This Week In College Viability (TWICV) for May 6, 2024

Gary (00:01)
Welcome back to this week in college viability for May 6th, 2024. It's a rainy day here in St. Louis, but of course everything has turned green. We are now awaiting the imminent arrival of the cicadas. Hi, it's Gary Stocker. Lots, lots of news and commentary today and we're heavy, heavy on the layoffs, heavy on the cutbacks and heavy on the closures this week. Story ones is of course those layoffs, cutbacks and closures, Wells College closings.

comes after more than a decade of money struggle. I'm going to also go to the data that shows Wells' preferred teach -out partner is also in financial distress. Northland, yet again, will stay open with a transformational gift. We'll talk about that. Keystone College in danger of imminent closure, their accreditor says, and like I talked about last week, experts fear catastrophic college declines.

thanks to the botched FASTA rollout. And we'll talk about that as well later in the podcast leading off with layoffs and cutbacks and closures. And again, like I said at the start, we are heavy on closures this week. And we start off with Keystone College in Pennsylvania is pursuing a rescue plan to prevent closure. This is by Jim Lockwood, who's on the Times Tribune. This was on April 26th. In a letter to faculty and staff, the president of Keystone College,

said negotiations are underway with an unspecified investment partner to rescue the financially struggling institution. But the president also concedes that if this effort falls through, the college could close. Again, another Tevyev episode. This is a fishing expedition like almost all of them are. And of course, Tevyev is, I've talked about this before, Tevyev responses is when a

College leader says on one hand and then on the other hand and then on the other hand. And of course, that reference is from Tebbier and the classic musical Fiddler on the Roof. Not only did the announcement come from Keystone, but the Middle States Commission, the accrediting agency for Keystone, said, guys, get it together or we're going to take away your Title IV funds. And of course, Title IV funds are what comes from the federal government to colleges and almost.

Almost no private college can survive without those Title IV funds. The enrollment is down. I didn't do a go to the data summary on this one because we've got so much content today. But there was an interesting part to this. And as part of the story, I'm going to quote here, recently some small private nonprofit colleges have closed abruptly, we know that, have closed abruptly in the face of financial and demographic challenges. But Marie Flynn,

and she's the library director at Keystone College, argued in a December op ed piece for higher education dive. And this is an important point, that these institutions owe their employees dignified closures. And Ms. Flynn continues, let's try a little death with dignity through goodwill, honest appraisals and consensus building, she wrote, exits full or partial can still have some honor.

Marie Flynn wrote in Higher Ed Dive last December. And she makes a point that I don't see raised often. Be upfront. And you heard me talk about it before. You're gonna hear me talk about it today. These college leaders are engaged in management by PR. They're not willing to declare the obvious. They're not willing to let their students, faculty, staff, and community get on with their lives. They continue to string them along. Folks, I can tell you.

I can tell you which colleges are most likely to close. Why can't they tell their paying customers and dedicated faculty and staff? The closure is imminent. It's not good news. It will impact in most cases, hundreds, if not thousands of people. I understand that fact, but the market has changed. This is the higher education market trauma.

that we are facing and it's not gonna get any better anytime soon. I'm not gonna talk about the three phases that I've talked about previously. Let's move on to another cut. This is Alverno College in Wisconsin. There's a story from Kelly Meyerhoffer in the Milwaukee Journal Sentinel and also one from yahoo .com. I'll include both in the show notes. And Alverno, quick study of their data. Their tuition and fee revenue is down 7 million over the last eight reported years. Their expenses flat, so get that.

Revenue down, expenses flat, not good. Their four -year graduation rate is only at 40%. So I guess it's a coin toss college, even though it's considerably below 50%. Interestingly, Alverno College in Wisconsin in 2015 had a 17, that's one 7 % four -year graduation rate. They've certainly improved in that regard, but it's still barely a coin toss college. And then this was interesting. And I don't recall that I've talked about this.

recently. In the same story, I think this is from the Yahoo story, the US Education Department annually calculates the overall financial health of private colleges and their scores range from negative one to positive 3 .0. And schools with a score of 1 .5 or higher are considered financially responsible. Not necessarily financially viable or financially healthy, but financially responsible, whatever that is.

