This Week In College Viability (TWICV) for Jan 27, 2025

TWICV For Jan 27 2025 (00:01.262)
It is this week in college viability news and commentary for January 27th, 2025. Hi everybody, it's Gary Stocker back again. The big higher education news in the last few weeks was the story that enrollment for fall 2024 had been underguessed. My words, not theirs. The source, the National Clearinghouse, issued a mea culpa and then reissued their guesstimate last week.

It went, as we all know, it went from enrollment down about 5 % to enrollment up about 5%. Now, I'm going to leave the developing conspiracy theories, the developing conspiracy stories alone, that this was a manufactured change at the request of some entity in higher education. That's just not realistic. The clearinghouse has value. They messed up. They messed up on a database prediction. happens. Lord knows it happens.

In my mind, though, the 10 % change is not a big deal from what I look at, from my perspective. And then it might very well suggest that there is at least a one-year pandemic-adjusted jump in enrollment. I can see that. It appears that a big part of the growth, though, was outside the traditional 18 to 22 age group. You can check that out with the countless news stories that are out about that story. And here's why it's not a big deal.

As I have shared before, it looks at the macro and that's fine. It is at the microscopic level, at the individual college level, where this is not a big news story. There are hundreds, hundreds of public and private colleges in significant financial distress. Many of those are probably terminal cases. We know the reasons, tuition discounting pressures, increased costs and overall market move away.

from the traditional four year degree are all factors in the challenges that these hundreds and hundreds of colleges face. What the clearinghouse data doesn't show us, and really never does, that's not their role. It doesn't show us the college by college impact. That's what I do, of course. And so let's get to it with this week's podcast and let's start out with layoffs, cutbacks and closures this week.

TWICV For Jan 27 2025 (02:19.534)
January 27th, Josh Moody and Inside Higher Education, Commonwealth University to close Learfield campus. Here's from Josh's story. Commonwealth University was formed in 2020 amid a consolidation effort that saw Bloomberg University, Lock Haven University and Mansfield University combined into a single institution. The small Clearfield site, which will close following the 2026-2027 academic year, is one of the four locations.

The other four at Broomsburg, Lock Haven and Mansfield will continue. All right. So I mark this down as a positive business development. It appears that Commonwealth University is shrinking to survive. And I've mentioned this many times. Commonwealth University is shrinking to survive and maybe somewhere down the line even thrive. And many, many, many more colleges are and will continue to do likewise. On to Sonoma State.

Shock and grief is the headline. Sonoma State University makes deep cuts to staff, departments, degrees, all student athletics, all NCAA Division II athletics. In a message to the campus community, interim president Emily Couture said prior reductions had proven insufficient to resolve the university's financial challenges. I want to go to part two of the story, and as always, I will have the links in the show notes.

And this headline for this one is from the Sebastopol Times, Dale Doherty on January 25th. And the headline reads, The sad decline of Sonoma State. A 23.9 million budget deficit leads to drastic cuts in staffs and programs. Mr. Doherty writes, the list of departments and programs that will be cut is shockingly long and diverse, which makes it difficult to see in the overall plan. Now, if you missed it in the headline,

this college, this university, Sonoma State, eliminated all NCAA Division II athletics. All NCAA Division II athletics. So I guess as a side note, for those colleges thinking about adding sports programs as a cure-all, beware, it's not a cure-all for financial challenges. It's probably just yet another example of management by PR. Hey, we're adding football.

TWICV For Jan 27 2025 (04:47.598)
We're adding girls wrestling, we're adding ping pong. It's not a cure all, never will be. Here's just a list. And I'm not gonna read all of them, because it's a long list of the major degree programs identified for elimination at Sonoma State University in California. Education leadership, applied statistics, these are a Bachelor of Arts, art history, art studio, dance, economics, education leadership, English, French, geology, history.

philosophy, physical science, physics, a bachelor of science in physics, public administration, theater arts, and some minors are going to get asked, art history, economics, French, geology, German, and many, many, many more. It's happened before. It will happen again.

TWICV For Jan 27 2025 (05:35.832)
This decline has been observable. You can see it in the data for at least six to seven years, I think, since 2018.

And the question I always ask is why is it just now being addressed?

Hope is not a strategy and yet I continue to see it as the main leg too many colleges rely on. The ever popular college drivel this week. Again, we don't identify the colleges or the people. We just use their college drivel, their silly quotes. Here's the first of three. Student success and the student experience is the central decision making and guiding light.

that we use to make decisions around what we do for the future. Number two, we've done, in an effort to not break their arm padding themselves on the back, we've done an amazing amount of innovative work and the future is really exciting. Okay. And the third one, the main mission of our private colleges, this is for an entire state, the main mission of our private colleges is to provide access to anybody who wants to go.

to college, I would challenge that on its premise, but maybe another day. Page two.

