College towns are dependent on revenue from students attending local universities, but what happens when these students don’t return to the classroom and instead take classes virtually? The effects on businesses in these small communities can be significant, according to a new report from Yelp.

From March 1 to Aug. 17, businesses in college towns have reported a 24% higher permanent-closure rate on average compared to the same time last year, according to the study.

College students who frequent these local businesses are not returning to classes as coronavirus cases surge among young people on campus, causing restaurants, automotive locations, and beauty businesses to feel the biggest impact.

In some college towns, 29% of automotive business have permanently shuttered their doors and 22% of restaurants and 19% of businesses in the beauty industry have closed for good compared with locations in their respective states, the study indicated.

Bars and nightlife businesses also faced closures impacted by students, Yelp said.

With these businesses reliant on college students to stay afloat, the loss of these customers has pushed many businesses to the breaking point. According to Zillow, 2.2 million college and grad school students ages 18 to 25 moved during the months of March and April.

Summer months in college towns are slower for business by about 10%, but year-over-year, these local communities had a 14% greater drop in consumer interest in shopping and retail and an 11% drop in restaurants.

College towns with the biggest economic impact have been College Park, Maryland, with 4.4% of all businesses permanently closed, as well as Berkeley, California, with 4.2% of businesses closed, according to Yelp. Norman, Oklahoma, along with College Station, Texas, and Provo, Utah, all had a 3.8% business closure rate, the study said.

Cambridge, Massachusetts — the home of Harvard University and Massachusetts Institute of Technology — saw 3.8% of businesses shutter, despite its location near the metropolitan Boston area.

But it isn’t all bad news for college towns. In August, the data indicated that they are recovering with consumer interest only down by 5% year-over-year compared to their respective states.

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A Kentucky college senior targeted for deportation by a fellow studnet, students go about their business at UCLA after California voters turned down a suite of tax and budget-reform measures in a special election to deal with the massive state budget crises May 28, 2009. Getty Images
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