The Economic Impact of the Pandemic on Various Stakeholders of Education (Opinion 2)

The Apocalypse, a black swan event, Kafkaesque and plain bizarre are all terms being used to describe the world events of the year 2020. With the deadly outbreak of the COVID–19 virus unleashing a domino effect on lives, lifestyles, livelihoods and economies at large, we are unquestionably living out the nightmares of a pandemic. The virus has impacted so many sectors economically, where even the ivory towers of academia could not make it out of this situation unscathed.

The education industry was quite directly and immediately hit when news broke out of the virus transmission impacting the several stakeholders of this institution. From students to educational institutes to businesses, the pandemic has imposed several economic costs and even some benefits on these different stakeholders. The following article thus aims to go through the economic impact of the pandemic on all the key stakeholders of Education.

Educational Institutions

Without a doubt, one of the biggest stakeholders in the field of education are the providers of it – Educational institutes. When news of the virus broke out, these institutes were among the first to shut down. Thus, schools and colleges had to quickly adapt and make the transformation towards the online learning world. Although, this is not the first-time educational institutes were forced to shut down, it is important to understand that this situation is even more challenging given the dual – health and economic crisis.

Several students and parents around the world are filing lawsuits against these institutes for not refunding partial or the infrastructural fee, of which they are no longer receiving the benefits. Some colleges in the United States, like Harvard and Columbia University, have reportedly offered to refund the portion of the unused rooms and boards. These refunds from the institutes’ point of view could scale up to nearly $8 to $20 million (Bloomberg, 2020). It would be logical to assume that the colleges could and should give in to these requests given that they too would be saving in terms of paying for utilities, salaries of their non-teaching, non-admin staff, like the cleaning crew, gardeners, bus drivers etc. Moreover, tuition charges reportedly account for only 20 per cent of the total revenues for public institutes but around 82 per cent for private institutes (Bloomberg, 2020; Business Insider, 2020).

That being said it is important to understand the economic recession preceding the pandemic shock is global and this translates to lesser public expenditure on education in some countries. In India for instance, the education budget estimate was cut by 85 per cent (Dogra, 2020). Coupling with these fewer funds, colleges are also dealing with a wave of – ‘Is college still worth it?’ sentiment owing to the pandemic. According to the National Student Survey, conducted by Simpson Scarborough (2020), among high school and college students in the United States, about 20 per cent of the high school students stated that they were unlikely to enroll into college due to the pandemic pressures on their family finances and the poor reported quality of virtual education as some of the reasons.

The actual reality, however, may be worse off considering that the survey was conducted in late March 2020 and the financial stress has only deepened since. Fitch Ratings Report (2020) confirms these findings and estimates a drop of college enrollment by 5 to 20 per cent in the fall semester. This coupled with loss from international student enrollments, Harvard estimates a $715 million drop in revenue from this. Education institutions on the whole, therefore, may bear a heavy economic loss due to this pandemic.

Teaching Faculty and Support Staff

The next set of stakeholders bearing the economic impact of the pandemic are the teachers and other support staff. Specifically, in private institutions, the staff has borne a significant share of the revenue losses of the institutes by pay cuts of about 30 per cent or delayed payments in India (Live Mint, 2020). In the US, this figure estimates to be between 8 to 20 per cent as per the Learning Policy Institute (Will, 2020). Adding to this is this worsening plight of the non-teaching staff like the cleaning crew, drivers and other support staff who generally fall under the low-income categories. An estimate of 4500 school bus drivers in the US state of Long Island are rendered jobless due to the pandemic.

Amidst this crisis, is another looming issue on the widening gap between the tenured professors and the adjunct professors. Tenured professors are those professors who receive job security to do research and teach. They are also compensated with better remuneration and benefits. They are who constitute the gold standard of professors in institutes. These professors are now increasingly being replaced by low paid adjuncts. They represent what we could call a gig economy of higher education.

Although this trend preceded the pandemic, the gap has only widened with revenue losses (The Chronicle, 2020). The problem with this is the fact that adjunct professors are asked to perform the same work as the tenured professors but with compensation and benefits that are now lower than their already low incomes with however an added workload. Moreover, it is important to note that adjuncts receive little to no medical benefits which in this pandemic is all the more disastrous. Thus, the long-term fallout of this trend is likely to lead to overworked, stressed and unhappy professors which could lead to lesser quality education.

