This Week In College Viability (TWICV) for October 28 2024

Gary (00:01.736)
It is this week in College Viability News and Commentary for October 28th, 2024. Welcome everybody. Thanks again for joining me on this weekly podcast. There were stories all over the place last week about the 5 % decline in freshmen enrollment for this academic year. And the focus on most of these stories was on the big picture. And while I like the big picture perspective,

It is, as I have said many times, the college by college enrollment, the college by college finances, the college by college graduation rates. That's the data that really matters, not the big picture stuff, although it tells us a trend. It's how can I look at colleges I'm considering both on their financial piece and programmatic piece to decide if that's the college I want to send my child to, that's the college I want to go to. So here is what is still the big issue.

It is those hundreds and hundreds of colleges that did not make headlines since mid August, who did not say, hey, we have a great enrollment. And I said all summer long for these colleges, no news, no news is bad news. Hundreds and hundreds of these colleges did not, did not send out press releases, spinning positive enrollment numbers that weren't there. And I'm becoming a bigger believer that

many of those colleges that did send out good news press releases were engaged in trying to make a meal, a meal of good news out of really only a morsel of a small amount of data.

to the news and commentary for this week, layoffs and cutbacks. Tracking college closures. The folks at Hekenger had a story by Marina Villanueva and Olivia Sanchez on October 21st at the Hekenger Report. And they wrote that in the first nine months of 2024, 28 degree granting institutions closed, right? We knew it was something like that, compared with 15 in all of 2023. To the math, that's not quite twice as many.

Gary (02:15.85)
that rain has slowed down over the summer months for obvious reasons. I fully expect those announcements to pick up shortly. And this is a report that was provided to Heckinger by the State Higher Education Executive Officers Association. Say that fast. SHEO, S-H-E-E-O. On to Southeast Missouri. Their state leaders, Southeast Missouri state leaders respond to enrollment decline. This is by Wesley Perez Vidal.

on October 21st at KVFS 12 TV in Cape Girardeau. And Mr. Vidal reports, student enrollment at Southeast Missouri, public Southeast Missouri State University, decreased by 22 % over the past 10 years. Enrollment reports for this year, the fourth week census, shows that the university had in 2014 enrollment of just over 12,000 students.

As of fall 2024, that number was around 9,500. Do the math, that's a big drop. Now, the good folks at Southeast Missouri State did, like many places do, issued a strategic action plan. It ran from 2022 until next year in 2025. And it's got four common items. Let's take a look at them. And I'll do them one by one. They want to reduce equity gaps and improve overall student persistence and completion. right. The second part is yes.

graduation rates are awful, completion rates are awful across the United States, not just at Southeast Missouri University. I've talked about that many times. The equity gaps are fine also, but keep in mind when you're addressing those equity gaps, typically that's a demographic that doesn't have a lot of cash laying around to pay tuition. So you are mostly, mostly in my mind, limited to Pell Grant kind of dollars.

Item number two in the strategic plan of Southeast Missouri was to increase enrollment of historically underrepresented racial and ethnic groups, Pell eligible students. Ditto what I said number one, great idea, but from a financial perspective, that's gonna generate some cash and depending on the way you account for it, it can make a difference, but it's not gonna be a big number. Item number three in the Southeast Missouri strategic plan, maintain enrollment market share for domestic undergraduate.

Gary (04:35.892)
new first time and transfer students. Well, sure, don't we all want to grow that number, but there are, there is already too many colleges, too many college seats and not enough students willing to pay for those seats at whatever discounted or public tuition there is. That's a tough, tough road to hoe because folks at Southeast Missouri State University, you ain't the only ones, you aren't the only ones looking to grow that enrollment piece of the pie.

And number four, increase enrollment of graduate and international students. And again, ditto, it's pretty much similar to item number three. Yes, please do. But saying it and doing it are two completely different things, especially in the tough economic, tough higher education market that exists now, has existed for quite a few years. And there's no reason to think it won't continue as a very difficult economic and market scenario.

for many, many coming years. And then finally on cutbacks and enrollments, cutbacks and layoffs, Tennessee State reports a 50%, 5-0 % drop in freshmen in 2024 freshman enrollment. And there was a story behind that, but it was behind a paywall and I didn't want to pay for the paywall for just one story, but that's a big number. A 50 % drop.

I'm going to follow that to see if there are any more stories that show what's going on there. That's a big, big number. And I'll look at the Tennessee state data somewhere to see what that number would be like with a 50 % drop.

Gary (06:11.894)
Page two, cash strapped colleges. Cash strapped colleges are selling their prized art and mansions, and this is from Amanda Albright and Lily Meyer at Bloomberg on October 23rd, and squeezed by the declining birth rate and by the shrinking pool of college applicants, schools are selling stuff. They are rushing to sell off prized assets, according to Ms. Albright and Ms. Meyer.

housing complexes are selling, presidential mansions, apartments, and even some paintings to receive some cash to help provide the cash needed to keep the lights on and eat payroll and those kinds of things. And there's an Emily Parkhurst who is a president at Cornish, I think it's university. Cornish University interim president Emily Parkhurst makes this note, like a lot of small colleges, and she's right on this, like a lot of small colleges, we are property rich.

and cash poor. And she's exactly right. Many, many colleges who have leverage those assets, those illiquid assets as collateral have some assets that they can sell. It's a one-time thing. Probably not the best business model with which to operate from nonetheless. moving on to the next story. Jeff Selingo, big time writer, big time thought influencer in higher education.