TWICV For Jan 27 2025 (07:00.27)
And guess what I'm going to do with this is it appears to me that the St. Louis Post-Dispatch is fast becoming the official public relations agency for Webster University. Monica Bradovich on January 26th posted a story that leads as Webster U digs itself out of a hole. It's attracting and accepting more students. And in my mind, this is yet another example.

of regurgitation reporting, Webster sends out a press release and a media outlet effectively throws the entire thing or almost all of it out there as news. And yes, the article did note Webster's massive growth in the percentage of students accepted from 59 to 96 percent, something like that. And it did note the overall decline in selectivity. But they let the university slide by on week

rationalizations of why both of those were fine and that's why I'm here. That is why I am here. Financial and news transparency. If reporters aren't going to challenge colleges like Webster and many others, you know it. If you don't know it now, you'll know it soon. If reporters aren't going to challenge colleges, I am. Somebody's got to do it with the data.

TWICV For Jan 27 2025 (08:24.558)
Facing a $20 million deficit, Albright College is making cuts, borrowing from the endowment. This is really good story. Amanda Frese, I believe, F-R-I-E-S, for Spotlight Pennsylvania on January 20th. And regular listeners know when I see stories about colleges in financial trouble, I always go to the data and I go to, I go beyond the data reported in the story and I look at eight year trends. It's the trends, it's the patterns that matter.

It's not a snapshot of a college for a year or two. It's the trends that matter. The longer the trend you're looking at, the better. And I use my own college viability app. And in the past seven months, I've started using Prospective Data Sciences and Matt Hendricks College Financial Health Advanced Compass. That's my source of data. It comes from audited financial statements, from IRS Form 990s, and from the iPads database itself. And the argument, I just made a minute ago, and I'm going to make it again.

The argument I end up making in almost all cases, including Albright College, is what were they waiting for?

Consider this, a financial transparency report to the data 2015-2022 from the college viability app, tuition and fee revenue down almost every consecutive year. Down 55 % over eight years. FTE enrollment down almost every consecutive year. Down 870 some odd students, down 39%. Percent admitted is up 36 points, 36 percentage points.

in an effort to drive tuition revenue selectivity plummets and I bet years down the road graduation rates will well as well. And to Matt Hendricks, Advanced Compass 2016 to 2023, that's what these ranges cover. The net income margin at Albright College is down in Pennsylvania. Albright College is down 60%. Operating cash margin down 28%. And those values are below.

TWICV For Jan 27 2025 (10:28.374)
lower than a set of recently closed colleges that Matt includes in his advanced compass. And since 2018 Albright College had already started drawing down its endowment at a rate that is much higher than 75 percent, 75, more than 75 percent, higher than 75 percent of other private colleges in the country. They were robbing the piggy bank to keep lights on.

And since 2020, expenses have gone from negative 70%. Excuse me, I'll say that again. Since 2020, expenses have gone from negative 7 % to a positive 15%. Revenue in that same period is down 25 % to down 31 % from 2016. Not good. And here's a to a post I did an all-white a while back.

And this story, the interim president, that'll get signed notes, set of actions the college has taken. They're all a little bit, all too little, too late. The story highlights the college's request to borrow against the endowment without donor approval. And again, I see this regularly and state attorneys general have to approve that.

TWICV For Jan 27 2025 (11:49.932)
And I guess I'll wrap this up and just cover the highlights. I want to go back to Amanda Frese who wrote the story. This is good. It's a long story for sure, but it is an exceptionally thorough, exceptionally well researched and written story. My compliments to Ms. Frese on an excellent story that does go to the data. A user, a listener sent this to me. It's called the Dead Horse Theory, The Dead Horse Theory, a Lesson for Leaders. And I'm going to kind of read it straight up.

If you're if you realize you're riding a dead horse, this is the dead horse theory. If you realize you're riding a dead horse, the best thing to do is get off. Yet many organizations, and I'm going to tie this to colleges, many colleges try to use a stronger whip. They try to analyze the horse. They train staff to ride the dead horses. Every brand horse has energy challenged and promote

the dead horse hoping to inspire others. And for leaders, here's from the dead horse theory, and I don't see it sourced. For leaders, be honest about what's working. If it's not, if something fails, act quickly and foster a culture open to new ideas. Yeah, there was tongue in cheek on all those items, but colleges are many colleges, too many colleges appear to be applying the dead horse theory to try and.

ride what is effectively a dead horse beyond its reasonable existence. Page three. Guys, another example of regurgitation reporting. Adam Frenier, the New England Public Media, in the story of New Hampshire, in the story of Hampshire College president leaving for Greece. This is published on January 21st of this year. And again, from the New England Public Media.

Here is a quote from the outgoing president at Hampshire College. We are at a point, we are at that point now, where Hampshire is at no risk of not being able, double negative, Hampshire College is at no risk of not being able to continue. We're well beyond that, Ed Ringelbach, who's the president said. We've done an amazing amount of innovative work and the future is really exciting. You might have called that from this week's section on college drivel.

TWICV For Jan 27 2025 (14:14.178)
The outgoing president said the school's school budgets as if it had 1000 students, but it has around 800 now. I call that deficit spending. I don't know about anybody else. It uses some of the funds it has raised from gifts to fill in the gap. All right, think I'm right. Deficit spending. He said it is projected that the school projected, there's a nice guest note for you, that school will the 1000 mark in the next few years, which will mean it will be fully sustainable.

