: ‘This COVID situation has really widened my eyes about capitalism’: Students locked into ‘unforgiving’ rents amid college confusion

A University of Michigan student moves out of her dorm in March. The cornavirus pandemic has created housing challenges for students. (Photo by Gregory Shamus/Getty Images)

Gregory Shamus/Getty Images

In her ideal world, Chelsea Chang wouldn’t be living in College Station, Texas, the town where her college, Texas A&M University is located. 

But that’s where she was renting and sharing an apartment with three other roommates until she went home for Thanksgiving last month, even though all of her classes were online this semester. 

When the pandemic first sent college students home in March, Chang continued to pay the monthly rent on the apartment where she had a lease, even though she wasn’t living there.

That experience left her wary of committing to a new lease for the upcoming academic year. But by mid-July Chang worried she might end up having to attend classes in person. Though Texas A&M had said they would be offering many classes remotely or in a hybrid format, it wasn’t yet clear whether all of her classes would be remote. 

“It was this very confusing time where all of us were, like, do we sign a lease because if we don’t sign a lease there’s a possibility we might be homeless or it affects our grades or something?” Chang said, noting that her timing for committing to an apartment was actually considered late. 

Chelsea Chang would have liked to break her lease.

Ultimately Chang signed the lease, and shortly thereafter learned she’d be taking her classes remotely. “There was no getting out of it obviously,” Chang said of the lease. 

Over the fall semester, she paid $650 a month to live in an apartment where she’d rather not be. “I really don’t feel like there’s any point in paying more money to stay in a room versus being at home and staying in a room,” she said. Of the period she’ll spend at home until spring semester begins, she wrote in an email, “a month and a half worth of rent will be going down the drain.” 

“This COVID situation has really widened my eyes about capitalism basically,” she added.  “I’ve realized how unforgiving it is.” 

Students were locked into leases

Over the past few months, students across the country have been coping with situations similar to Chang’s. In some cases, they’re forking over hundreds of dollars in rent each month for apartments that remain uninhabited and in others, paying thousands of dollars to break leases signed several months before the first case of COVID-19 was reported in Wuhan, China.

For some, like Chang, having signed the lease was motivation to return to their college town when they might have preferred — and perhaps been safer — staying at home. 

Even as decisions by college administrators and students have been closely analyzed for signs that they could be contributing to the spread of the virus, the role of off-campus housing has rarely been scrutinized. 

The sector typically relies on a captive audience of students willing to sign leases, in many cases almost a year before they begin, to keep buildings occupied. That dynamic may have contributed to a situation where even when colleges offered classes remotely, cases in the surrounding areas still spiked. 

“It is entirely possible that some of the practices around college-student housing contributed to the spread of COVID-19,” said Kevin McClure, an associate professor of higher education at the University of North Carolina Wilmington. 

Of course, it’s also the case that many students moved into their off-campus apartments despite largely remote instruction because they wanted the independence and ability to focus on their schooling that comes from living in a college environment.

Indeed, as colleges shifted their housing policies over these last several months in response to COVID outbreaks and public health guidelines, some students scrambled to find places to live off campus. 

“Students value being in that community environment where there is an atmosphere where they can engage with peers,” said Dan Oltersdorf, chief learning officer and senior vice president at Campus Advantage, a property management company that specializes in student housing. 

Roughly 2% of residents at Campus Advantage properties approached the company about going on a payment plan during this period, Oltersdorf said. The company worked with those students to provide them with those arrangements, connect them to other resources and “educate our staff on how to do that compassionately,” he said.  

In addition, the number of “no shows” or students who had leased an apartment before the school year starts, but didn’t move in, was up just 1% from last year. Those two factors combined “seems to indicate to us that the impact on our residents at least, isn’t as much of a burden of feeling like they’re trapped within that lease,” Oltersdorf said. 

A 950,000-bed industry

Campus Advantage is one of the several companies involved in the nearly 950,000 bed student housing industry. Despite enrollment and revenue concerns plaguing colleges during the pandemic, “most property owners didn’t see that much distress this year,” said Barbara Denham, senior economist at Moody’s Analytics’ REIS. 

The occupancy rate for off-campus student housing was roughly 87% for fall 2020, according to data from RealPage, a property management software company. That’s the lowest level since the company began tracking the data in 2011, and 4% lower than fall 2019. RealPage’s data also indicated that the allure of living within a half a mile of campus dissipated somewhat following the onset of COVID-19. These properties typically command a $180 per month premium. 

This year, apartments within 0.5 miles of campus saw rent growth of 1.4% and occupancy rates of 87.1% compared to rent growth of 1.7% and occupancy rates of 91.3% last year, according to RealPage’s data.

The relatively modest decline in vacancy is in part because the leasing cycle for college housing typically begins in October of the previous year. In other words, the companies’ occupancy data partially reflects that students are locked into leases they may have signed before the pandemic. 

