothing store sales fell 79% from March and even grocery purchases dropped 13%. Online sales grew 21.6% year-over-year.
• More economic data: Industrial production declined 11.2% in April. That drop is—wait for it—a record.
• Stimulus: The Democratic-controlled House passed a $3 trillion economic relief bill last night, but it's pretty much DOA in the Republican-controlled Senate.

HIGHER ED

How to Throw a Disc on the Quad—Remotely

The coronavirus pandemic has put colleges and universities in a financial predicament no string of all-nighters can solve.

• When governments rolled out lockdown orders across the globe, colleges had to scramble to get their enrolled students educated. And scrambling—shifting classes online, purchasing software, and teaching Professor Langdon how to use Zoom—costs money.
• But at the same time colleges were tacking on new expenses, many issued room and board and tuition refunds. And far less revenue is coming in for next school year.

The University of Michigan said it could lose up to $1 billion by the end of 2020, and many other higher ed institutions have frozen hiring, cut pay, and laid off staff.

So how are they going to survive? Unclear...but some, like Southern New Hampshire University (SNHU), are making bold moves. Last month, the fightin' Penmen said they would revamp on-campus learning and cut tuition from $31,000 to $10,000 beginning in the 2021–2022 academic year.

• SNHU said tuition-reduction plans were already in the works, but got fast-tracked when the pandemic and economic crisis showed up.

So what will college actually...be like?

Incoming freshmen at SNHU will live on campus and participate in clubs and activities, but all courses will be online (with in-person support from faculty).

SNHU isn’t the only innovator. Arizona State University created a series of three “teaching and learning modalities” that provide students options across the spectrum of IRL/online learning, from a traditional on-campus experience to recorded video instruction they can watch on their own time.

Bottom line: While some schools are devising creative workarounds, this is a seismic(ly bad) moment for higher education. George Mason economist Tyler Cowen writes that the crisis threatens “the financial model that has sustained many schools and will force some to downsize, cut programs, or go out of business altogether.”

REOPENING

So What's the Plan, Dr. Stan?

More than six in ten colleges plan to reopen with in-person classes this fall. You can keep tabs on all reopening announcements with this tracker from the Chronicle of Higher Education.

INTERNATIONAL

Universities Risk Losing Their Profit Engines

This fall, universities may lose their most reliable revenue stream outside of dining hall buffalo chicken wraps: international students paying full tuition.

The American Council on Education estimates international enrollment will drop 25% the next academic year as students face uncertainty over visa approvals and the status of fall classes.

• Some universities are offering admission deferrals or waiving deposits and fees to incentivize students to commit.
• College deans are exploring paths for international students to study online their first semester.

They really need international students

State funding cuts have pushed colleges to prioritize students who pay full tuition. And that was before a pandemic brought on stunning financial losses.

The number of international students was already going down. In the 2018–19 school year, U.S. colleges reported a slight decline in international undergrads, ending 12 years of growth.

Big picture: International students contributed an estimated $45 billion to the U.S. economy in 2018, and studies show immigrants' presence in graduate programs increases patent output. Any significant drop-off in international enrollment this fall will have painful consequences.

ADMISSIONS

Incoming High School Seniors Right Now

COVID-19 has toppled the pillars of college applications—entrance exams have been halted, grades made pass/fail, AP tests cut short, résumé-stuffing extracurriculars canceled. For the incoming class of high school seniors, it’s chaos.

Still...college admissions wasn't exactly operating like the ’96 Bulls pre-pandemic. Education experts hope the coronavirus will refresh an application process that, per NYU Prof. Scott Galloway, has turned into “the most thorough and arduous job-interview process in modern history.”

Testing, testing

After canceling spring exams, the SAT and ACT will slowly resume later this year. But a record number of colleges have already scrapped test requirements for the next cycle.

• Good news for people who bubble in "C" and hope for the best: COVID-19 could accelerate the trend of making these exams optional.
• The GRE, GMAT, and LSAT quickly moved online, but many graduate programs also relaxed testing requirements.

