American University will use all revenue from increased 2020 tuition for financial aid
President Burwell announces additional budget measures to mitigate impact of economic downturn
American University is dedicating all $13 million from this year’s tuition increase to additional financial aid in an attempt to mitigate the economic effects of the coronavirus pandemic, President Sylvia Burwell wrote in an email to the student body Friday morning.
To help offset lost revenue and increased costs, the University is planning to use a reserve fund, created in previous years in case of emergency, along with pulling from unrestricted portions of the endowment. In addition, it is reducing non-personnel and maintenance spending and eliminating spending for facilities modernization, furnishings and equipment.
The University is anticipating no large-scale layoffs in the fall, although short-term contracts may not be renewed if enrollment decreases. Following winter break, AU may implement a one-week unpaid furlough to save additional funds, although those earning less than $40,000 will be exempt.
“A key element of our financial picture is enrollment for current and incoming students,” Burwell wrote. “It is central to our educational mission and we want to thank everyone who is working on this critical area. As we implement our fall plan, prioritize health and safety, and track the ongoing impact on enrollment, we will obtain greater insight into the corresponding revenue and costs.”
Burwell’s announcement comes days after the University released its fall semester plan, AU Forward, which garnered mixed responses from students. On May 26, Burwell announced that the University was projecting losses over $100 million due to the pandemic, resulting in a series of contingency plans.
In April, the University implemented pay cuts for the president and executive team, a hiring freeze, and a pause on new construction and merit increases. These cuts will also continue into the fall.
While AU relies heavily on tuition for its revenue, some students have expressed concern about returning to campus in the fall or taking classes online.
“These developments impact our team members in a number of ways, and we understand that any change to personal finances is incredibly difficult,” Burwell wrote. “It is welcome news that we can draw on unrestricted income from the endowment, use reserve and contingency funds, and make targeted budget reductions to cover the majority of the projected shortfall.”
This is a developing story, and it will be updated as further information becomes available.