IU announced Sunday that classes will be online for the rest of the semester, all IU-affiliated events will be canceled or postponed and all students must move off campus. The university has promised prorated reimbursements for housing, but no other refunds have been announced. Meanwhile, businesses across the country, including in Indiana, have begun laying off workers. The governor ordered all theaters, gyms, fitness centers and nightclubs to close and all restaurants and bars to end in-establishment dining until April. Many businesses in Bloomington have closed.
Considering the severity of the economic threat posed by the coronavirus, students need money — and fast.
The university’s financial statements suggest it can afford to give refunds for mandatory fees, emergency scholarships for every student and sick pay for student employees in housing and dining. It should do so immediately.
Top economists have warned that a prolonged recession is inevitable if Americans maintain sufficient social distancing. Layoffs in Indiana have already begun. U.S. Treasury Secretary Steven Mnuchin reportedly said Tuesday that up to 1 in 5 workers could be unemployed in the coming months.
If past recessions are any indication, those who are students during the coronavirus recession will not fare well upon graduation. A Federal Reserve analysis found that college-aged Americans during the 1990-91 and 2001 recessions had particularly high unemployment for several years after the recessions ended. And the Great Recession left millennials with fewer jobs, lower wages and less wealth, according to a 2014 Fed report.
Little is known about how the U.S. government will provide relief aid in this recession, but direct deposit payments could take months to arrive. That is precious time wasted for students with low income and high debt.
IU data show that nearly half of graduates last year had student loans, and the average debt amassed was more than $27,000. Economic research indicates that student debt prevents graduates from building wealth, and the problem is worse for minority graduates.
Students will not be saved by returning home to their parents. Families will find increased costs in utilities, food and household goods. As the coronavirus recession grows, many parents will be laid off.
IU can — and should — provide assistance. The university's revenues exceeded expenses by $110 million in fiscal year 2019 and a similar amount the year before.
What can $110 million do? IU has already agreed to give refunds for housing paid for the remainder of the semester. Estimations using university tuition, enrollment, housing and financial data suggest that IU could also refund one-fourth of mandatory fees, provide sick leave for RPS student employees and send $500 to every full-time student — and still have more than $6 million left to spare.
IU follows other Big Ten universities, including Ohio State University and Michigan State University, in promising refunds for housing. The Residential Programs and Services website mentions “reimbursements,” but the university has not said how those would be calculated.
A fair reimbursement would mean giving students back one-fourth of the year's room and board costs. Refunding one-fourth of the standard room and board rate to the about 12,000 IU-Bloomington students who live in RPS properties and about 3,000 on-campus students at other IU campuses would cost about $39.4 million. The university can afford this.
The next necessity is providing sick pay for RPS student employees, who will not be able to work as residence and dining halls close. Residential Programs and Services employs 2,000 students, IU spokesperson Chuck Carney said in an email. The employees average about 10 hours a week.
Providing sick pay to 2,000 students at the campus minimum wage of $10.15 an hour for 10 hours a week for the remainder of the semester would cost $1.6 million. For comparison, the relocated Metz Carillon cost $7 million.
What about refunds for tuition and fees? An online petition demanding IU reimburse students for the loss of in-person instruction and access to on-campus services had gained more than 11,000 signatures as of Wednesday evening.
This is a reasonable request. The move off campus means students will significantly reduce usage of classrooms, gyms, the health center and other facilities and resources.
Using the published 2019-20 fee rates, refunding one-quarter of the year's mandatory fees for all students — undergraduate and graduate — on all campuses would cost about $24.5 million.
Moving to online-only tuition rates, however, makes less sense.
Refunding the difference between campus tuition and IU Online base tuition would cost the university more than $136 million, which is likely more than IU could afford. It's also unfair to in-state students at regional campuses. The IU Online base tuition rate is equal to the regional campus tuition for in-state undergraduates. Out-of-state IU-B students would reap the most rewards by getting back 24% of their semester cost of attendance, whereas an in-state IU student not at Bloomington or IU-Purdue University Indianapolis would get nothing back.
Here's a better idea: Give $500 emergency scholarships to every full-time student and $250 to every part-time student, including graduate students. Based on spring enrollment figures, this would cost about $38.1 million.
The university already provides emergency funding to students in difficult financial situations. As students move off campus and lose jobs during the economic crisis, they may face increased burdens of rent, utilities, moving costs, medical fees and unexpected expenses. Emergency scholarships can help students remain in classes and pay their bills during a recession.
IU can find the money for these expenses. The total cost of housing refunds, sick pay for RPS employees, mandatory fees refunds and emergency scholarships would be about $103.7 million. That's more than $6 million less than IU's net revenues last year.
Hoosiers need help. And they need it now.
Tom Sweeney (he/him) is a senior studying economics and mathematics and is the treasurer of IU Student Government. He plans to pursue graduate studies in economics.
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