This Week In College Viability (TWICV) for June 10, 2024

Gary (00:02.417)
Hey, I've been gone a week. There's way too much to catch up on, but let's do it anyway. Hi, it's Gray Stalker back with another episode of This Week in College Viability, the podcast. This is for June 10th, 2024. Cutbacks and layoffs, lots of them. I'll talk about those in a second. Columbia College in the news again, this time with what we're gonna call a final layoff announcement. I don't believe that.

Headline, college enrollment up for a second semester in a row. Finds new report. I'll tell you why that is misleading. Tuition discounts at private nonprofit colleges reach new highs. That's an annual thing. I guess if you can't sell it, you try and find a way to give it away. Another short notice closure, this one generating lots of news out of Philadelphia, the University of the Arts announced its closure like on May 31st.

and turned out the lights, locked the doors on June 7th last Friday. And hey, you get a chance, send me questions, comments, concerns, even insults to gary at college viability .com. That's gary at college viability .com. Let's do them. Let's do layoffs and cutbacks. Benedictine University in Illinois, up by Chicago. Alisa Fabray, and May 21st, I've been calling a while. 25 positions combined, cut and vacated.

They have a $5 .5 million deficit. Enrollment was down 13 % over the last five years. I did a quick calculation. Their revenue to expense ratio in 2022 was 0 .8. And for those of you that didn't pay attention to math class, that's for every dollar in expenses. They only generated 80 cents in revenue. That's never going to be a good thing. But Turbo University faces budget deficit. They're going to cut 25 positions, as far as from Sam Schultz.

on May 24th from news8000 .com. There's more details, but I'll leave the link, as always, in the show notes. Cal State Monterey Bay, a public college, announces layoffs. The university is currently in $4 million of deficit and cutting operational costs for the past two academic years. I did not know that. Looks like 16 layoffs and 86 into a voluntary, that's a big number, 86 into a voluntary separation agreement.

Gary (02:25.617)
12 million structural deficit. They say it's been reduced to 4 million. There's always some funny math going on with those kind of projections from the colleges themselves. And then finally, two more to go, Oregon Health and Sciences University will lay off at least 500. And the financial question raises questions. Now, the stories show, this was in the Oregonian by Mike Rogoway.

44 million in losses and as I mentioned 500 in cuts. There's something else. There's something else going on there. Those are big numbers and I'll follow that in the coming weeks. And then finally, University of Lynchburg in Virginia is cutting back 12 employees and eliminating 25 minors and five graduate programs. Page two, what is a this week in college viability?

podcast without a returning performance. And this week it is Columbia College in Chicago. This is a story from the Columbia Chronicle by Patience Hurston and Sydney Richardson, again, a little bit ago, May 20th. Here's the interesting part of the story. As the trustees at Columbia College have decided that the adverse circumstances, that's their way of saying financial exigency without actually saying financial exigency, the trustees decided that adverse circumstances,

will remain in effect until the board votes otherwise, which faculty have argued effectively suspends tenure at Columbia. Well, I don't know that effectively suspends it, but certainly it is, whether intentional or not, certainly part of what we're seeing is the ongoing battle. You can call it a war if you want to on tenure. This one is just taking place at the battleground called Columbia College.

in Chicago, Illinois. Goddard College, one of the recent closures, about one of them, about one per week this year, nonprofit private colleges. Goddard College, their closure announcement came in April via email. That's always touching. Here's a quote from a story that Ben Unglesby wrote in Higher Education Dive. Even by mid -May, remember their announcement came in April, even by mid -May, the college's president, Dan McCoy,

Gary (04:52.049)
hadn't communicated directly with faculty about the shuttering.

The faculty noted this is messed up. To close an institution and not even speak to its community. Hukoi, the president at Goddard College. Hukoi did not respond to multiple requests. This is from HED, for an interview or comment by email, LinkedIn, or phone. Goddard's board chair, Mr. Mark Jones, also did not respond.

to multiple requests for interviews. Now, this level of college leadership ineptitude, it's not universal, not at all, but it's way too common, especially among colleges that are closing. Now, I gotta think there's a connection somewhere, but we're not talking...

month plus six weeks, give or take, of a college's closure announcement and its leadership in the form of Dan Hikoi and Mark Jones have not, as this story was written, addressed anything about that closure.

Let's give that a jeesh. Changing the topic a little bit, there's a story from Bloomberg. The headline reads, colleges ramp up debt sales to EBT, debt sales and a frenzied race for new students. And the subheading reads, fierce competition drives colleges to renovate campuses. Some barrings are hail Mary efforts by colleges, CFO says.

Gary (06:41.137)
And again, this was Amanda Albright and Siri Taylor in Bloomberg on May 22nd. Now, there's nothing wrong with borrowing to grow your business. It, of course, happens all the time. But you'll recall many times when we're talking about college closures, we even have specific topics we've discussed about bonds themselves. When you borrow the money, that means you have to have dollars to pay the interest on the principal. And that means you have...

fewer dollars to invest in faculty salaries, campus amenities, students, programs, all that kind of stuff. And here's my question, here's my concern. If these colleges are borrowing funds and the market's not particularly nice on interest rates right now, it's kind of, I'll use the term Hail Mary, what happens if just by wanting to spruce up the place?

