This Week In College Viability (TWICV) for September 16, 2024

Gary (00:01.996)
Welcome to the September 16th This Week in College Viability Podcast. Hi, I'm your host, Gary Stocker. It is still summer in St. Louis, highs in the 80s, upper 80s most of this week. And with any luck, the St. Louis Cardinals hometown favorites will be put out of their playoff hope misery sometime this week. And colleges continue to announce positive enrollment stories.

New enrollment record, biggest class ever are just some of the typical headlines and that's fine. Colleges can spin the vague enrollment measure in any way they want, as much as they want. But if you haven't discovered Matt Hendricks, perspective data science research tool, you need to do so. It quickly and simply visualizes seven acute financial indicators from the year 2016 through 2023, way ahead of iPads and other statements.

And that also created a measure that lets users compare their colleges or private colleges finances to a set of nine recently closed private colleges. Always interesting. Just looking at the seven visualizations can give you a quick read on any private colleges financial health and viability. And what I have discovered is that the true financial health of a college is nowhere close.

to being accurately represented by its enrollment numbers. And of course, I'll post a link to Matt's research tool in the show notes. And on the show today, this week frequent flyers, Quincy University and Columbia College are back with us. I have missed them desperately. Rick Seltzer's daily briefing at the Chronicle has some new and updated concerns about student debt. And another really high quality college,

private college has serious financial issues. We'll talk about all aspects of that. And I asked the question, are we making it too easy to get accepted into college? The Common App has a new direct admit program. I have some concerns. We'll talk about that. And we're going to conclude the show with what I think is a new story and maybe not out there prior to today. Are colleges price fixing? That's right.

Gary (02:27.256)
Are colleges price fixing their tuition by using private financial information in their algorithms? And if that's not a good teaser, I don't know what it is. But hey, let's get started. Layoffs and cutbacks. Columbia College considers cutting 18 underperforming majors from the curriculum. And this is from NBC5 television in Chicago on September 13th. And the college says the move will ultimately reduce and consolidate underperforming programs.

The number is about 40 programs. I don't know what the headline means. In hopes of helping the school return to a healthier financial position, finding a dime on the street might accomplish that. They say the program array we currently offer costs too much, and we must reduce those programs to eliminate some of those costs. The message went on to say that the school offers too many programs with a complicated pathway to complete.

a degree, decluttering program pathways will reduce costs and improve student retention. The announcement said, OK, I can't and won't argue with the logic. And I know I'm commenting from the backseat. I know that. But I've asked it before. I'll ask it again. Why wait so long?

Gary (03:52.808)
And the college closure drama of the summer has been the University of the Arts in Philadelphia. And they had it in the Philadelphia Inquirer on September 13th, that was a good date. It says UArts, University of the Arts has filed for chapter seven bankruptcy to liquidate its assets, whatever those are, probably buildings. There is some hope from the story in the Inquirer that this action will finally lead University of the Arts to tell us why it had to close. They have been so vague, so, it's so sad.

not just that they haven't been upfront, but the trauma that has caused faculty, staff, students, of course, and their community as well. Page two, Rick Seltzer's daily briefing newsletter at the Chronicle last week is the source on this. And the headline reads, Concerns Continue About Student Debt. I'm going to read you three observations that Rick Seltzer shared. Only about half of all borrowers were current on student loan payments as of January this year.

This was after the pandemic pause was expired. The information here is from the GAO, the Government Accountability Office. Number two, balances had actually increased for 57 % of the loans after six years. That's right, increased for 57 % of the loans after six years of repayment. And those were for loans that had started between 2009 and 2013. And this one will get you.

College dropouts with debt. College dropouts with debt are worse off than those who never went to college. Economists writing for the Federal Reserve concluded last year. Now this, this less than ringing endorsement of the college experience, I think this is for those on the fringe, those marginal students who can't decide whether they want to go to college, can't commit to four years, whatever. This is not.