The story goes on, Alverno's most recent score for the year, for the period 2020 to 2021 was 3 .0, top of the scale. And yet, and yet their closure appears to be close at hand. Top Department of Education score 3 .0, and yet closure appears to be maybe not imminent, but certainly getting close to that point. And that...

should tell you a lot about the Department of Education's Financial Responsibility Score. The first of many today, Jish.

Gary (06:28)
Wells College closing. It comes after more than a decade of money struggles. This is on May 1st from Syracuse .com and the story is by Rick Moriarty. I'm not going to use any of the faculty or student stories about We Are Shocked. They're out there and they're part of the story. I'll give you a number. 41 ,000. 41 ,000 students as of April, 2024 last month have been impacted.

by college closures, I think since 2018. 41 ,000 students multiply that times whatever ratio you want, whatever factor you want to see the impact of faculty and staff and the community at large. It's happened, it's going to continue to happen. We have to face this reality and I'm here to help us.

think that through and help colleges like Marie from the previous story make college closures more humane and more reasonable because we can tell which ones are in trouble. So the announcement from Wells came from the story from Rick Moriarty. College president, Jonathan Gibraltar and board of trustees chair, Marie Chapman Carroll broke the news to students and the community with an announcement that Wells will close for good at the end of the academic year.

and they go on to say we have a fiduciary responsibility. I'll talk about that in a minute. And then as you may be aware, this quote ends, as you may be aware, many small colleges like Wells have faced enormous financial challenges. And you know that because you're listening to this podcast, but please quit using the woe is us. Woe is us. We are like all other college closings. We know that.

The pattern is obvious. Don't rationalize you're just like everybody else. You're part of a market that is consolidating and the closures are a part of that. And Mr. Gibraltar and Ms. Chapman Carroll talked about fiduciary responsibility. Well, why didn't they honor that fiduciary responsibility if they were there five or 10 or 15 years ago, whoever was leading Alverno College in that time frame, was college in that time frame?

This closing, this closing like almost every other has many advanced signs, has had many advanced signs that the end is near. Wells and many, many others like it are victims of parochial management. A college with leaders so focused on their own really, really, really little corner of the world that they can't or won't.

Look at the bigger picture. Years ago, these college leaders could have looked to a more secure future by getting outside of their comfortable little academic kingdoms and made nice with other proximate colleges, although proximity is not important now, and made nice with other proximate colleges to get their academic and non -academic operations to scale. And now it's too late. It will continue to happen.

I'm my best educated guess is into next year sometime before the second phase enters. And just a sidebar for me, reporters always go to the financial statements and probably the form nine nineties after college closes. And one of the main reasons I created the college viability app was to give the many stakeholders, including reporters, the ability to compare the financial health of colleges, both private and public. And I will again offer.

to any reporter, a courtesy, read that free, courtesy link to the 2024 public or private or both College Viability apps. Drop me a note at Gary to Gary at College Viability. That's College Viability, one long word. Gary at collegeviability .com, page two.

Gary (10:50)
Northland College will stay open thanks to, and I put in quotes, transformational gifts. This is from Jessica Blake at Inside Higher Education on May 3rd, just late last week. And all right, I'm going to read the story. I'm going to read the highlights of the story. Northland College needed $12 million in March. I covered this back then. In April, they had come up with a total somewhere in the vicinity of 1 .5 million, not even 10 % of what they needed.

And whatever this behind the closed door dollar number is, if it's transformational, they say it's probably not. They're not identifying what that is because it probably doesn't exist. And if it is transformational, why is a number less than 12 million that they had back in early March not the transformational number? Where did the 12 million come from? Dartboard? Is this Dartboard College Economics?