These colleges don't get the students that they want, A, and B, because of the intense pressure they're going to face in the market for tuition discounts. What if they can't get the tuition revenue they need? Because they have to discount tuition so much just to get students in the door. And I've said many times, Iowa Wesleyan, that closed about 15, 16 months ago, same thing. They had gotten 300 more students, give or take.

over the last eight years, but they'd given away so much in tuition discounts, in unfunded institutional grants, call them whatever you want. They had to close their doors. They're certainly welcome. These colleges are certainly welcome to try that, but boy, it's risky. Mike Nitzel and Forbes talked about college enrollment up for a second semester in a row. I don't doubt that for one second. But the macro is the good trend.

but it's not universal. It's the micro trend that is important. What are the actual enrollment numbers for each college?

Gary (08:50.481)
because it's obvious to me that the high -end colleges, the well -funded colleges, the large public colleges, they're not facing the same level of market, financial and market challenges as the smaller, private nonprofits. And if enrollment is up, I don't see the number here, if the enrollment is up across all colleges 2%, well, that means it's also down 2 % some places.

to get to that average of 2%. I'm just making up those numbers. So we have to wait till those fall enrollment numbers start to come out. And we won't even see the aggregate for about a year and a half when iPads releases their fall 2024 enrollment data in early 2026. Talk about a screwed up system, especially when we note that public companies provide quarterly updates on all sorts of things.

Page three, the dark side of enrollment management.

Gary (10:01.009)
This article is from the Chronicle and Stephen Byrd. And it uses Clemson University as a case study for financial aid leveraging, that's an inside term I know, to get the types of students that a college wanted. In the case of Clemson, this was higher performing, non -need based, which means they could afford to pay for more of their tuition, students. In effect, Clemson gave out merit aid discounts to smart kids.

who could have paid more for their college. The story notes that the losers, my words, not theirs, the losers at Clemson were students with financial need who might have otherwise qualified. Now at the end of this story, Stephen Byrd writes this piece. He's talking about the parent plus loans that can be applied for in almost all cases granted for the cost of the education.

And Mr. Hurd says, policy makers should forbid colleges from packaging PLUS loans, Parent PLUS and others, and require them to use a standardized award letter that clearly lays out how much families will be on the hook for after all grant and scholarship aid is awarded. That has been shared by many, asked for by many. It's not going to happen anytime soon. They also, he goes on, they also need to tighten the PLUS loan eligibility requirements. Now, what he's talking about here is there are parents,

get those plus loans who in reality have no capacity or limited capacity to repay them and they are burdened the non -dischargeable debt into eternity for all intents and purposes and he's saying hey don't burden families with these loans well okay great point but those loans provide a significant

materially significant amount of revenue for colleges, they're going to be hesitant and use their lobbying forces in any way they can to say, hey, if these students need an education, let them have it. Don't be limiting our capacity to generate revenue by making Parent PLUS loans harder to get.

Gary (12:20.529)
Tuition discount rates at private nonprofit colleges reach new heights. This is from the Navi Schwartz and higher education dive. And the rate for the last reported year was 56 .1 % for first time full -time students. This is from the National Association of College and University Business Officers. And like I said in the intro, I guess if you can't show value for education, give it away.

and some can afford, some of these colleges certainly can't afford it, but those ones that can't afford that 56, 60, 65 percent tuition discount, they're the ones that are going to go away, and there are going to be many, many, many more of those left. I didn't put this next story in the cutbacks and layoffs because it was innovative, and the headline reads, Clark's Summit University, this is in Pennsylvania, furloughs all of its workers.

This is from WNEP ABC Channel 16 Television. Now this is innovative. The furlough for the employees, and I don't remember the number, is temporary but indefinite. And it goes on to say, the story goes on to say that leaders will work voluntarily without pay. Great, that's their choice. But here's my question. How will these furloughed faculty and staff pay their bills?

and how long until they start looking elsewhere to meet the financial needs of the families. And for students, there's almost certainly a nationwide realization that the college closure bandwagon is underway with no end in sight. They're gonna look elsewhere, at least many of them will. And these colleges that are denying, these colleges that are denying,

financial and market realities as I've said many times before and I will say many times in the future.

Gary (14:24.177)
They're only hurting their students. They're only hurting their faculty and their staff and their communities by not turning out the lights now, not later. Folks, the writing is on the wall. Don't delay it. It's not going to change things. Page four. I saved the University of the Arts story for the last part of today's podcast.

