College Faces Financial Fears Amid COVID-19: Uncertain Times Lead to Financial Worries among Staff and Students

The spread of COVID-19 has brought with it a flood of economic worries and uncertainties, and now that Gustavus has closed its doors for the rest of the Spring Semester, the question of how the school will be impacted financially still remains.
The economic hardships felt in the global market have led to significant decreases in the Gustavus endowment, however the losses are relatively low compared to those in the public market.
“Since December 31st, we lost almost $32 million in the endowment, which is about 15.5 percent of its value, which, if you compare to what the market is doing, is actually very good and demonstrates how properly diversified we are. That’s still a huge hit, but the public markets are down by over 20 to 30 percent,” Vice President for Finance Curt Kowaleski said.
Gustavus’ losses are relatively low because it has a properly diversified portfolio, or a wide variety of investments.
“Our endowment is invested in the stock market. It’s invested in global markets. It’s invested in fixed income, which are like your bonds and such, and there’s other miscellaneous things that it’s invested in,” Kowaleski said.
“This kind of shows us that we are properly diversified. For instance, in the fixed income market, we’ve actually had a positive increase in our investments because they’re not tied to the domestic stock market. We’ve lost the same thing as other people have lost in the public markets, but we have our money invested in some of these other alternatives, which makes our percentage loss less.”
Because Gustavus saw such increases in the years before COVID-19, the losses seen in the endowment at this point should not be cause for radical concern.
That being said, basic measures will be taken during Gustavus’s period of closure in order to cut expenses on electricity and utilities. In addition, the Investment Committee on the Board of Trustees will meet to discuss potentially rebalancing the portfolio; however, it is unlikely that drastic changes will be made.
“Eventually the market corrects itself,” said Kowaleski. “You don’t want to sell off your stock market equity right now. You want to maintain it because it is ‘cheaper’ than it was two weeks ago, so we’re long-term invested and the stock market will come back for us.”
In addition to a decrease in the endowment, the fact that COVID-19 has caused Gustavus to close for the semester raises the issue of meeting the financial needs of the student body. For instance, many students are concerned about losing out on financial aid.
“I rely on my scholarship, loans, and grants,” Sophomore Amara Packey said. “School is very expensive, and I can’t afford to pay the full price if any of it gets taken away.”
Students are also worried about the school simply not having funds to hand out. “I’m really concerned about the possibility of having less donors because I’m able to go to Gustavus because of them, so if some of the people donating don’t have the funds anymore, then it might not be good,” Junior Rachael Vlasak said.
Losing out on aid obtained through work study is another financial concern for students.
“I have a work study at Gustavus, and they said that they will match your average hours of pay, which is nice but also means I cannot work more hours,” Packey said.
In addition to aid, students worry about whether or not they will be reimbursed for payments they’ve already made for housing and food.
“I’m obviously concerned and a little bit confused as to what it’s going to mean for the money I paid at the beginning of the year for housing and board. Will I get any of that back?” Freshman Autumn Zierman said.
The Cabinet and the Board of Trustees are working hard to address these concerns. On the afternoon of Friday, March 20, an emergency board meeting was held in order to present updates on measures being taken to address the closure and COVID-19, including students’ financial concerns.
“The cabinet has discussed refunds to the room and board, and we are definitely going to do something there. Financial aid is involved too though, so it’s very complicated and we’re trying to work through that, and there should be an announcement coming out early next week on what we can possibly do there and still meet the requirements that we have to live under with financial aid,” Kowaleski said.