So let me do the reporter's work for him.

From the 2023 audited financial statement for Hampshire College, this is from the accountants that did the audit. I'm reading directly from their statement, took it straight from the Emphasis of matter regarding going concern. And going concern is an accounting term that suggests that college will continue as a going concern, as a business, or not continue. And it's the not continue part that's gonna come up for Hampshire here. The accompanying financial statements,

have been prepared, assuming that the college will continue as a going concern. All accountants use that in their basic terminology, the basic template in their audited financial statements. But these accountants go on to say, as discussed in note nine to the financial statements, the college, Hampshire College, did not meet its debt covenants, a couple of bonds they had out. The holder of these bonds exercised its put option and issued a mandatory tender, which effectively means pay up.

They don't follow up on that, but they go on to say the college is working to secure options for refinancing, has not done so at the time of the issuance of these financial statements. Therefore, the bonds are still listed as current. And they conclude, and the college does not have the assets to pay off the bonds. Hampshire College does not have the assets, according to the 2023 audited financial statement.

TWICV For Jan 27 2025 (16:16.674)
has stated that its ability to continue, the college itself has stated that its ability to continue as a going concern is contingent on securing financing for these bonds. And then we go to note 15.

TWICV For Jan 27 2025 (16:32.782)
And it's really essentially the same thing that I just shared with you, just in another section of the auto-ed financial statement. I will read just one part. Management has concluded that it would be prudent to acknowledge that the college's ability to continue as a going concern, going business, within one year from the issuance of these financial statements is dependent on successfully securing financing.

Management continues to pursue all options. Now, this was a 2023 audited financial statement. I have not seen the 2024 one. I'll look that up sometime soon. And to the reporter, you're welcome. This is why I believe I am becoming the alternative media source for college finances. I do the work. I do the work. I look at the data. I do the comparisons. Even just this past Sunday, I had a reporter use my research in a story.

on Sunday. This time they didn't attribute it to me, most of the time they do, so that's not a big deal. So regurgitation reporting, let's go with a single G on that. And one more note on the story about the error on data showing a positive negative or normal last fall that's now turned into a positive about 5 % growth projected for 2024, 2025 school year.

I'm going to report from a fast company story that Lily McDonald wrote on January 23rd. Ms. McDonald says, there have been other reports suggesting that fewer people believe that college is worth the money, the job uncertainty that may follow graduation and the burden of student loans causing supposedly causing a decrease in college enrollment. She continues, however, the clearinghouse, I'm shortening that, the clearinghouses data.

showing a positive trend refutes that narrative. Uh-uh. It does not. As it shows that students are increasingly going to college, which may ease concerns over the future of post-secondary schooling. Sure. If you want to believe the Clearinghouse Dad, and I do, I do, the trend is positive for bigger colleges, for the land-grant colleges.

TWICV For Jan 27 2025 (18:55.79)
for larger colleges in general, but like I shared last week and earlier in this podcast.

This news will not impact the hundreds and hundreds of public and private colleges where students are not going. It's the macro versus micro argument again. I've told many people this. I believe we are in the early stages of more students, many more students, choosing larger public and private colleges because they sense there is a risk of choosing smaller ones. Now we won't see that for a year or two or three in the data.

I'll put that on the record right now on January 27th, 2025. I think I've shared this previously. I think there's a migration towards big already underway.

TWICV For Jan 27 2025 (19:44.45)
Page four.

St. Augustine University rejected a lower interest loan contingent, excuse me, contingent.

TWICV For Jan 27 2025 (19:57.794)
contingent on the board chair's resignation.

Self-Help Credit Union's CEO, I'm not going to name them now. This credit union offered a $19.5 million loan to replace the university's current loan arrangement, which was at 25%, 26%, something like that, which critics had called predatory. This is stories from Aaron Gressinger and Chloe Courtney in the IndieWeek.com on January 22nd. Lower rate from 24%, 25%, something like that, to 9%. They had to replace two board members.

The college said no. The college said no.

I think you can count on me having more on this story in the coming weeks. And let's do a wrap.

It's getting close. It's getting close to the time frame when the really financially stressed colleges will start to say no mas, no more.

TWICV For Jan 27 2025 (21:04.31)
Sadly, I think too many will continue to be short notice closures where students and faculty, staff, even communities will have little to no time to react or even adjust. There are colleges like Fontbonne University here in St. Louis and a few others doing closures well and God bless them. It's not enough. Fontbonne, I think, gave everyone about 18 months. They'll be closing sometime in middle part of this year. They made their announcement in spring of last year.

But most colleges in 2024 did not offer that consideration when they closed. There was one even announced a closure, I think, on Friday and locked the doors on Monday. I think this was a nonprofit private college. And last year, as you may recall, it was about one private college closure per week through about the first six months or so. Then it really slowed down. And best guess, best guess.

is a similar pattern, best guess is a similar pattern in 2025. That should start happening. I think it's really happening now. We're just now not hearing the news about it yet. So, hey, thanks for listening. As always, I'm grateful for you making time to listen to the podcast. I will be back next week with more higher education news and commentary. Until then, Gary Stocker, best wishes for a successful week.