Students and Their Families

Amidst the impact on the other key stakeholders of the pandemic, the ones who bear the largest brunt of this are indeed the students. The pandemic changed the course of student lives when bedrooms turned into classrooms and any semblance of a ‘campus life’ was lost. What is of economic concern, as discussed earlier, is the fact that most colleges are continuing to charge the full tuition charges. Although we saw the constraints from the institutes’ point of view, looking at it from a student point of view it means that they have to bear their full education cost as they would in an offline mode of study and in addition to that also bear any added cost as a result of the switch to the online mode of education.

Apart from these economic costs incurred, students could face the biggest loss of all in terms of the loss in learning which is estimated to amount to a loss of $10 trillion at present value, in earnings overtime for the generation impacted by the pandemic. Furthermore, the pandemic is sought to lead to a loss of 0.6 years of schooling, after being corrected for quality. (World Bank, 2020) With this projected loss in future earnings, we may have a better understanding of why students today are left feeling distressed. This sentiment is worse for the students with large student loans when the scope to recover the full tuition fees they are made to pay has drastically reduced (Inside Hire Ed, 2020).

Furthermore, an important point to note here is that the economic recession which preceded this pandemic and has only aggravated from it has led to a severe state of unemployment. This, coupled with the financial losses faced by families who finance their children’s education has led to decisions of dropping out or dropping their decision to go to college after high school (Scarborough, 2020). Thus, the costs of acquiring these degrees are quite high, yet the consequence of not having a degree is far worse today. Research by the Economic Policy Institute in 2015 suggests that 56 per cent more than high school graduates (as cited in The Wire, 2017) and ‘well-paying jobs’ are held by college graduates 55 per cent of the time (Georgetown University, as cited in Inside Hire Ed, 2017).

Students from developing countries fare far-worse, where a large number of the population are poor and may have the added expense of purchasing specific gadgets and/or laptops; purchase for internet connections (or better internet connection), UPS devices/inverters to combat power failures to name a few.

Although every student may not have to make this purchase, this pandemic and the move towards online education has highlighted the stratified nature of the pandemic effects by further widening the gap between the haves and the have-nots and between the developed and developing countries, with countries moving further away from their Learning Poverty Goals (World Bank, 2020). In addition to this, among the lower-income strata who receive public education and have the option of the midday meal schemes, the shut down of schools has translated to poor nutrition among children (The Economic Times, 2020).

Booming Technologies Industry

Among the few ‘winners’ in the pandemic, are the virtual conferencing applications like Zoom and Cisco WebEx whose users have more than doubled. The quick transfer of education to the online mode required investment in such a video-conferencing application that would allow to ‘simulate’ offline learning. Although the result of the increased users is a culmination of the switch to online education as well as the increase in remote employment, where Cisco WebEx reported an increase of 3.5 times in the Asia Pacific, 2.5 times in the United States and about 4 times in Europe. Similarly, Zoom reported an increase of 190 million daily users from the past year (Reuters, 2020).

Exclusive to the education sector is the increase in the use of online testing platforms. According to a poll by Educause (2020), 54 per cent of institutions were employing online proctoring services for tests and the data revealed that this change has made them concerned about the costs as well as the loss in students’ privacy (as cited in Inside Higher Ed, 2020). In India, platforms offering these services have seen an increase in demand by 70 to 80 per cent (Express Computer, 2020). Therefore, although, the costs to the institute and the students are high, these online platforms are benefiting quite substantially. This demand, however, is likely to translate itself towards better technological innovations specifically in the field of Artificial Intelligence and Augmented Reality/Virtual Reality which could benefit the economy and the innovation in the education sector at large.

Among the key stakeholders impacted by the COVID -19 pandemic, one worth mentioning would be the policymakers in the education sector who although may not directly be impacted economically, still observe a key stake in happenings of the education sector. The pandemic as we have extensively seen in the above paragraphs has changed the course of learning and has also brought to the surface many structural problems of the current education system in both developed and developing countries. Policymakers have been pushed to closely think about these issues for the future development of education policies, as well as, to combat the current education crisis due to the pandemic.

In India, specifically, newer policies aimed at adapting to this digital for has set course with the establishment of the DIKSHA platform to enable wider access is certainly a step in the right direction. In addition to that, the New Education Policy has projected to aim at some of the fault lines made visible from this pandemic. In the United States, this event has given low paid adjuncts agency to voice their concerns, putting pressure on the policymakers to drive this change. In conclusion, however, the biggest lesson to be learnt from this outbreak is that of the crucial significance of ‘preparedness’, so that sliding into recovery mode becomes much easier.

-Shireen Bangera (A Student of MA in Applied Economics at Christ College, Bengaluru)

Picture Credits: (Representational Only)


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