◼ BUSINESS Bloomberg Businessweek May 18, 2020Colleges vs. the Covid-
Gap Year
SunnyHostin,a hostofABC’sTheView, shared
somewonderfulnewsseveralweeksagoonher
program:HersongotintoHarvard.ButGabriel
Hostinwon’tbegoingthisfall.Hedeferredhis
admissionsohecanavoidburnout.He’llalso
sidesteptheworstofthepandemic.“Iseea gap
yearasallaboutself-exploration,self-enrichment,
communityservice,andmaturity,learningwhere
youareintheworld,”Gabrielsays.“I’mblessedto
beinthepositionI amin.”
JasonLi,whoseparentsgrewupinruralChina,
won’tbewaitingtostarthiscollegeeducation.
Li,who turned downHarvardinfavor ofthe
MassachusettsInstituteofTechnology,is allin,even
if hehastostudyonline.“Idon’texpectit willbea
completelynormalsemester,butI’mgoingnomat-
terwhat,”hesays.“MIThasbeenmydreamschool
forever.They’regivingmereallygoodfinancialaid.”
Thedivergingpaths ofthetwo17-year-olds
demonstrateoneofthemanyperilsfacinghigher
educationthisfall:thesocioeconomicsofcollege
deferrals.Studentstakinggapyearstendtobe
moreaffluent,betterabletoafforda $75,000-a-year
privatecollege—and theexpense oftakingan
extendedbreakbeforeenrolling.Butif toomanyof
themputofftheirstudies,it couldsmashtheeco-
nomicmodelunderpinningtheU.S.’s$600billion-
plus higher education industry. Private colleges rely
on tuition and fees for 30% of their revenue.
For decades, schools have billed higher prices to
affluent families while charging less, or nothing at
all, to high-achieving students of modest means. On
average, for every $1 that a private college charges,
almost 50¢ goes for financial aid, according to the
National Association of College and University
Business Officers.
“It’s kind of a run on the bank if a significant
enough share of the students who can pay decide
they’re not going to go,” says Matt Maguire, a vice
president with Maguire Associates, which has con-
sulted on enrollment with schools such as Harvard,
Amherst, and Rice. “Then the bottom falls out, and
how are they going to deal with that?”
In a recent survey of 6,700 parents and students,
most of them high school seniors, Maguire foundthat 12% are considering deferring enrollment this
fall, many times the typical proportion. Even worse,
30% of international students, who generally pay a
college’s full cost, are considering a postponement.
If many kids on scholarship take their place, colleges
could find themselves in a deep hole.
A surge in gap years could start a “chain reac-
tion” that may leave institutions unable to make
their budgets, according to Craig Goebel, a princi-
pal of Baltimore-based education consultant Art &
Science Group, whose own survey also found a jump
in students expecting to ask to defer for a year.
It’s no secret why many want to wait. This
fall is expected to look very different from years
past. While colleges don’t know today what will
happen once classes resume, they’re discussing
options such as a staggered return, a combination
of online and in-person classes, social distancing,
and the cancellation of activities including sports
and theater.● As more affluent kids defer, school budgets
will suffer if scholarship recipients replace them16
ChristinePluta,a privatecollegecounselorat
EdvicePrinceton,saysmanyfull-payingstudents
are asking about putting off their studies. They
want to wait for the “normal college experience,”
says Pluta, a former admissions officer at the
University of Pennsylvania and Barnard College.
Not so at programs that help high-achieving,
lower-income students get into selective colleges.
Consider Prep for Prep, a 40-year-old nonprofit that
recruits and helps prepare New York City childrenHow Colleges Pay the Bills
Share of revenue at private nonprofit colleges,
2016-17 school yearAverage tuition discount rate at private
colleges,byacademicyear
45%30150
2007-08 2018-19*
DATA: NATIONAL ASSOCIATION OF COLLEGE AND UNIVERSITY BUSINESS OFFICERS, NATIONAL CENTER FOR EDUCATION STATISTICS*ESTIMATE^Privategifts
andgrants12%Tuition
30%Investment
20%Government
funding 11%Other
26%