COVID-19 and Financial Sustainability of Academic Institutions

Pavlov, O.V. and Katsamakas, E. COVID-19 and Financial Sustainability of Academic Institutions. Sustainability. 2021, 13(7), 3903; https://doi.org/10.3390/su13073903

29 Pages Posted: 26 Apr 2021

See all articles by Oleg V. Pavlov

Oleg V. Pavlov

Worcester Polytechnic Institute (WPI) - Department of Social Science & Policy Studies

Evangelos Katsamakas

Gabelli School of Business, Fordham University

Date Written: April 22, 2021

Abstract

The COVID-19 pandemic has had a significant impact on higher education. Steering academic institutions through the pandemic is a complex and multifaceted task that can be supported with model-based scenario analysis. This article studies the short-term and long-term effects of the pandemic on the financial health of a college using scenario analysis and stress testing with a system dynamics model of a representative tui-tion-dependent college. We find that different combinations of the pandemic mitigation protocols have vary-ing effects on the financial sustainability of an academic institution. By simulating six individual components of the COVID-19 shock, we learn that due to the causal complexity, nonlinear responses and delays in the sys-tem, the negative shocks can propagate widely through the college, sometimes with considerable delays and disproportionate effects. Scenario analysis shows that some pandemic mitigation choices may destabilize even financially healthy institutions. The article concludes that higher education needs new sustainable business models.

Keywords: higher education; university; college; COVID-19; pandemic; risk; resilience; stress testing; system dynamics; simulation; model-informed decision making; computational model; computational experiments; causality; feedback; complex system

Suggested Citation

Pavlov, Oleg V. and Katsamakas, Evangelos, COVID-19 and Financial Sustainability of Academic Institutions (April 22, 2021). Pavlov, O.V. and Katsamakas, E. COVID-19 and Financial Sustainability of Academic Institutions. Sustainability. 2021, 13(7), 3903; https://doi.org/10.3390/su13073903 , Available at SSRN: https://ssrn.com/abstract=3832341 or http://dx.doi.org/10.2139/ssrn.3832341

Oleg V. Pavlov (Contact Author)

Worcester Polytechnic Institute (WPI) - Department of Social Science & Policy Studies ( email )

100 Institute Road
Worcester, MA 01609
United States

HOME PAGE: http://www.olegpavlov.org

Evangelos Katsamakas

Gabelli School of Business, Fordham University ( email )

140 West 62nd Street
New York, NY 10023
United States

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