And it closed, as I said earlier, they made their closure announcement on May 31st, locked the doors last Friday. And the first term I'm going to reference is from Ben Unglesby at HED, Higher Education Dive, on June 6th. And the news of the institution's shutdown first came from the Middle States Commission, their accrediting agency. But the accreditor in Ben's story says it wasn't supposed to happen that way. All right, fair enough. So the accrediting agency, the Middle States Commission on Higher Education.

wanted to correct the message that the University of the Arts leadership put out. The Middle States Commission made public the news that the Philadelphia -based University of the Arts would shutter before, yes, that's right, before the university did. And when the University of Arts Board Chair, Johnson Aaron, and President Kerry Wach published a statement later that same day, and I think this was May 31st,

They said the Middle States Commission on Higher Education elected to withdraw URX, that's their shortcut name, URX accreditation and announce it before we could communicate it with you. That, ladies and gentlemen, boys and girls, is not true. In a statement, because now we're playing tit for tat, in a statement on Wednesday, that was last week, Middle States sought to correct the record. Good for them. According to the accreditor,

Middle States President Heather Perfetti asked Wach, the president at UArts, to immediately notify campus stakeholders of the university's pending closure before the accreditor's announcement came out on May 31st. All right. So heads up, Middle States said. We're letting the world know on May 31st, you've got, I think, two days is what I read into this. They had two days. UArts had two days to give their stakeholders a heads up.

Gary (16:50.769)
In a statement, the accreditor said that UArts notified it on May 29th of plans to close. They said because of a cashflow issue, probably, which came before the decision by middle states to pull the private nonprofits accreditation. Middle states asked the university for details on how and when the institution became aware of the cashflow problem. That's a good question. They're going to say, just a couple of minutes ago, and financial details and more.

and they gave them a deadline of noon Eastern time on May 30th.

the university missed the deadline and ultimately Middle States said the information it did get was insufficient. In seeking to correct the record, the story continues, Middle States also said its accreditation withdrawal did not cause University of the Arts closure, as it said some in the media have reported. And now there have been protests going on at University of the Arts since last week.

And they continue over the weekend, I think even into this early part of this week. And that's fine. Protests are what colleges do well. But this is another example of leadership and board leadership ineptitude. How can you not project cash flow issues? Did the lawn mowing costs jump up all of a sudden? They couldn't afford to pay the lawn mowers? I'm being silly, of course. But there's more.

So just this morning, so on Monday, June 10th, this story came out of the Philadelphia Inquirer. University of the Arts had explored a possible merger with Drexel University, also in Philadelphia, two years ago, but it didn't materialize. And this is a story in the Inquirer from Susan Snyder and Christian Graham.

Gary (18:45.585)
And the essence of the story is Drexel's president said, you arts wanted only a partial partnership. I have no idea what that was, what that is. And Drexel didn't think that was enough and rightfully so. So again, these colleges wait too long. This was two years ago, let me remind you. Two years ago, there was an opportunity and all university arts wanted to do was stick its toe in the water. Maybe they wanted a story to say, hey, we tried.

Drexel wanted to do it right. They wanted a full -fledged merger. And this is yet another, yet another prototypical example of a college that knew it was in trouble, but didn't have the courage, the means, the leadership to do the right thing. How many more times, how many more times will we see this? And let's do the last closure, Pittsburgh Technical College.

in imminent danger of closing the university now since closed. And here's just from Philadelphia CBS News Report, and this is from students. Again, no notification, open today, close tomorrow. The way everything was handled, this is a quote, the way everything was handled, completely unacceptable, said a rising sophomore, I won't share the name. It was just a cowardly act on their behalf, just not communicating with us all, said another student at Pittsburgh Technical.

College.

And certainly, as we wrap up this episode, certainly college leadership from the president to the board is not universally inept. It's not. Most colleges are run by competent and even visionary leaders. They're still facing the same market pressures. And it makes it for a tough gig, for sure. Yet colleges like Northland up in Wisconsin, Wells College in New York, and now this week, University of the Arts.

Gary (20:42.161)
and Pennsylvania are just the recent cases where this is not the case, where these leaders clearly are way in over their heads. And that's why my college viability app, the 2024 version for private colleges in particular, is critical for faculty and staff. I have a version for them, but even more so for students.

their families. I'll tell you I'm getting a lot of orders for the student and family version because students and their families are recognizing the fact that the colleges they're considering may not survive and they're looking at my app to be able to compare colleges. The Blue Book, you know kind of like the Kelly Blue Book for cars, kind of like a reverse FAFSA. It gives parents and families financial information on colleges. And the data's there. We track eight years of data.

that colleges themselves reported to the National Center for Education Statistics. And if enrollment is small, to start with, and decreasing, if the four -year graduation rates are abysmal, if the endowment is not much more than couch money, these are just some of the many signs that a college is unlikely to survive.

There are, as I record this on June 10th, there are too many students and families being burned by colleges without sufficient financial resources to provide a good college education. I will continue to do my work to educate all of the stakeholders in higher education about the market adjustments.

that the industry is in. Things, ladies and gentlemen, boys and girls, will not get better anytime soon. Hey, send me questions. Send me questions, comments, concerns, even insults to Gary at College Viability. That's Gary at College Viability. Until next Monday, this is Gary Stocker from College Viability with This Week in College Viability.