Looking ahead...experts think the current application process fails to assess students on their ability to actually succeed. So what could change?

• More emphasis on high school grades/curriculum
• Fewer spots to list extracurriculars, since IRL is canceled
• Fewer essays, because everyone knows they don’t actually get read

Students may also have to rely on virtual campus tours. Silver lining: As universities invest in their digital presence, it’ll benefit students who haven't had the means to trek cross-country to look at 15 variations of the same leafy quad.

COLLEGE TOWNS

College Towns Miss College Too

When you’re in college, it’s easy to feel like you’re living in a beer bubble of paper-writing, pong-playing, and laundry mishaps. But you’re not. The areas that surround colleges and universities draw major economic benefits from them.

How? Universities fuel incomes through sporting events, professors who consult for local industry, research centers that attract high-skilled talent, and businesses on the receiving end of employee and student spending.

Higher ed institutions are all some towns have. In 2016, economist Lyman Stone wrote “it is not too much to say that the University of Pikeville is saving the city” of Pikeville, KY.

The point: no college is horrible for college towns

During the pandemic, revenue for municipal services like transportation have plunged and many local businesses may not survive. The director of the Edunomics Lab at Georgetown University explained to NBC that municipal agencies can’t just flip a switch when population levels swing dramatically.

Bottom line: “I’m not sure folks realize how much of an economic hit these small towns are going to take,” said MA state Rep. Mindy Domb.

+ P.S.: Can you identify the college town in the image? Answer at the bottom of the newsletter. Hint: That big building is your clue...

ADMISSIONS

Maybe College Isn't the Best Idea Right Now

Nothing elicits an “oh,” from parents quite like their children announcing they are thinking of taking a gap year.

But as the coronavirus cut short spring semesters and threw the upcoming fall semester into limbo, students and parents alike have been forced to consider hitting the pause button before heading to college.

• Google searches for “What is a gap year?” exploded by 180% in the last week of April.
• Students must have liked what they found, because 35% of prospective college students are planning on actually taking a gap year, according to one survey.

There are two problems with 2020’s version of the gap year: 1) traveling is severely limited and 2) job opportunities are severely limited. Gap years themselves are much less accessible to lower-income students because...

• Wealthier students can more easily go a year without school or work
• They will still be able to afford college if/when they go back

Big picture: Some college administrators are urging students to skip the gap year. According to Oakland University President Ora Hirsch Pescovitz, it’s “actually the perfect time to earn a degree.” Worth noting—tuition and fees account for 30% of revenue for private colleges.

WHAT ELSE IS BREWING

• JCPenney filed for bankruptcy.
• Facebook is buying Giphy for around $400 million, per Axios, and plans to integrate it with Instagram.
• Vice Media laid off 155 staff globally and its CEO said Big Tech companies posed a “great threat to journalism.”
• The U.S. further tightened restrictions on exports to Chinese telecom equipment manufacturer Huawei.
• Clubhouse, a social media app with just 5,000 beta users, has raised a series A that values it at ~$100 million, per Forbes.
• Relevant: Graduate Together, the celebrity-fueled virtual graduation ceremony, is happening tonight in primetime to celebrate the Class of 2020.

SATURDAY HEADLINES

With protective face masks taking center stage in the medical (and fashion) world, we picked out some of the craziest mask-themed headlines from the week's news. However, concealed behind one of these headlines is a story we made up. See if you can uncover it.

• "Italian designer creates the 'trikini,' a bikini set with matching face mask"
• "These face masks come with a straw hole for sipping cocktails"
• "Gucci halts production of its $6,000 masks as customers complain about breathing through the leather"
• "Men are less likely than women to wear face masks because they see it as 'a sign of weakness,' a survey found"

SATURDAY HEADLINES ANSWER

Also, the town (though it's really a city) is Madison, Wisconsin.