The short answer is that there is no definitive answer yet. Universities and law schools aren't ready to make a decision because the pandemic is so fluid and there is so much uncertainty, nor do they have to yet. But the question is being discussed on a daily basis, and we have spent a good deal of time speaking with college presidents, provosts, and deans and trying our best to get the most recent and trust-worthy epidemiological modeling and medical community input.
This podcast condenses those two perspectives – that of higher education and that of the medical community – into a prediction for the fall. Our prediction, based on speculation, and which we are going to devote continuous attention to over the next several months, is that it is likely many colleges and universities will not have on-campus classes this fall. This is particularly true for those schools that are able to take a semester or even year-long financial hit. We allude to Bill Gates' work that states this may be the once-in-100-years pathogen we have not been prepared for, and the infection rate of the virus plays into this prediction. Certainly there is a broad continuum where you could see some colleges entirely online, some with a hybrid online/on-campus model, and potentially some that are fully open.
What about law schools, the area our firm has the most expertise in? The dynamics are a little bit different here because law schools generally don't have, or don't have to have, student housing. Their student bodies are considerably smaller (there are roughly 112,000 total law school students in the country vs. 22 million college students), and thus with testing improvements and availability you could see law schools having a model where all faculty and students are tested, and those who test negative can be in the classroom, which would also be webcasted or recorded for those who can't be in the classroom for a variety of reasons.
In fact, we think some law schools will open and some will remain closed. They may start up, even independent of central university openings, or they may ride out a semester of online only courses. Some may do the model described above – and some may open fully with a hand on the button to shutter immediately if the spike comes back from the virus.
Pictured below the podcast is the model from Dr. David Sinclair PhD we have been looking at, along with much of his other work, in formulating some of these speculations As the summer progresses this will become less speculative, and we will provide updates at any juncture we learn new information.
Listen to the full podcast here:
Or read the full transcript of the podcast here:
Hi, this is Mike Spivey of the Spivey Consulting Group. It's April 3rd. I'm going to be talking about a question that, in higher education, is on everyone's mind: whether classes will be on-campus in the fall or online. Not just law school classes, but the whole shebang — colleges, universities, all [postsecondary] schools. It's at least a $650 billion question, in terms of how much higher education revenue is generated a year. It's a question of health and lives as well. And, it's a question that there hasn't been declarative answer to for good reasons yet. So, no one has attempted to make a final decision, or close to a final decision. And many of these schools that we've talked to — we've talked to college presidents, provosts, deans — they have daily or at least tri-weekly/bi-weekly COVID committee meetings and meetings with their boards, and much of this is geared toward planning for having classes, and then planning for not having classes. And what we're going to do in this podcast is say what direction we think this is going to tip in.
So, this is the highest level of decision making at universities, and colleges are extremely cautious for their students' well-being. They also have brand liability issues; just yesterday when I opened up my computer online, my alma mater, Vanderbilt, was in the news for when they closed campus many students didn't leave, and a number of them who went to a party contracted the virus. Same thing with the University of Texas–Austin; a group of I think 40 students contracted COVID-19 who had been together on a chartered plane.
