While we’re grieving for those people, jobs, and sports seasons that have been lost in this COVID-19 pandemic, we should also get ready for the financial fallout that is already following in its wake. And while it’s still difficult to think about money when lives are being lost all over the world to this virus, the economic consequences from this crisis are significant and only going to get worse for many colleges and universities, especially those such as DU, which are so tuition-dependent for revenue.

DU Chancellor Jeremy Haefner wrote an update letter on March 20 to the DU Community that began to touch on some of this financial anxiety, a portion of which is excerpted below:

I know that economic uncertainty is one of the many fears created by this pandemic. We are understandably receiving many questions from students and their families and loved ones about tuition, room and board refunds, student health and activity fees, and scholarships. Staff are asking about job security in our new “remote” world, and what will happen after the next pay period. We do not have answers to all of these questions yet, but we are working very hard to address each of them. I promise you that by early next week we will have sorted out the financial questions for students and families, and we will provide an update. For staff and faculty, we will begin communicating our early financial analysis of the impact of the coronavirus health crisis, as well as our best thinking about how to approach our new “remote” working world.

Let’s look at some of the general financial challenges the University will likely face, in broad strokes:

The largest hit to DU will likely come from families who are economically affected by the recessionary and potentially depressionary downturn in the US and global economy, with job losses and losses to family savings and portfolios, who may choose a less expensive educational option for their children. Some 81% of DU undergraduate students were receiving some kind of grant aid already, and DU has tried hard in recent years to appeal to more diverse audiences, including more first-generation students and/or less affluent families. And while some of that 81% are academic merit grants going to students from otherwise affluent families, at least 40% of the grant money is going to those students with demonstrated financial need. The financial crisis will likely hurt the less affluent audiences the most, especially those who are not on a full scholarship.

DU’s Spring Quarter revenue is certainly going to take a large hit, as some current DU students and their families may not wish to pay DU tuition prices for online instruction, as it eliminates some of DU’s competitive advantages (the on-campus experience) over less expensive schools. Indeed while some families have paid for Spring Quarter already, others may transfer or choose to withdraw, at least for the quarter. With about 78% of DU’s 2019 operating revenue dependent on tuition, each potential student who withdraws for Spring Quarter (or in the Fall) represents a financial hit to DU, though some Fall withdrawals may be replaced by incoming students. Falling Summer School revenue may also take another bite out of DU’s revenue pie if coursework is forced to be kept online, rather than in-person on campus.

In addition, while DU’s endowment was worth nearly $786 million in June 2019, nearly $665 million of it was in stocks at that time. It has almost certainly suffered in the financial meltdown in the financial markets, with the stock market declining nearly 30% over the last month or so and still falling this Monday morning. This means diminished returns that help offset operating budgets and help fund financial aid.

DU is also trying to handle recently-increased debt service/construction budget overruns on the new student union, new residence hall and career center buildings that are set to open in the Fall. All of this badly hurts DU’s financial position and may affect bond ratings down the line if this crisis persists, making borrowing money more difficult and expensive.

There may also be further ripple effects in the downstream admissions arena, as DU had to cancel accepted-student admissions events as well as college tour visits this Spring, though it’s important to note this issue is not limited to just DU as almost every other school did the same. It remains to be seen how future enrollment yield (accepted students choosing to enroll at DU) and the melt (admissions-deposited students not showing up for classes) will shape up for the Fall. Certainly, if DU does not start normally with in-person classes in the Fall of 2020, there will be even deeper losses.

International student enrollment is also a big part of DU’s current financial solvency. Of DU’s 768 international students in the fall of 2019, some 340 (or about 45% of them) come from China, and the vast majority of those are likely coveted ‘full-pay’ students. Should that pipeline be adversely affected by the virus (or government reactions in China or the USA to the virus), DU may experience even more financial setbacks.

