This Week In College Viability (TWICV)

Elizabeth Kelsey's Dubuque TelegraphHearld article: Leaders of local private colleges determined despite anticipated challenges is thorough enough reporting. Yet she falls into the PR trap that most regional reporters do. She doesn't challenge the company line from colleges she is reporting on.Here are three areas I have written about previously that appear in this article

.Fallacy 1: New programs will save us. It won't happen in almost all cases. We are not looking for 'couch money'. These colleges need materially significant new, net revenue. New programs only guarantee start up costs and years of effort before a small percentage might materially contribute.

Fallacy 2: We are unique. Nope. The competitors for these three colleges are engaged in very similar activities to try and grow their market share and net revenue. A college degree is a commodity. Some are certainly more valuable than others; but it is safe to argue that the fastest, least expensive route will prevail.

Fallacy 3: "Let's not share any actual data with reporters. They aren't that smart." The discussion about reporters and intellect is for another day. Certainly, these stories play well locally. That is why reporters write them. However, College Viability is only one of many higher ed data entreprenuers working to improve the transparency of college finances and viability. The data in this story was predominantly based on hopeful numbers somewhere in the future. The actual data paints a much different picture than these college leaders choose to share
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Here is a link to get a FREE pdf report on the financial health of Loras College, Clarke University, and U. of Dubuque

Through all of the silly season admissions announcements, let’s remember to ask: “Who is the fiduciary - someone looking out for the best interests for students, parents, faculty, and the community?" It is definitely not college leaders and boards. 

Tune into our regular TWICV podcasts as we work to increase financial transparency in higher education. 

For students and parents, We’ll give you the perspective you need to make the most informed decisions about college you are considering. 

For faculty, staff, and other stakeholders, come to College Viability to get the guidance and data you need to engage in transparent conversations with your college leaders.

Here are the links to today's stories.

Liam Knox at IHE 9-7-23 (Dominican U etc.)

Limestone University names acting new president following resignation of interim SC

‘Debt-free’ education: No more student loans in Washington U. financial aid packages STL PD 9-8-23

Western Illinois Univ Fall 2023 enrollment

International, grad students buoy Eastern Illinois University enrollment

Enrollment at Iowa’s public universities is on a downward trend

Lyon College sees enrollment gains The Batesville Daily Guard

Webster University (St. Louis, MO) was the focal point in a late January 2023 story in the St. Louis Post-Dispatch. The essence of the story is that the college is in financial trouble. It is unlikely to close, but it will almost certainly face a need for lowering its cost base. This podcast addresses the specific issues at Webster only in the context that their response is similar to almost all private colleges with similar financial distress - and it wont' work.

New programs, degrees, etc only guarantee new start-up costs. With the competition doing the same thing, Webster and all of the other colleges have no guarantees of adding any materially significant new net revenue.

The intense pressure private colleges face on tuition discounting will extend to new programs they begin. The Webster leader's focus on public grants are not a long-term solution. It’s similar to couch money. At some point, every business must generate positive net cash from operations. Webster's admissions yield (aka popularity) is down 19% points since 2014. Their 2021 unfunded discounts were over $33M and the funded scholarships were a meager $1.2M. Their tuition and fee revenue has decreased $83M (source National Center for Education Statistics and IPEDS).

Those trends are not good.

While the details of this story are about Webster University, the responses from other private and public colleges are almost universally the same. “Let’s grow our way out”. Do we not see the LACK of logic that if every college is trying to grow its way out of financial distress – none or very few will be able to do so?

While colleges can't cut their way to success, they can certainly look to change their business model and look for merger or other consolidation partners. Webster and other college leaders should be looking to lower their cost base because the documented trends from the past are not promising.

Forbes.com had a guest contributor discuss her predictions (aka wishes) for 2023.

Gary Stocker focuses on 4 financial health and viability predictions for 2023.

1. Pressure on tuition discounts will continue.
2. Majors and courses will be cut in more colleges
3. The closure rate for private colleges will increase.
4. A select few of mid-size private colleges will step up and lead the way in consolidating college operations.

From 2015-2021, La Salle University has had decreased FTE enrollment of almost 600 students. Their tuition and fee revenue is down almost $22M. 4-year graduation rate is OK at 53%, but 6-year is only at 60%. In terms of graduation rates, this college isn't much more than a coin-toss college.

Here is a link to a one-page summary sheet for the College Viability App results of

La Salle University.

This podcast episode reviews the enrollment, finances, and outcomes for Buena Vista University (IA). Their enrollment risks are mitigated by decent 4 and 6-year graduation rates and an above average endowment. The loss of almost 500 FTE students from 2015-2020 is a significant risk factor and suggests the university has not found a solution to those enrollment losses. It also has decreased tuition and fees revenue that does not quite match the decreases in total expenses.

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As private colleges enter another challenging financial and viability year, I am going to review these high-risk colleges. These are the basic factors I will use to determine which high-risk colleges to review.

A college that meets these general specifications will be considered 'high-risk' of financial weakness and potential issues with viability. The data source is the National Center for Education Statistics and its IPEDS data base. The application used for the analyses is the College Viability App.

1. FTE enrollment has decreased in the past 6 years.

2. 4-year graduation rates average 50% or less over the past 6 reported years

3. 6-year graduation rates average 70% or less over the past 6 reported years

4. Admissions yield (aka popularity indicator) has decreased over the past 6 reported years.

5. Tuition and fees revenue collected by the college has decreased over the past 6 reported years.

6. The endowment in the last reported year is less than $50 million.

As is always the practice at College Viability, we offer comparative analyses of college finances, enrollment, and outcomes. It is not our practice to predict college closures - simply compare results using government data that has been submitted by the colleges themselves.

Birmingham Southern College is following the same no-win model as many other private colleges. They have maintained such a parochial focus that their options to survive amount to begging for support.

In this episode, we discuss other options that colleges like Birmingham Southern, Holy Family, Cazenovia could have pursued much earlier.

How can a public university with a 4-year undergraduate graduation rate of 33% not demand more accountability for its faculty?

The Hechinger Report has a story on December 15, 2022 that describes the gneral challenges in getting a higher education organization to change. In this podcast, I offer some perspective on what that means for colleges and universities.

The focus on changing enrollment patterns and accountability for graduation rates is the focus of this 5 minute commentary.

From 2015-2020, Rockhurst University (MO):

1. Tuition and fee revenue increased $3M
2. FTE enrollment is up 400 students, so the 2022 enrollment crash has to be significant.
3. 4 and 6-year graduation rates are strong at 56% and 73%, respectively.
4. Admission yield is a strong 30%
5. Their endowment is weak at $38M in 2020 and has been very flat over the past 6 years.

Quick analysis: The article suggests this is a bad confluence of events. I tend to agree. Rockhurst compares favorably to most colleges I review. What concerns me is the $40K to $10M jump. I think somebody at the top screwed something up. It’s possible the 2019 the acquisition of St. Lukes College of Nursing and Health Sciences induced some unanticipated costs that are just now showing up.

Rockhurst's current leadership is proposing adding sports and academic programs. The only guarantee for adding programs in the current higher education market is start-up costs. Net revenue is not guaranteed, in large part because so many other colleges are doing the same thing.

Rockhurst is one of those rare colleges in a position to merger with another regional private college. They would bring strong historical credentials and could leverage scale across many non-academic functions to better manage over costs.

It is also worthy to note that the university's top leadership has had recent attrition.