The college business model is in crisis as more and more students decide they don't want to return in the fall

• As universities keep campuses closed and offer only online classes for the fall semester, many students are deciding not to return.
• It's proving hard even for prestigious universities to convince students to pay upwards of $30,000 semester for remote classes, when online-only colleges offer similar courses for a fraction of the cost.
• As US students and colleges alike grapple with the reality of virtual learning, COVID-19 may be leaving a lasting impact on how Americans view and value higher education.

As colleges around the country decide to extend online learning into the fall semester as a safety measure against the ongoing COVID-19 pandemic, more and more students are deciding they don't want to fork over thousands in tuition to take classes on Zoom. Colleges are finding it harder than ever to convince them it's worth it.

Put plainly: The business model of the American university is not looking good.

Here's why.

Students just don't want to pay so much for online classes

Minh Phuc Tran, a student at the University of San Francisco, told Business Insider that he is unlikely to continue classes at USF in the fall if they are strictly online.

"My experiences with classes the past couple of months have not been so great," he said, "For me, for college, you really have to be there and be present... the dynamics now just aren't the same."

University of San Francisco's estimated tuition for the 2020-21 academic school year is $51,930. But paying this price for online classes while losing out on all of college's social activities — from living in dorms to participating in schools sports, clubs, and other activities — doesn't seem fair to students used to on-campus life.

Despite universities' best efforts, many students are dissatisfied with the conversion to online learning. Given the lack of access to campus resources, libraries, labs, performance spaces, and creative studios, it's difficult for colleges to that require students pay the same price for virtual classes alone.

Grainger Rickenbaker, a freshman at Drexel University in Philadelphia who filed a class-action lawsuit against his school for tuition reimbursement, told the AP that many of his classes have been replaced with pre-recorded videos.

Students at schools around the country, from Columbia to Purdue to Michigan State, are filing suits demanding refunds.

Universities will need to prove that their price tag is worth it — or adjust accordingly

Some colleges were being severely affected by equivalent online options even before the pandemic. Concordia University in Oregon completely closed in February (and did not refund students their spring tuition) after attempts to increase enrollment in their online classes, which ironically led students away from joining campus in-person.

This is the challenge that many universities face: If they reduce tuition for online classes, it will be harder in future years to convince as many first-time students that the on-campus experience is worth its sticker price.

Colleges are facing a "triple whammy"

Richard Vedder is a professor emeritus at Ohio University who has been researching the economics of America's higher education system for decades. He says that universities are being hit by a "triple whammy" of government funding cuts for state colleges, dwindling enrollment, and COVID-19 causing pressure to reimburse the spring semester's fees.

Some universities may try to survive on donor funding, but even large donations won't be able to replace or cover the money that they normally rake in from students. Towering tuition fees and static household incomes were already a growing threat to colleges, and the increased popularity of online schools (as the former Concordia University can attest) prove that the college model was already on thin ice, long before pre-coronavirus.

FOR A DEEPER DIVE: Read "College students don't want to return in the fall, and it could cause many universities to collapse" on Business Insider Prime.