So colleges are aware of that side of the issue, but they also obviously are aware of their revenue streams. And I'll talk about that soon, but first I want to talk about the other side of it, which is the side that my firm, for obvious reasons, we have zero medical background. All 33 of us, I don't think anyone was even pre-med. So we are relying heavily on trusted resources. The person I'm using the most is an aggregator. He's a doctor, a research doctor; he's a [PhD] out of Harvard, his name is Dr. David Sinclair, he's a researcher, not a practicing physician. What he does and has been doing is aggregating the most trusted research, which changes on a daily basis, and just to summarize quickly because I don't want to get too heavy into the medical stuff — the heavier I get the less I'm talking sideways; I'd much rather talk heavier on the parts I know, which is the higher education decision making — but let me at least talk about what his aggregation of trusted viral epidemiologists is, which is as follows:
We are going to be in the thick of the contagion for the next 12-18 months. You will see increases and then declines and then periods of leveling out, but likely — and I think he thinks in the fall, or again the doctors he is aggregating [think it will be in the fall] — another incline and another decline, and this is just going to go up and down, not just on a time sequence, but state by state, county by county, country by country, until there is a therapeutic, or ideally the vaccine which most experts believe is 12-18 months away. So until you get a therapeutic that is not only efficacious to large numbers but also has some sort of, ideally, preventive quality, or a vaccine, this is going to bounce up and down. Flattening the curve is great in the sense of not overloading the medical system, hospitals, and frontline workers, but flattening the curve sadly does not decrease the [total] number of cases and the fatality rate; that's only going to happen with a vaccine. So keep that in mind. I'm just going to, rather than talk about this, I will read from Sinclair's aggregation:
"Of note," he says, "when epidemiologists extend their models beyond summer, the predictions are bleak. No matter what we do, the total number of COVID-19 cases and deaths don't change appreciably over the next 18 months, because the virus will come back. In fact, delaying the spread could make it worse if the peak is pushed off until next winter when the virus could spread more easily." And then he has figures for that (see graph above). "Modeling the UK outbreak shows that social distancing measures might be needed for large parts for the next 2 years, including school and university closures." Let's hope not.
There's another issue he addresses that I'm just going to briefly mention, which is the mutation of the virus. So in other words, we might have some sort of therapeutic or even vaccine — hydroxychloroquine and azithromycin are at the forefront of the therapeutics that have been mentioned of late in the media — but Sinclair also notes that there have been stories claiming that the coronavirus isn't changing rapidly. It is. Only about 1,000 genomes have been sequenced worldwide, so there's a lot we are missing. Even so, according to nextstrain.org, a site that tracks viral genomes across the planet, the virus is mutating 1,000 times faster than influenza viruses. Very few people, he says, are making note of this in the media, but it's an issue — it's a possible issue. And then to quote Sinclair, "RNA-based viruses are known to be genetically unstable, and this one is mutating about 20 times faster than regular RNA viruses. The published rate of change has gone up by 20% in the past two weeks." This could be good news or bad news; it's global roulette. If the ball ends up in the right slot, then it could mutate in the right direction and become much less contagious. If it mutates in the wrong direction, it could render therapeutics and vaccines that they're currently working on — which I believe there are 57 drugs and 39 vaccines in trial mode alone right now — but it could render those useless.
So, again, we're looking at an up-down, up-down, up-down outbreak that, until they have a vaccine that nails this, we're talking 12-18 months. If I know this, colleges and universities know this. So why would they open if in 12-18 months we're not going to have any sort of stop point? Well there are other considerations at play. To begin with, the spread of the virus is going to go down relatively soon — 2 weeks, a month, 2 months, 3 months — so you're going to have this steep decline. As the decline is going down, there is going to be, mark my words, tremendous pressure on the international economy, on businesses, to open back up, and probably they will. You're going to see the economy moving again. Again we don't know when — 2 weeks, a month, 2 months. But there won't be the quarantines and the state-wide orders that we have right now, which incidentally is another reason why it could come back as another spike in the fall.
So this is going to be the huge decision for colleges and universities. The economy is generating again, businesses are moving, people are flying, $650 billion at stake. The equation for colleges on the financial side is this. If you have classes on campus, you can charge full tuition. There is research that the efficacy and the learning is much greater in person. There's all kinds of student cohesion that prevents attrition. There are psychological benefits, of course, to not being isolated and to having on-campus culture. All of these are going to be discussed at these board meetings.
Let me give you two data points. Two of the major universities I talked to — one of them lost $28 million in pro-rating room and board alone; the other was I think $33 million. You start adding in now discounted tuition if classes are online off campus, you start adding in no room and board, no dining, no associated fees, no parking fees, no athletic fees. Endowments in these blended markets are in rapid decline. So that's going to be discussed. I do not mean to imply that this is going to be the tipping point, because the tipping point is going to be the well-being of students.
On the flip side, college dorms are essentially cruise ships. Everything is touched a thousand times. Student centers are congregating places of thousands of people, and no college, even beyond the health thing which is the most important, but even from a brand and then a liability perspective, no college wants to be the one where you have 30,000 students on campus, and there's an outbreak and a cluster, and your college has thousands of people with COVID-19. It is a highly infectious disease, and that is on the minds of lots of decision makers.
