Note: Institutions’ stances on refunds—as well as legislative guidance on the subject—are rapidly evolving. Below is EAB’s analysis of the state of affairs as of 3/25/20. We will continue to monitor this issue and publish additional insights on refunds’ impact on financial aid and retention.
College and university leaders have made many tough decisions across the past few weeks—shifting classes online, recalling students from study abroad, and canceling major events like commencement. While these decisions were made with the health and well-being of students in mind, they’ve understandably been met with strong emotions and political backlash. As the dust settles and students adjust to the new norm of remote instruction, they—and their parents—are now raising another contentious question—will I get my money back?
In some ways, this is leaders’ most difficult question yet. On the one hand, their decisions will have real financial implications for their students—many of whom are already struggling with the economic impact of the outbreak. At the same time, most institutions don’t have the cash to meet every student demand, particularly in the face of revenue losses and extraordinary expenses incurred during the pandemic. So leaders face a difficult balancing act: they need to create refund policies that appropriately recognize the disruption and loss of services students have endured without over leveraging the institution’s financial resources.
To help inform leaders’ decisions, EAB has analyzed the current state of refund policies across 4-year institutions.
What types of refunds are schools offering?
Most institutions have announced that they will refund room and board on a prorated basis or are evaluating their ability to do so. At campuses that have moved to remote instruction, most students will not receive housing, dining, and other non-academic services for which they prepaid, creating pressure on institutions to reimburse them for at least part of these costs.
- Leaders are most commonly awarding prorated refunds calculated from the day students were asked to leave campus.
- Several schools have issued their refunds through direct cash payments, including the University of California-Berkeley and Davidson College. Cash refunds are students’ favored option, as they give them greater flexibility and can help them cover unexpected costs caused by COVID-19.
- However, most institutions are instead opting to award refunds through balance-forward credits; i.e., issuing redeemable vouchers to student accounts that can be used to pay for existing or future student charges. Schools issuing these refund credits include Carrol University, Rochester Institute of Technology, and the University of Nebraska-Lincoln. Institutions prefer balance-forward credits because they preserve cash-on-hand and incentivize students to re-enroll next semester. That said, leaders should be prepared to deal with potential adverse publicity and student backlash to non-cash refunds; at both Clemson and Penn State, for example, students have created petitions demanding cash payments.
- Some institutions, like Susquehanna University, are creating hybrid policies to get the benefits of balance-forward credits while still giving students the option of cash refunds.
Nearly all institutions that have announced refunds policies have refused to reimburse tuition as courses move online—despite student and parent claims that online education is not as valuable as in-person instruction.
- Most university leaders argue that tuition refunds are unnecessary if academic instruction can continue online and/or students will receive credit for their coursework. Many colleges and universities have explained their reasoning for not offering tuition refunds in university communications and FAQs on COVID-19, like SUNY Brockport and Boston College.
- Notably, several institutions have carved out limited exceptions for cases where students cannot continue their coursework online (e.g., study abroad courses that depend on the in-country experience). To help students and families understand these decisions, the University of Minnesota built a refund matrix based on the ability for students to receive academic credit for study abroad programs disrupted by COVID-19.
- For institutions that have separate face-to-face (F2F) and online tuition and fee tables, some students have asked to have their tuition updated to reflect the different rates (e.g., 2/3 of the semester at the F2F rate, 1/3 at the online rate). At present, most institutions feel they can say no to this type of request for this semester, assuming a majority of coursework was completed face-to-face before students were sent home. That said, this does raise questions about tuition and fee charges for the fall, if instruction must still be conducted remotely. EAB will continue to monitor this issue.
Institutions have shown more willingness to refund some non-academic fees (e.g., parking, recreation, and student activity) while taking a firmer stance on academic support fees (e.g., general instruction, course, and technology).
- With campuses closing, students are asking for refunds on fees for student services outside of room and board, such as gyms, parking, and printing charges. Although each institution’s fee structure is different, most universities tend to show greater flexibility on refunds on non-academic fees, like transportation and recreation, than on academic support fees (e.g., technology and registrar).
- Leaders have made these refund decisions by considering the degree that each fee-support service has been disrupted, their financial and legal ability to issue fee refunds, and the actions of their peer institutions.
- For example, universities like CSU Monterey Bay and Stanford granted prorated refunds on parking as campus closures prevented students from using their parking spaces.
- Other institutions, including the University of Buffalo, plan to offer prorated refunds on athletic, transportation, recreation, campus life, and student activity fees, aligning with other SUNY schools’ policies.
- In contrast, American University said it would not issue technology, recreation, and student activity fee refunds,as those fees supported services that students have or will continue to receive.
- In certain cases, institutions have charged special COVID-19 fees to students. These fees are designed to cover expenses related to closing campus early, cleaning facilities, or providing special services (e.g., shipping belongings back to students or storing them on-campus, take-out dining services).
How do refunds affect student financial aid?
Leaders should be aware that institutional refunds may impact a student’s federal financial aid
Normally under federal policy, a refund would reduce a student’s cost of attendance, which may inadvertently change a student’s financial aid eligibility. However, the Department of Education recently issued guidance that creates an exception for COVID-19 related refunds: “if, as a result of the COVID-19 outbreak, you provide a refund or waiver of expenses for all or part of a student’s tuition, fees, room and board charges, or other institutional charges, or if you become aware that a student has moved off campus for the remainder of the term, the Department will not require a re-evaluation of the student’s cost of attendance”. However, it remains unclear how refunds and credits could impact aid into the next academic year or for universities who operate on a quarter academic calendar, as the guidelines are based on an institution’s “payment periods”.
Leaders should work closely with their financial aid office to construct a policy that mitigates any negative effects on aid
Institutions should have their financial aid offices review all refund decisions to ensure any refund payments or credits do not adversely affect students’ financial aid awards or eligibility.
Special student populations will require greater financial aid diligence
This can be a particular challenge at full-need-meeting institutions, where some students receive institutional grant aid to cover some or all non-tuition expenses. This can be further complicated if a student has received off-campus scholarships to support this portion of their education expenses. In such cases, institutions must make tough decisions about giving less money (if the student/family didn’t cover these costs themselves) to the students who are most likely to need additional funds.