As I've said before, please folks at Northland, it's over. Maybe I should drive up to Northern Wisconsin and offer to turn off the lights. These folks at Northland are just stringing along their faculty, their students, their staff community. It's over, close it. Move on and one more time, the details, the refocus model based on this transformational gift, they're going to reduce the number of majors from 24.

to eight, they're going to do some semblance of some sort of restructuring and layoffs to save seven million. And they're keeping current athletic programs. There's a cost factor in there. So they're going down to eight majors. So the students who now go to Northland, I think they focus on environmental stuff, is our call. Maybe they have a nice enrollment number there, but that's a, looks like about 200 % cut in majors.

All right, go for it. And to the data one more time, they have 500 students. Their unfunded institutional grants are up 33 % from 9 million to 12 million. Their four -year graduation rate is at 47 points, 47 % down seven points. In the last eight years, they don't even graduate half their students. And this is a head -shaking double -jeesh story.

I'll keep following Northland because maybe I'm wrong. I don't believe I'm wrong. And if so, I'll certainly take responsibility for that. But I see it too many times. Too many times. Page three.

Gary (13:34)
So experts fear catastrophic college declines thanks to the botched FAFSA rollout. We've talked about that before. And this story is from the Associated Press through WIBV4 TV, I believe in Buffalo, and the reporter is Colin Brinkley. Colin, drop me a note. I'll be glad to send you a free courtesy link to the 2024 College Viability Apps, public or private.

And this story is mostly about the FAFSA mess. I'm not going to go into that, but I do want to read a quote. And this is from Angel Perez, who was the CEO of the National Association for College Admissions Counseling. NACAC, I believe, is where you pronounce their acronym. And here Mr. Perez is quoted in the story as enrollment decreases like those being projected could put many small colleges out of business or necessitate deep cuts in staff.

Duh, we've been talking about that. Some colleges are pushing for emergency relief just to stay afloat. Now this is new. I wonder if this was going to happen. Others have suggested it, but I've never talked about it on the podcast. And I'll finish the story from Mr. Perez. He's quoted as saying in the story, if they don't, the colleges, if they don't get checks from the federal government to basically get them through next year, they will not survive.

Now we're gonna follow this story in the coming weeks and months because you heard me talk about the projected catastrophe this fall that would start in October, November, December when colleges realize they can't make their payroll either late this fall or through the middle part of next year. If they start closing in significant numbers and I can't define that yet, will the feds, will the federal government step in with some kind of relief plan?

I'm not even willing to predict how that would go, but certainly it's a possibility because I think Mr. Perez is correct here. If they don't, I think we'll see a catastrophic set of college closures starting this October and beyond. New story, this is from Karen Weaver. She's a Forbes contributor. This was on April 30th. And she says, in a rising tide of college closures, the impact on division three NCAA division three athletics become clear.

And as I discussed last week, sports teams should be a department of basketball, a department of football, department of soccer, whatever, with both revenue attributable from their tuition fees and expenses, but both direct and indirect cost allocations. Because when you do that, I've talked to college presidents, they say no sport outside the big power five conferences, no sports nets positive in the black.

Revenue. It's the net revenue that matters, not just the gross tuition revenue. And I worry that these folks that have been adding sports programs and will probably continue to add sports programs are only looking at the net. They're not looking, I'm sorry, they're only looking at the gross. They're only looking at the gross revenue and not worrying, not catching up on the net. And from this article, I'll read the quote, university administrators at tuition -driven institutions wrestle with this reality each day.

Prospective student numbers are dropping while the cost of remaining competitive, I guess he more wins than losses, while the cost of remaining competitive is increasing. And he goes on while the noise has been around what's going on with the Division I programs. This reporter concludes, don't forget about the 200 NCA Division III teams that no longer exist. And in the story link, you'll find a list of those sports.

And again, colleges and the number of losses for each.

Let's go to page four. And the headline reads, low enrollment of financial struggles forced New York College to close. It's really unfair to everyone. And this is a follow -up to the story at Wells, which we talked about earlier. And this is from Fox News. It's from Alba Cuevas Fantasi. And this is a what was me story for sure about Wells. But here's what I want to focus on.