This is not going to increase the number of those students who consider a college education. I can only hope and beg and plead that colleges recognize the financial bind they handcuff students with when they can't graduate them. And I'll remind you yet again that less than 50 % of undergraduate students, less than 50 % graduate.

Gary (06:18.584)
in four years or less, an absolute tragedy. And this continues to beg the question, are too many colleges selling enrollment? Get those students in the door, get those tuition payments instead of focusing on graduation. And we'll talk more about that later in the podcast. And another frequent fire, Quincy University. Enrollment is down 3%. All right, credit they get for announcing that. The number of returning full time students.

Largest in seven years, that's nothing but spin, and that's fine, I'm sure it's accurate. And the source on that is the Muddy River News. And for those of you that don't know, Quincy University is on the Mississippi River, also known as the Great Muddy River, I think. And this was on September 14th. And all I wanna do is I wanna go back to Matt Hendricks, Prospective Data Science, and his seven visualizations. And remember, his visualizations compared any college you search on, I've got Quincy University is what I did on this one, to nine private colleges.

that have recently closed and the data is from 2016 to 2023. At Quincy University, the net income margin maps really closely to those nine closed colleges. The cash flow at Quincy, while bouncing all over the place over those seven or eight years, trends lower. The cash flow trends lower than those closed colleges. At Quincy University, the ratio of the end of year endowment

to expenses, so it should be a high number, trends a little bit better than the close. So they've got a couple of bucks in the endowment, especially relative to expenses. The percent of endowment, that's the percentage of endowment used for expenses, also known as an endowment draw, is consistently higher. And what this means that at Quincy University, they're using their endowment as a piggy bank to be rated to help keep the lights on, make payroll and pay expenses. They're unrestricted net assets.

unrestricted net assets to expenses. And again, the higher the number, the better. In the past five reported years, Quincy trends lower at a faster rate than closed colleges. Draw your own conclusions. With two more left, cash and cash equivalences on financial statements to expenses. And again, the higher the number is better. In 2021, I'm just pulling a single data point. In 2021 at Quincy University,

Gary (08:46.68)
They had 4 .5 cents, 4 .5 pennies in cash.

for every dollar in expenses. And ladies and gentlemen, boys and girls, it trended downward from there. And then finally, the ratio of total liabilities to revenue.

In 2023, Quincy University had a dollar and 69 cents in liabilities for every dollar of revenue. Closed colleges, those nine closed colleges in 2023 had one dollar in liabilities per dollar a row. Again, I could have picked one of many other private colleges spending positive enrollment numbers or less than great enrollment numbers. Quincy, at least, was honest.

into the similar financial train wreck story. I understand, I understand positive enrollment is a warm and fuzzy, it's a good story. I had a reporter tell me that last week, but let's look at it from a human level. Quincy University has about a thousand students, depending on how you count, there's something called full -time equivalent, which I use, versus total enrollment, they're not the same thing. The total enrollment is always gonna be higher than the FTE.

The financial data I just shared is scary stuff. None of it's good except one. One of them was higher than the closed colleges. So I have to wonder, and I hope you do too, what will the president of Quincy University and its trustees say to their faculty, staff, and students and their families when their last dollar has circled the financial drain and someone...

Gary (10:36.554)
is assigned to turn off the lights. Page three. Talladega was in the show last week. Talladega County leaders haven't made the frequent flyer list. Maybe they're striving to do that. Talladega College leaders respond to financial tumults. This historically Black college has suffered from enrollment declines and mounting debts, but campus leaders say they're working to restore financial health. Again, the why now, why wait questions.

And we had Talladega, like I said, on the show last week with the public declaration they weren't gonna close. let's one more time. I won't do this anymore for Talladega, at least for a while. Let's go to the data. From 2015 to 2022, their four -year graduation rate averaged around 25 % for every 100 students that started at Talladega College.

