What for the Classes of ’20 and ’21?
The virus closed schools, colleges, and universities just as it closed most other institutions, and more than 1.6 billion students worldwide pulled a massive sickie.
It’s not always the case, but the more educated you are, the more earnings you should rake in over a lifetime. If a generation of students haven’t been swatting down at home (which they haven’t because most exams are off), the World Bank forecasts more than ten-billion-dollars in lifetime earnings have already been lost into the ether.
The income shock from lockdown, evident in jobless claims, is also going to stifle plans to get expensive educations, especially for marginalised groups.
The actual content of most degrees is available on the internet. You’re paying 50,000 dollars per year to make it official and get the scroll, for the social life on campus, and for the connections. If professors are planning lectures on Zoom, most of that won’t be available, so millions of gap years will be declared until things return to how they were.
The impacts of deferred students cannot be understated. The majority of tuition fees are paid by international students who’ll almost certainly be late to class, so half-built show-off sporting facilities and plush accommodations to attract them are now in jeopardy. Most college campuses are now stalled building sites.
Colleges need to cost-cut, and interestingly, start thinking about investing in the markets. The majority of colleges get tax relief for investing an endowment. Harvard’s endowment is $41 billion, for example!
It’s a dilemma of allocations between asset classes, stocks or bonds or bills or real estate, and where to invest geographically, rather than a question of which individual stocks to pick. However, the potential is there for a college to withdraw some emergency funds if those endowments have performed well enough. Investing to the rescue!
To the graduating class of 2020, congratulations, and good luck, the job market is tight as hell right now, but fingers crossed it recovers soon. We’re keen to hear your pandemic stories from school or college, perhaps you’re taking clutch exams right now, or you’re graduating, let us know!