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Higher Ed Finance and the Need to Understand It Thoroughly

Higher Ed Finance and the Need to Understand It Thoroughly


The coronavirus pandemic has impacted the finances of colleges and universities globally. With many colleges and universities in the U.S. reversing course and going online, some families are asking for tuition discounts. It’s too soon for final reports on enrollments, even as some universities report unprecedented numbers of incoming freshmen who requested an enrollment deferral (also called a gap year).

There have been more than a few articles written about the financial impact of COVID-19, and a few more have attempted to rate or rank the financial risk of institutions based on publicly available data. Recently, I read an article written by a professor who argued that institutions should increase financial aid in a situation like this pandemic, rather than discount tuition.

I realized that he chose not to recognize or did not know that most institutional aid is not funded through the endowment, but is a discount of tuition to a sizeable number of students. If a professor did not understand a piece of higher ed finance, how many others do not understand it?

Rather than write a primer on higher ed finance, I opted first to search the web for source material on higher ed finance. One of the higher ranking search results was a higher education finance graduate course reading list from Seton Hall professor Robert Kelchen, published in January 2020. The list is organized by various topics, including:

  • The higher education finance landscape and data sources
  • Institutional budgeting
  • Policy analysis and higher education finance
  • Federal sources of revenue
  • State sources of revenue
  • Higher education expenditures
  • College pricing, tuition revenue, and endowments
  • Financial aid policies, practices, and impacts
  • Free college
  • Student debt and financing college
  • Returns to education
  • The financial viability of higher education

Listings in the last category can likely be doubled or tripled since COVID-19. I follow Dr. Kelchen on Twitter and regularly read his blog posts.

Another source was the syllabus for a course, Higher Education Finance and Budget, which was posted on academia.edu by Arizona State professor Rebecca T. Barber. Readings are also organized by topic and sequence in the course:

  • Introduction
  • Economics
  • Tuition and Financial Aid
  • Revenues
  • Appropriations, Endowments, and Other Costs
  • Cost Control
  • Athletics
  • Public Private Partnerships
  • The Future of Higher Education Finance

The topics organized by the two professors appear to cover most areas of higher education finance. It is not a subject that is easily understood.

Students appear to be the customers on the surface, but college revenue sources may come from students (tuition and fees, room and board), federal sources (financial aid and grants), state sources (financial aid, grants, and state subsidies to higher education), gifts, endowment, ticket sales, sponsorships, and so on. There are researchers whose academic work focuses on a single area like public funding policy or tuition discounting or athletics in higher education.

As the COVID-19 pandemic continues, there will be more and more articles about the financial impact of the coronavirus to higher education. Administrators are making tough decisions daily about staff and faculty furloughs, as well as delaying funding of pensions and other benefits. College and university board members will be presented with challenging situations.

Those who understand higher education finance will be valuable assets to the administration. Those who don’t may want to find a primer and buckle up. It’s going to be a rough ride.

Wally Boston Dr. Wallace E. Boston was appointed President and Chief Executive Officer of American Public University System (APUS) and its parent company, American Public Education, Inc. (APEI) in July 2004. He joined APUS as its Executive Vice President in 2002. In September 2019, Dr. Boston retired as CEO of APEI and retired as APUS President in August 2020. Dr. Boston guided APUS through its successful initial accreditation with the Higher Learning Commission of the North Central Association in 2006 and ten-year reaccreditation in 2011. In November 2007, he led APEI to an initial public offering on the NASDAQ Exchange. For four years from 2009 through 2012, APEI was ranked in Forbes' Top 10 list of America's Best Small Public Companies. During his tenure as president, APUS grew to over 85,000 students, 200 degree and certificate programs, and approximately 100,000 alumni. While serving as APEI CEO and APUS President, Dr. Boston was a board member of APEI, APUS, Hondros College of Nursing, and Fidelis, Inc. Dr. Boston was appointed to the National Advisory Committee on Institutional Quality and Integrity by the U.S. Secretary of Education in 2019. He also serves as a member of the Board of Advisors of the National Institute for Learning Outcomes Assessment (NILOA), as a Trustee of The American College of Financial Services, as a member of the board of Our Community Salutes - USA, and as a member and chair of the board of New Horizons Worldwide. He has authored and co-authored papers on the topic of online post-secondary student retention, and is a frequent speaker on the impact of technology on higher education. Dr. Boston is a past Treasurer of the Board of Trustees of the McDonogh School, a private K-12 school in Baltimore. In his career prior to APEI and APUS, Dr. Boston served as either CFO, COO, or CEO of Meridian Healthcare, Manor Healthcare, Neighborcare Pharmacies, and Sun Healthcare Group. Dr. Boston is a Certified Public Accountant, Certified Management Accountant, and Chartered Global Management Accountant. He earned an A.B. degree in History from Duke University, an MBA in Marketing and Accounting from Tulane University’s Freeman School of Business Administration, and a Doctorate in Higher Education Management from the University of Pennsylvania’s Graduate School of Education. In 2008, the Board of Trustees of APUS awarded him a Doctorate in Business Administration, honoris causa, and, in April 2017, also bestowed him with the title President Emeritus. In August 2020, the Board of Trustees of APUS appointed him Trustee Emeritus. In November 2020, the Board of Trustees announced that the APUS School of Business would be renamed the Dr. Wallace E Boston School of Business in recognition of Dr. Boston's service to the university. Dr. Boston lives with his family in Austin, Texas.


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