Only 25 graduated from Tel Aviv. And again, the qualifier, know some moved on, graduated elsewhere. Their full -time enrollment was down 31. Not a big number, but that's still down over eight years. That's not good. They had a decent increase in graduate students, up 69. Their total expenses were up 3 million in the face of declining enrollment. And their endowment is not even college couch money at $3 million. Their tuition and fee, this was interesting. I talked about this last week.

The tuition and fee revenue was up 7 million and it doubled over the course of those eight years. I don't understand where that's coming from. And their endowment per student, per FD student is only $2 ,000, really, really low. Institutional support expenses, and I harped on this last week, institutional support expenses are 47 % of total core expenses. I have never seen that before. Academic support at Talladega is only 4%.

of every dollar.

Gary (12:31.136)
And I don't get to the type of story that I want to share next. And this can only be categorized as a high quality college, Ithaca College exceptional graduation rates I'll talk about in a second. Ithaca College unveils plan to stabilize enrollment and manage budget shortfall. And this was on September 12th, last Thursday. And the source is fingerlakeone .com. And of course, I'll post the link in the show notes.

And again, this is unique because Ithaca graduates students. It graduates a really high percentage of its students. But Ithaca College President, Luzerne Terry Cornish, had outlined a comprehensive strategy to address enrollment and budget challenges.

The college is facing a shortfall in first year enrollment this year with numbers down about 200 below target. The president, presume Dr. Cornish, indicated layoffs are not anticipated and a more detailed plan will be shared later this fall. Vice president of enrollment for enrollment management, Hall, Rock Hall, introduced efforts to engage prospective students earlier, including expanding outreach to high school sophomores and freshmen.

The college aims to foster, the story concludes, with stronger connections to an extended recruitment campaign and a new parent engagement tool. President Cornish assured the community that the college is prepared to meet these challenges together, emphasizing with pom poms flaring, I'm assuming that the best is yet to come. And to the data we go again, a high.

quality college, there's no other way to categorize this. Yet they still face challenges. From the IPEDS data 2015 to 2022, FTE enrollment is down 1600 students, that's 25 % down. Tuition and fees decreased 30 million over that same period, down 20%. The graduation rates that I've said are so good slashed at 69 and 72, 69 % for four years, 72 % for six years.

Gary (14:44.696)
That's just exceptionally good. Their endowment is approaching 60 million, not great, but above the 50 million threshold that we have. And this is what they missed. If there was a sin committed, a financial sin committed, expenses were down 23 million, they knew they had problems. And this is again over eight years, but the revenue was down 115, 115 million. Oops. Again, a high quality college that graduates students is really struggling financially.

And even looking at Matt Hendricks perspective data science visualizations, Ithaca is quite strong on cash. And with the exception of revenue relationships to expenses, they look okay. And again, even colleges as high quality as Ithaca College, why are they waiting so long to pull the financial fire alarm?

Let's take the podcast in a new direction. The Common App announced last week a 2024 -2025 Direct Admission Program with 117 colleges and universities.

Beginning this month, first generation and low and middle income students who are college interested, I have no idea what that is, who are college interested will receive proactive admissions offers. New to the direct admissions program this year is the ability for students to regularly see, learn, and act on their admissions offers in the application, in the Common App. Common App direct admissions also includes outreach and resources to counselors and families with students.

receiving direct admissions offers, and that's the qualification here. All right, you admit them. You're making it easier to admit them. But even with merit aid and Pell grants, is this a group of students that can afford college without substantial loans? Can they graduate from college? Are we creating, I guess, we creating first year enrollment numbers? We've talked about that the last month or so with colleges saying we are great with enrollment.

Gary (16:59.123)
Are we creating?

too many students with a focus on admissions and enrollment and not on graduation. Now the common app are removing friction from the application process. That's good. No issues. They're ignoring the ability to pay component of the college admissions process. Are we creating a population of marginally qualified high school students who can't afford college, who don't have the academic skills that should have been taught

and learned in high school. And if a college is a part of the common app process, and there are many, dear common app folks, is there any chance there could be a requirement that they at least graduate half of their students after four years? So we at least have some semblance of focus on graduation and not just on admissions and enrollment. And this is not a bad thing.

