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Coronavirus could force North Texas colleges to refund over $120M in room and board

Schools across the country are increasingly arriving at a sobering fact this week: The coronavirus could cost them billions in lost room-and-board revenue.

As if North Texas colleges and universities didn’t have enough financial pressure on their plates, schools throughout the country are increasingly arriving at a sobering fact: The coronavirus could collectively cost them billions in lost room-and-board revenue.

The lost revenue could add up to roughly $121 million in North Texas alone, by The Business Journals’ approximation.

Collectively, colleges and universities in Texas could lose $494 million in revenue, according to The Business Journals’ research.

For a look at the refund estimates for North Texas, click here.

For a look at the most impacted universities across the Lone Star State, click here.

Most colleges and universities have sent their students home to finish the semester remotely to help mitigate the spread of the coronavirus. Some schools have already said they plan to refund students and families for the meal plans and room-and-board services they are no longer using.

Texas Christian University in Fort Worth looks to be the North Texas school with the highest amount of room-and-board refunds potentially due, according to the methodology used by The Business Journals.

Here’s how we reached our estimations: We pulled data from the U.S. Department of Education and broke out room and board revenue for by fiscal year 2018, the latest available data. The DOE refers to that revenue as “auxiliary sales and services.”

The DOE’s room-and-board figures are annualized. To arrive at an estimated refund, we assumed schools would at a minimum refund 50 percent of the spring semester’s room and board. We chose 50 percent because most schools nationwide that have announced intentions to refund have said they will return “unused” fees, and the coronavirus outbreak hit roughly halfway or less through the spring semester, depending on the school's calendar.

In short, we used refund estimates of 25 percent of annualized room and board costs.

By that measure, TCU’s room and board refund estimate comes out to $28.9 million, the highest of any North Texas university or college.

The university plans credits and refunds for unused room and board but has not yet calculated how much that will cost, TCU spokesperson Holly Ellman said in an emailed response to questions from the Dallas Business Journal.

“Returning students will receive a credit toward the fall semester room and board, and graduating seniors will receive a refund,” Ellman said in the email.

The Business Journals’ analysis of roughly 800 U.S. colleges and universities determined that about a quarter of their student-related revenue, some $44 billion in payments during the most-recent fiscal year, came from so-called “auxiliary enterprises” in the form of goods and services sold to students and faculty. The vast majority of that revenue came in the form of housing and food services provided to on-campus residents, according to data provided by the Department of Education.

After TCU, the college in North Texas that stands to lose the most in room and board, or dorms and meal plans, is the University of North Texas in Denton, where the refunds could total $18.4 million. Next was The University of Texas at Dallas in Richardson, at $17.2 million, followed by Southern Methodist University in Dallas at $16.7 million.

The next largest refund estimate after SMU is for The University of Texas at Arlington at $11.7 million, followed by Texas Woman's University at $5.6 million.

Spokespeople for UNT, UTD and SMU told the Dallas Business Journal that their respective institutions either haven’t decided whether to make refunds yet, or haven’t put a pencil to the amount.

It’s too early to know, UNT spokesman Kris Muller said.

“Many students are still making the decision as to whether they will be living on campus for the remainder of the spring semester,” he said.

He pointed out in an email that UNT remains open.

“Our top priority is the health and safety of our students,” Muller’s email said. “As of now, our campus remains open, which includes Auxiliary Services, the residence halls, dining facilities, student union and student health services.”

John Walls, spokesman for UT Dallas, released this statement to the Business Journal: “The University will be working in the coming days and weeks to create a path forward in addressing these issues.”

SMU spokeswoman Kimberly Cobb said the university’s essential staff are working around the clock on all topics related to coronavirus, and no decisions had been announced on the possibility of refunds.

UT Arlington is focused on supporting the health and safety of the UTA community and the transition to a fully online course delivery system for the rest of the spring semester, university spokesperson Jeff Carlton said. The university is working on the details and processes to address pro-rated refunds for housing and dining charges to students moving from the residence halls, he said.

“Additional information will be forthcoming as these decisions are finalized,” Carlton wrote in an email.

Texas Woman's University spokesman Matt Flores also said it's too soon to talk about refunds.

"This is a topic we can't respond to at this time as the university hasn't announced a decision on refunds," according to his emailed reply.

While the North Texas amounts may seem like a large revenue losses, they’re relatively small compared to The University of Texas’ main campus in Austin, which stands to refund $79.7 million, and Texas A&M University in College Station, which could refund $54.9 million to students and their families. UT and A&M have the highest estimated refunds in the state.

After the Longhorns and Aggies comes Texas Tech University in Lubbock, with a $39.8 million refund approximation. TCU's $21.9 million estimation is next in the statewide rankings, followed by the University of Houston at $23.9 million, Texas State University in San Marcos at $22.7 million, then UNT's $18.4 million refund approximation.

Room and board revenue at U.S. colleges and universities

A tidal wave of forced closures and shifts to online coursework crested last week as schools from New England to Hawaii braced for what is expected to be a months-long response to the fast-spreading coronavirus known as COVID-19. As of this week all but a handful of U.S. campuses were emptied for the duration of the spring semester.

The forced closures come with significant financial challenges. Should schools follow in the footsteps of the dozens that already have pledged to refund unused room and board to students, the collective hit for the industry would amount to about $11 billion, or a half-semester’s worth of payments. The clawbacks will no doubt compound the financial strains already facing many schools amid industry-wide declines in enrollment and cost competition, trends that have been well underway for the past few years.

Pressure on school administrators to meet student demands for refunds is mounting. This week the University of Nebraska-Lincoln said it would honor room-and-board refunds for students who exited the campus by March 24. The returns could max out in the range of $50 million to $60 million based on DOE figures that show the school’s annual auxiliary services revenue of around $240 million. The move came less than a week after UNL canceled on-campus classes.

In the Northeast, Boston University capitulated this week to angry students and their parents demanding refunds after many of the school’s cross-town peers, including Boston College, Harvard University, Massachusetts Institute of Technology, Suffolk University and Northeastern University, agreed to refund unused room and board fees.

As a group, those refunds would likely total about $250 million, based on the six schools' most-recent filings with the DOE.

To be sure, the pain will be more acute at some schools vs. others, particularly for large public colleges that lack well-funded endowments and derive a majority of their student-related revenue from room and board. Still a big unknown is whether schools will see any related refunds from the food suppliers and related service providers who support their on-campus dorms and dining halls, or whether states will need to alter their budgets in light of the hit many of their largest in-state higher-ed systems are about to endure.

Tops among them is the University of North Carolina-Chapel Hill, which reported nearly $900 million in auxiliary sales and revenue in the recent fiscal year. That figure was roughly double what it generated in student tuition and fees after accounting for discounts and scholarship assistance, according to the DOE.

Rounding out the nation’s top five schools in room-and-board related revenue during the most recent fiscal year were Ohio State University in Columbus ($490 million in auxiliary sales and revenue); University of California-Los Angeles ($478 million); University of Missouri-Columbia ($475 million); and Pennsylvania State University in State College ($456 million).

Craig Douglas with American City Business Journals also contributed to this report.

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