So they're waiting on data. They're waiting on data on the therapeutics, they're waiting on data — I read this morning that there's compelling data that the people who are at risk are primarily, and this is from one doctor so take it for what it's worth, pre-diabetic and diabetic patients. Certainly they're waiting on the decline, which were not at yet, we're still in the growth stage.
So having spoken to, again, a number of people, having not seen a single article yet in the media because no one's making a statement, my guess is as follows. This is the once in 100 year pathogen that we've been worried about and probably no one has really been able to prepare enough for. Because this is so contagious, it's going to come back. And my best guess is that colleges and universities, by and large particularly the ones that can absorb the financial hit, are not going to have on-campus courses in the fall. And what's going to happen is, there's a herd mentality in higher education — which is, when leading institutions make a decision, others follow. This is entirely now instinct-based based on my 20+ years in higher education, but my instincts are that there will be a financially secure institution that can ride out not just a semester but a year online, and their board, their president, their chancellor, will come to the conclusion that they would rather ride out that semester than have their university be the cluster that breaks, which would have tremendous implications. It could damage your university brand much longer than a semester.
So let me talk about law schools now, because there is a scenario out there where universities could be closed as far as dorms, but law schools could be open. Most law schools don't have student housing, and even if they did they could shut down student housing — you know, it's small, 30 students, 40 students. But they could be in an area that has been on the decline, with low per-capita contagiousness for an extended period of time. Testing highly likely will be cheap and available by then. So you could see at the law school level, where the central university is not having students in dorms and on campus, the law school will be open with the following sort of parameters. The faculty are tested, the students are tested, and people who test negative, you have on-campus courses. They're all online, or they're recorded. International students, and students who actually just choose — and understandably so; I could see myself being one of these — choose to take a semester off, do it online. Students who test positive but who are asymptomatic or who have limited symptoms would watch the courses and have the tests, it would just be remote. Students who have the virus and have severe symptoms, and hopefully obviously that's a very small subset — would certainly not be on campus; they would also almost certainly be granted medical leaves of absence. If you're an admitted student with the same scenario with severe symptoms, I would project that almost any office of admissions would almost certainly give you a deferral or work with you on some sort of different starting point.
So for law schools it's a little bit of a different equation. For universities it's 50/50, but I'm going to say, to me, it's 51% no on-campus 49% on campus. For law schools, I could see creative law schools having the ability to have on campus courses due to their much smaller nature, and particularly due to the fact that they could test because of the smaller number of students and they don't have student housing. So this is how I think it's going to break for law schools. I think you will see law schools aspiring to be open in the fall. And I think, you know, as we track the data, track the modeling, and track the outcomes — what's happening — I think you're going to see some law schools that are going to be entirely open for people who test negative, they're all going to have back-up professors in case a professor happens to catch it. You may see law schools where — and this actually could apply to universities and schools too — classes start in September, late August, and if in October COVID comes back sharply, everyone is sent home again. I would actually — and this is me personally, I'm not quoting this, not a single chancellor, president, or provost has said this to me — but I would personally rather just tell people to stay home for one semester than tell them to come back for a month and then send them back home.
This thing is going to go away. It's not a civilization-ending, or close to it, pandemic. The fatality rates are very low. I think the rebound is going to be very quick, and two years from now, when everyone's on campus, out on the quad, in calasses, in dorms, this will be a memory. Right now we're in the middle of it — in fact, we're in the ascent of it. And I think it's that ascent which will hav have universities and colleges, particular financially stable ones, not wanting to risk students clustered in dorms. Law schools we will update in a month or so, because I actually think it's going to be scatter-plotted. I think you're going to have some law schools that are open, and some will stay online.
At the end of the day, none of us know. We will know much more in a few months, which is why people smarter than me have yet to make statements, but we wanted to get a guess out there because people are very curious about this. This is our guess — this is our best guess. I hope this was helpful. I hope that everyone is safe and healthy who is listening to this. Our firm — we can't do much, but what we can do is we can, to the extent possible, work round the clock to stay on top of this and keep everyone updated. So we will keep the updates coming. This was Mike Spivey with the Spivey Consulting Group.