This is not a bad thing that Common App is doing. It just seems to be front -loaded with no consideration given to a student's academic capabilities or even financial resources. In my mind, colleges have historically shown no or little concern for creating debt for their students. I believe there is a great risk that without full consideration of all of the consequences,

of college admissions. Too many more students will start but not complete college and leave with the same debt issues as millions and millions of others. Page four.

Gary (18:49.08)
The headline is kind of confusing. It reads, the real page suit and higher education. So some background is important. This is from CITAS on September 14th, and this is the newsletter they have, so I won't have a link to this. But the real page, one word, real page suit and higher education, you can search on that. Here's what the story leads with. In March of this year, 2024, two attorneys at the Federal Trade Commission, a Hannah Garden -Mohenheit and Ken Murber, released an important piece, so says the author.

entitled Price Fixing by Algorithm is Still Price Fixing. The authors make a number of points, but one that stands out is price deviations don't immunize conspirators.

Gary (19:35.66)
The authors go on to say that some things in life might require perfection, but price fixing arrangements, and bear with me on this, price fixing arrangements aren't one of them. Just because, now listen, just because a software recommends, college folks, just because a software recommends rather than determines a price doesn't mean it's legal.

setting initial starting prices or recommending initial starting prices can be illegal, say the authors, even if conspirators deviate from the recommended prices. Now, the source of this article was Landlord Pricing. RealPage was a company with a software algorithm tool called YieldStar, Y -I -E -L -D star. And I'm going to quote US Attorney General Merrick Garland directly.

And again, this is the context with landlords and rent. Americans should not have to pay more in rent because a company has found a new way to scheme with landlords to break the law. Now let's quickly move from landlords to higher education.

Catherine Hill is an author, is part of the author, I believe, of this story, readily admits that the current financial aid rules allow colleges to charge higher earning families more. We know that from history research and just our own knowledge, but justifies this, charging higher earning families more, justifies this as a way to reduce college costs for lower income students. All right, we all know that. This may, she goes on to say, this may be desirable

but is distributing private information to achieve this, is distributing private information to achieve this legal.

Gary (21:28.374)
The article goes on to say, suits could conceivably be directed at colleges themselves, accusing them of price fixing and collusion on their tuition pricing, causing damages to millions of families. And colleges can make the defense, the article says, that the activity was effectively sponsored by the Department of Education. Okay, fair enough, they can. Two senators, Minnesota Democrat Amy Klobuchar and Utah Republican Mike Lee, both attorneys,

co -sponsored 2021 legislation on antitrust venues. Klobuchar in particular has been active in this area, especially some legislation she has started. Now, this is really, really early in the process, but you can envision the trauma this can cause higher education and other industries if it moves forward. And it's a story I know I'm gonna be following along and I assume with every other higher ed entity in the country.

I want to wrap this podcast episode with the same theme that I started with. Colleges spin. Nothing inherently wrong with that, even though I can make the case much of it is misleading because it paints a one -dimensional and probably misleading picture. Too many colleges are hiding their financial weaknesses. They're hiding them until it's too late.

for faculty or students or alums or a community to have any recourse other than to scramble. And that's why I'm here every Monday through Sunday, not on the podcast, but every Monday through Sunday. I'm working to try and provide folks with a more comprehensive review and analysis of the financial health of private and public colleges.

Almost all of us are familiar with the fact that higher education, the market is shifting under our feet. And there are precious few people willing to clearly point out the financial and even operational weaknesses of individual colleges. Most people paint the macro picture. I paint the micro picture college by college. Many indict the industry macro. Hardly any, hardly any do the same for individual.

Gary (23:48.034)
colleges. And so with that, I will continue to be your quality control source, your quality control person for the financial health and viability of individual private and public colleges in the United States. Until next Monday, I'm Gary Stocker for College Viability. Thanks for listening. Let's do it again next Monday.