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With Students Staying Home, Empty College Towns Hit Hard by Coronavirus Crisis
College campuses all over the world have closed and have sent students home for the rest of the school year. As people practice social distancing and quarantining methods, economic activity is declining. Similarly, as students vacate campuses and head home, economic activity in college towns significantly decreases. Stephen Gavazzi, writing for Forbes, notes that when students leave campus, “gone with them is the purchasing power they had poured into the local economy.” College towns are regions whose revenues rely heavily on demand from the student population, and “until recently, college towns were thought to have a distinct economic advantage over municipalities that did not host an institution of higher learning.”
College campuses all over the world have closed and have sent students home for the rest of the school year. As people practice social distancing and quarantining methods, economic activity is declining. Similarly, as students vacate campuses and head home, economic activity in college towns significantly decreases. Stephen Gavazzi, writing for Forbes, notes that when students leave campus, “gone with them is the purchasing power they had poured into the local economy.” College towns are regions whose revenues rely heavily on demand from the student population, and “until recently, college towns were thought to have a distinct economic advantage over municipalities that did not host an institution of higher learning.”
Congress has allotted billions of dollars from the CARES Act be provided to assist colleges and universities. Since students have departed home, colleges and universities are tasked to refund housing and meal plans and provide emergency financial aid to eligible students. Unfortunately, thousands of students are displaced and have been completely uprooted. Gavazzi goes on to write that “while state and local governments also stand to benefit from CARES Act money through a $150 billion fund, there is nothing in the congressional action that addresses the specialized needs of college towns.”
College towns are accustomed to their peak seasons when students are present and experience slower seasons when the college/university is on break. “Among the unique aspects of the college town is the back and forth movement of students and how those population swings impact the local economy,” Gavazzi writes. Without the student populations, several businesses have closed temporarily and others have closed permanently. The “COVID-19 pandemic has brought the local economy to an almost immediate and complete standstill.”
Discussion Question:
- Define both demand shock and supply shock. Is COVID-19 a demand shock, supply shock, or both? Explain.
- Should the CARES Act address the specific needs of college towns? Explain.
Source: Forbes “With Students Gone, College Towns Are In Crisis Mode” by Stephen M. Gavazzi
