4 Iowa privates fighting for survival in a tough market

Gary (00:02.506)
Welcome back to this episode of This Week in College Viability. Hi, my name is Gary Stocker. We're going to do a slight different takeoff today on the top bottom reports we've been doing, and we'll continue the regular ones again another day. But what you have on the screen in front of you is kind of a new report I've generated in the College Viability app. And this is just the working environment that I actually developed the app in. It's a screenshot of that.

What I've done is I've gone back into Iowa. And you'll recall that I have four states that are on my high risk for college closures, Iowa, Wisconsin, Pennsylvania, and New York. And Iowa in particular catches my eye, creates some concern, and here's why. If you followed the post that I did last week, late September, you'll notice that both Wartburg College and Graceland University in Limone, both listed on this report here,

announced something called tuition resets. That's the generic name. The good folks at Graceland came up with something called transforming tuition. I don't even know what that means, but they're trying to create interest by lowering their tuition. And in the case of Graceland, it was from close to 40,000 to about 20,000. Quick math, it's about the same amount, if not a little bit more than what students were already paying.

with a $40,000 price and a 50% tuition discount. I've already talked about that. I'm not gonna spend any time on that. But here's the point I wanna make with this report. I'm gonna kind of set it up for you. And again, this is from the college viability report, the 2023 version, as something I've developed internally, something I have access to and I haven't published. I may or may not do that. And I'm looking at four colleges in Iowa. And I chose the two, Graceland and Wartburg, because they announced...

the tuition resets or transforming tuition. And I chose Central because they've done something different. They tried a marketing approach, being nice, about guaranteeing graduation or providing one extra semester to get to graduation at their cost. All right, give them credit for being creative. But here's the point. And let's start in this eight year changes. And again, the data as always.

Gary (02:24.358)
is from the National Center for Education Statistics and it's iPad's database. It's data the colleges themselves have reported. And I for the 2023 version of the app, I used the period 2014 through 2021. That's the last reported data. The 2022 data should be out sometime later this year. And I use eight years in part because it shows a trend. And I'll talk about that in a second, but also because I can't get much more than eight years on a page. But that's neither here nor there. But let's take a look at

enrollment. And these are the four colleges and Simpson is the fourth college. You'll notice this is the eight year changes. And I put the 2014 actual values and the 2021 actual values, just so you can do your own comparison. And let's just quickly look at 2021. And these four colleges are all about the same size, a thousand plus students. And they're all in Iowa. But let's go up to the green section. The eight year changes.

And let's look at over the past eight years, each of these four private colleges in Iowa have lost significant FTE enrollment. And the good folks at Graceland University and Limone have lost the most. You can see where they started from and how much they've dropped. And so it's no wonder that they're looking for some publicity, some marketing niche to get more students to apply. And there's nothing wrong with that.

But I'm here to tell you that I look at a lot of college financial numbers.

And it really doesn't look promising for any of these four, plus many, many others who show an eight year trend of declining enrollment. How do you turn that around to generate materially significant revenue? It's difficult, if not darn near impossible in the market that we face, which is too much supply of college seats and not enough demand for those same college seats.

Gary (04:22.966)
This is an interesting group and I want to digress for a second because typically when I bring up a group of four private colleges, I'm going to see most, if not all of them, with their four year graduation rates at or below 50%. And you can see this is an exception. This is, for the most part, it was a random group with the qualifications I've already shared. But look at the four year graduation rates for three out of the four. Really, really strong. They're doing something right. But yeah, look at their numbers. They're still not.

getting the kind of growth or stability even that would help stabilize those enrollment numbers. And when it goes back at the weakest of the four, Grayson University, who was trying to transform tuition. Let me know if you figure out what that is. You can always drop me a note at gary at collegeviability.com. 36% after four years, 54% in the next column after six years. Well, let's kind of put a spin on this. And I'm not...

concerned about doing spin. At Graceland University, Limoni, it's not even a coin toss college. You have better odds of calling heads or tails than you do from graduating in four years at Graceland. And after six years, it's barely a coin toss college, barely better than a coin toss college. And yet we're trying tuition, pricing gimmicks, and the folks at Limoni had great public relations in their own mind.

how they want more Graceland students in the world. Well, guys, can I give you some advice? The good folks at Graceland University, graduate the students you already got. That might help. And let's look also at some of these other columns. And again, tuition and fees for private colleges in particular are the bread and butter, the financial bread and butter that provides these colleges with the revenue they need to keep the lights on, to make payroll. And you can see each of the four.

has lost revenue. Wartburg not as much. Over eight years, that's not a lot of money, but nonetheless, the trend is downward.

Gary (06:29.286)
And if you're losing money from tuition and fees over eight years, tell me how you change that trend without needing another eight years to reverse it, if that can even be done. I'm going to jump over to the far side and I want to look at graduate enrollment. Central doesn't have graduate students, but even though Grayson has had some issues, I have no idea what they are about losing 300 students out of about 800. You can see down below.

300 students out of 800 in 2014, it wasn't quite that big in 2021. Something's not right. Something's not going well. So when we look at all of this data, and there's one more thing I wanna take a look at, two more things I wanna take a look at, and I wanna go down to the 214 and the 2021 values for endowment. And again, this is a kind of a unique group. If I were to grab four random private colleges, about half would meet the college viability minimum threshold of 50 million, five zero million.

endowments and three of these four are above it. Again, you can see which one is not there, even though they're close. And the last thing I want to talk about is the column fourth from the right, and it's called unfunded institutional grants. This is inside baseball. I'm starting to call it inside college data. These unfunded institutional grants are essentially the dollars that a college passes up to get students to enroll.

They call them merit aid, they call them scholarships, but essentially they're forgoing tuition dollars to get students to enroll. And we can see in each of the four cases, we can see that starting in the green section, Central College has tried to lower that amount, it's reflected in their fall enrollment going down, or FTE fall enrollment going down. But look at the other three. Grayson up 11 million, Simpson up almost four,

of almost 11, and yet each, despite giving more and more and more of the store away, continue to hemorrhage students year in and year out. I hesitate to say this, but I'm going to. I worry that for colleges like these four and many, many others, too many others, the financial die is already cast.

Gary (08:56.462)
Continuing to do business as usual, I know that's a trite expression, is not gonna get it done. If you follow the posts that I do, the podcasts that I do, the YouTube posts that I do, the solution is consolidation. You can call it mergers, you can call it whatever you want. And it's large scale consolidation, just like every other industry. You probably can't name another industry besides higher education that has not had.

significant mergers and consolidations. I don't use the term acquisitions for private colleges because it's rare if ever that an actual cash is gonna change hands, unlike the public sector where cash can change hands. So the bottom line is we're looking at four colleges trying different things and they're certainly entitled. I just worry that it's not gonna matter. And I worry that the students that are looking at are already attending colleges like these.

may be getting a college education that is not as good as they hope for, not as good as they want, not as good as they have earned. And so to all looking and listening at this data, be sure to continue to look at the data. It shows those colleges that are financially strong, none of these are, but there are some out there, and those that are financially weak. And I would offer when you look at colleges,

moms and dads and students and others, please start looking at the finances, look at the enrollment, look at the graduation outcomes. There are differentiators and they're easy to see. We'll talk next time and we'll provide another version of top to bottom with ten or more colleges for a state and we'll talk about those as well. Thanks for listening in. This is Gary Stocker with another episode of This Week in college viability.