Additionally, a good percentage of graduate school tuition (which makes up more than half of DU’s tuition revenue) is often funded by outside organizations (especially in the Daniels College of Business, DU’s largest unit), who are now facing their own financial losses and market uncertainty.  This reality will likely put some of DU’s already-soft grad school enrollments in an even more precarious position. That said, recessions can sometimes be good for graduate enrollment, as historically, some people choose to return to school to upgrade skills while waiting out depressed job markets. With the overall economy moving into recession, research budgets may also be under further organizational scrutiny. DU has about $35 million in research contracts.

Finally, in times of financial uncertainty generally, DU’s fundraising will likely take a hit. Alumni, foundations, and other donors are almost certainly pausing on at least some of their giving, given the sudden economic upheaval. Most non-profits suffer when charitable giving declines. This may be quite frustrating for DU just as the quiet period of the billion-dollar DU capital campaign was coming to an end and the public period of the campaign is/was preparing for launch.

Then you must add in the extra unanticipated and un-budgeted costs DU has already likely had to already pay in managing the virus crisis over the last month – in IT, health care, training, logistics, funds for vulnerable students, medical preparation, overtime, security, etc.. And then add to that the lost revenue for Spring room-and-board on campus, some or most which will likely be refunded in the coming weeks, since almost all of the students won’t be on campus for the rest of the year.

For DU Athletics, the losses will also be significant. When DU’s overall university revenue is down, the athletic budget is likely to be trimmed as well, as DU athletics will likely never be self-sustaining. Given that the athletic budgets were already tight this year, this crisis will only exacerbate the situation.

While DU may save a few bucks on travel and game management costs on DU games that were canceled for this March, April, and May, the overall sports losses will be significant. The NCAA makes nearly a billion in revenue from the men’s basketball tournament from TV, enough to fund the operations of the organization and its championships in all sports, as well as returning about 60% of that revenue to its member schools. With no NCAA tournaments this year, the future loss to schools is likely to be a big one, even after insurance mitigation. Though if history is any clue, this mitigation is going to be drawn out and limited when it does eventually land, probably at best a year from now as insurance companies are notoriously unethical stingy with policy payouts, especially big ones.

Conference tournaments are also money-makers for conferences and schools, and that lost revenue hurts too, especially if the schools must dig even deeper to offset the conference’s losses. For mid-major conferences, the conference tournaments are the primary revenue sources that pay for the conference yearly expenses (staff, officiating, etc.) as they don’t receive the TV payouts that big conferences enjoy. With DU participating in five different athletic conferences, most of whom lost 100% of their tournament revenue (the Summit League did get its basketball tournament completed), there is the possibility that some of those conferences may require further operational pooled subvention from member schools.

Finally, there are also home gate and ancillary revenue (parking, concessions, merchandise, etc.) losses for DU’s canceled home games this year. DU lost two – potentially three if necessary – home hockey games this winter for the NCHC first round, and while most of the gate revenue would go to the NCHC as playoff revenue, DU would have kept the ancillary revenues. DU also had three more men’s lacrosse games remaining and was also set to host NCAA regional tournaments in hockey and gymnastics, so there are certainly some financial losses there, depending on how the NCAA handles the guarantees they charge for hosting. And again, history does not favor ‘the right thing’ being done by the NCAA here.

There also may be some athlete losses, as many athletes at DU are not on full-ride scholarships and, like other students, may not return to school.

Add in additional hosting losses from canceled on-campus corporate conferences, high school sports tournaments, and commencements, potential sports camps, canceled fitness memberships and other facility rentals due to the virus. There also may be athletic fundraising and sponsorship losses as proverbial belts tighten.

This is a problem that is not unique to DU. All colleges and universities nationwide are experiencing these very same problems. Denver does have a particular slant to their issues as the University is currently in the middle of a massive capital campaign that will take a hit, but the bottom line is every school is in this together. From endowment hits to athletics losses, every institution is already feeling the serious financial impact of COVID-19.

In the end, it will all add up to millions lost for DU and billions and even maybe trillions for the entire country by the time this crisis is over.

DU will survive but there will be consequences and they won’t be solved quickly or easily.