“They’re probably a little nervous about next year,” Denham said of student housing property owners. “It hadn’t quite been a tenant’s market in the past because of this need to lock in housing for the following year, but I think that’s going to shift,” Denham said.  

For one, many students and families have less money to spend on college and housing than before the pandemic. In addition, the wider adoption of remote education may push some students towards living elsewhere while they attend college. Finally, demographic shifts mean that there will be fewer students of college age than in recent years. 

“A lot of tenants may resist signing leases early and will hold out for lower rents because they can if there’s just too much of a supply out there,” Denham said.

Oltersdorf said he anticipates that student housing operators’ experience during COVID will usher in several changes to the industry, including an increased focus on amenities like study spaces, fresh markets and retail and a shift away from perks like tanning beds. The pandemic forced operators to evolve in ways that probably should have happened before the pandemic, like offering drive through move-ins and revamping package delivery, he added. Finally, this period could also move the timeline for leasing off-campus apartments forward, he said. 

Campus Advantage’s pre-lease numbers are lower this year than at the same time last fall, he said. Since so many colleges sent students home at Thanksgiving, Oltersdorf said he expects leasing activity to continue to be slow until they return next semester. 

Off-campus housing timeline

Historically, the off-campus leasing cycle was set to align and compete with on-campus providers, according to McClure. “Prior to technology, students would come to a physical space and get a lottery ticket,” to participate in an on-campus housing lottery, McClure said. “Getting that all arranged and often meant that institutions had to do it while students were still on campus.” 

That leasing timeline can compound the pressure on a process that is already stressful financially and socially for many students, McClure said. “Very rarely is it the case that students are deciding where to live by themselves without the consideration about where friends are living,” he said. “It’s just a more complicated decision making process for them because it’s something that they view as being very important.” 

Daianne Barros picked her apartment because it was affordable, offered a shuttle to campus and it appeared to have an affiliation with her school, the University of Central Florida. When college students began heading home in March, Barros, 21, assumed that apparent affiliation would mean the building would work with her. That wasn’t the case. 

Though many off-campus properties are marketed to students specifically, include phrases like “university” in their names and in some cases, invoke a nearby college on their website or in other materials, the buildings are privately owned and managed. In other words, they’re just like a regular apartment. 

“I understand that I signed a contract, I understand that I’m responsible for that contract,” Barros said. “If million-dollar companies were able to get a bailout from the government, it would be nice if students would have some sort of relief.”

Daianne Barros started a Change.org petition in hopes of getting local leaders to pay attention to the plight of college student renters during the pandemic.

When her university went largely remote, Barros also lost her on-campus job making it difficult for her to afford rent. Her building waived the late fees on the apartment over the summer, but once the fall hit, Barros had to borrow $2,000 so that she could pay her back rent immediately — or risk a $5 per day late fee. 

“The only way they would let me go is if I find someone else to take over,” Barros said. “But no one is going to campus, no one is going to school.”  

Barros started a Change.org petition, and with other, similarly affected students — at times there are about 100 of them in a group chat — tried to get the attention of local lawmakers to see if there was anything they could do. But nothing has come of it. 

One city offers funds for students

In Irvine, California, where the University of California-Irvine is based, lawmakers said they would use $2 million in funding the city received from the CARES Act, the coronavirus relief bill, to provide residents, including students with money to help them pay their rent or to terminate their leases. 

Young Invincibles, a youth-advocacy organization, has been working for months to convince other lawmakers in California to take similar steps or go even further. When the pandemic began to take hold in March, YI organizers began to hear from students who said their landlords were pressuring them to continue to pay their rent even though their schools had shut down and would require several thousand dollar fees to break their leases. 

“At that point we realized without attorneys or some kind of higher level legal knowledge that our students were really in a situation where they needed help,” said Kristin McGuire, the western regional director for Young Invincibles. 

Student organizers began meeting with elected officials all over the state, McGuire said, and the organization sent a letter to California’s Democratic governor, Gavin Newsome. Now they’re working on a legislative solution that they hope could be introduced in January. 

Ruth Sosa, YI’s lead organizer on the group’s “Release the Lease” campaign, knows about the challenges students are facing with housing during this time first-hand. Sosa, a student at Sacramento State University, moved back to the central valley of California when her courses moved online in March to help with her parents’ small business. 

She’d completely vacated her apartment by April, but she wasn’t able to terminate her lease until June. That’s because the company that owned her apartment required that Sosa give 30 days notice to leave and pay that 30 days up front — a sum that totaled $3,500. 

“It took us a few months to be able to get the money together and, even when we were able to get the money together, a lot of it went on our credit cards,” Sosa said. 

When she vacated her apartment, Sosa still had about six months left on her lease. She’d signed it in November 2019, months before the pandemic reached America’s shores.

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December 07, 2020 at 02:32AM

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