They've identified their preferred teach -out partner as Manhattanville College. Somebody dropped me a note, it's 250 miles away from Wells. All right, I'll give them that. Here's what's happening, because you know what I'm going to do. I'm going to go to the data for the teach -out program. I've done this many times in the past. I'm going to, let's go to the data for Wells, all right? Wells and Manhattanville, so I've got them lined up here in my notes. The full -time equivalent enrollment, the one we always use here at College of Viability, was down

350 at Wells, this is from 2015 to 2022. The number was 350, excuse me. It was down 105, that's down 36%. At Mary Manhattanville College, their enrollment is about 2000. It's down 500 and change from 2015 to 2022, down about 22%. The four -year graduation rate at Wells is just below 50%. So they follow my category of a coin toss college.

And Manhattanville to their credit is just above 50%. If you think just above 50 % is a good four -year graduation rate. Tuition and fees are down 3 million over the last eight years at Wells. They're down 4 million from 2015 to 2022 at Manhattanville. The endowment in both is around 28 million. At Wells, it dropped 5 million. They were pulling from the endowment to keep the lights on, meet payroll.

At Manhattanville, the endowment was down not quite 5 million, 4 .6 million from the IPEDS data in the college viability app. Revenue was down 5 million at Wells, down 8 million at Manhattanville. You know where I'm going with this. Expenses were flat at Wells, I knew they were in trouble, but they increased in the face of decreasing enrollment. Expenses increased at Manhattanville from 2015 to 2022.

I'm hearing more and reading more and more reports of students who were impacted by one college that closed going to another one that closes. And if you're concerned about that, the student and family version of the 2024 Private College Viability Act for students and families will let you compare the financial health and viability of those colleges.

Gary (20:18)
And so let's go on to Drake University. And the headline reads, this is from Ben Ungelsby at Higher Education Dive on April 30th, Drake University to cut three academic programs as it tries to balance budget. All right. So here's the story. The leadership at Des Moines based Drake University had an $8 million shortfall to cover, and they proposed cutting 13 programs. But the board of trustees...

The fiduciary responsibility, responsible board of trustees agreed instead with a faculty plan to cut only three programs, a religion major and East Asian studies major and a graduate certificate in evidence based higher education. Again, this is from Ben Ungelsby at higher education dive. So let me give you a sarcasm alert and a Jish alert here.

I've been working on another app that's called Program Completion. I've got it pretty much ready to go for the private side, not the public side so much. But I'm going to go to that, even though it's not released yet. I'm going to look at the 2020 -2022 Bachelor's Program Completion data for Drake. All right. Parks and Recreation.

Parks and Recreation had four students graduate in 2023, 2022. Foreign Language had five, Physical Sciences had 13, Math and Science had nine, Liberal Arts had five for a grand whopping total in those five programs of 36 students. Not quite three times what the collaboration between faculty and the Board of Trustees was. So.

What else are the top three programs at Drake in 2022 are business, communications, and visual performing arts. We need some more artists, sarcasm on my part, and more sarcasm alert.

I'm guessing that the good folks at Drake see an improving market this fall and beyond. They must see the FAFSA debacle is over and colleges will probably quit discounting tuition to get students in the door. So there must be no need to be concerned about expenses or revenue. And this is where the gish comes in.

The board has clearly chopped the legs out from underneath the leadership legs of the college president. Three cuts, three programs. And the total number of students, I can't remember what that was, 14 total students. The year they net probably 20 ,000, that's $280 ,000 per year. The deficit was $8 million. Don't even need a calculator to do that, Matt. All right, that's enough. Let's do a wrap. You know, this was a heavy week, as I said at the top.

This was a heavy week of bad news and it's expected to continue because it's going to. And remember, as we wrap this podcast episode up, remember my role is to serve as your unofficial college financial quality control resource. You may agree with what I say. You may disagree with what I say. You may like the news and commentary. You may disagree with the news and commentary I provide. Yeah, it still serves.

I'll offer it still serves as another perspective for every stakeholder in higher education to make decisions based on having as much information, perspective, agree or disagree, as possible. So hey, it's Monday, May 6th. Let's do this again on May 13th. My name of course is Gary Stocker. This week in college viability is over. We'll do it again next week.