And I'm a big fan of Jeff Selingle and his books. His books are Who Gets In and Why, There Is Life After College. And the first one, I think, maybe was College Unbound. They're all in my Kindle reader and I've read them and highlighted them in many places. And his podcast called Future You with Michael Horne regularly takes innovative looks at the inner workings of higher education. So last week, maybe it's early October. Early October, they had a Mr. Matt Brown on.

And Matt has the website, the newsletter website called ExtraPointsMB.com. Extra Points MB, as in Matt Brown. And Matt is a college sports guru in many ways. Now here's one of the many fascinating things that Mr. Brown said during his appearance on Future You with Celine Gwynn-Horne. Write this down. Adding sports, Mr. Brown says, Matt Brown from Extra Points MB. Adding sports.

Gary (08:36.684)
Adding sports is a leading indicator of colleges in trouble. Adding sports is a leading indicator of colleges in trouble. So keep that in mind as I go to the next story. LaSalle University in Pennsylvania. LaSalle University's enrollment dropped 28 % since 2019. What is the school doing to cope? That's a sub headline. Full-time undergraduate enrollment is down over 46%.

and they have significant operating losses. And this story is in the Philadelphia Inquirer. It was back a few months ago, back in April, and it was written by Susan Snyder and Harold Brubaker. Now, Matt and I had LaSalle's data on the college financial health show, Matt Hendricks and I last week, on the college financial health show. And our report and analysis of LaSalle University was not positive. And the president at LaSalle, Mr. Daniel Allen, said he's not naive.

about the challenges facing LaSalle. And he goes on to say in this article in the Philadelphia Inquirer last April, the last thing he would want to sound is Pollyannish. Dr. Allen, I presume, the president, says, I'm realistic about our situation. LaSalle has had a tough go of it. It's a tough time in higher education right now. All right, we know that. And at the same time, listen to this, talk about not being Pollyannish. I couldn't be more confident.

about this university. And again, Tevye and Fidler on the roof on the other hand, and on the other hand, and I couldn't be more confident, Dr. Allen says, I couldn't be more confident in the plan that we have articulated for its future. All right, remember the story about Matt Brown. Dr. Allen also says the university will also bring back baseball, add new sports for women.

beef up its cheer and dance clubs and start a band. I presume this is a marching band all designed to improve student life and school spirit. And that's fine. That's fine. know, balance Pollyanna or not being Pollyanna-ish and reality with more sports programs. But what did Matt Brown say? What did I just share a couple of minutes ago? Adding sports, leave the finances alone. Matt Brown says adding sports as a leading indicator.

Gary (11:03.262)
of colleges in trouble. I've talked about it before. I'll talk about it again, I'm sure. This college is unlikely to survive with its current business model. And they talk about changing it, changing the stuff, changing the business model. And I wish them the best. I wish all colleges in this situation the best. implementation of any new business model in this tough economic and market environment

does not bode well for the LaSalle universities of the world. Page three, first year enrollments tumble. And I talked about this in the lead. A sharp drop in freshmen enrollment. This came from Inside Higher Education and Liam Knox on October 23rd. Sharp drop in freshmen enrollment, the first since the pandemic. And this Mr. Knox is saying the FAFSA fiasco.

may have played an outsized role in this. USA Today had a similar story. Their headline read, fewer high schoolers went to college this fall. It's unclear why. Zachary Schmerli. Shamel, excuse me, from USA Today on October 23rd. And of course, I believe in macro. The data is what the data is. It had to happen in some form or fashion, in some level of change, some level of decrease, in part, in large part probably, because of the FAFSA debacle.

and probably in the small part and maybe large part the overall downward trend in the higher education industry. But here's what I don't get. And I mentioned this in the lead. What's still bothers me? What's up with all of the we have great enrollment stories that have been rolling out since mid August?

I just, I trust them to be true, but I have alarms blaring inside of my aging brain suggesting some of those just aren't gonna match up with reality.

Gary (13:08.586)
And there's a Preston Cooper wrote a story, AIE higher education, he's a policy researcher. And the gist of it is going to a liberal arts college is usually an expensive way to get a bachelor's degree. However, that's not the full story. You have Preston Cooper, the higher education, he's a higher education policy researcher at AEI higher education. He says, that's not the full story.

The most financially consequential decision for prospective college students is not which college, it's not which college they attend, but what they study once they arrive on campus. And even though as Mr. Cooper, Dr. Cooper maybe say, even though the liberal arts students see a lower return on investment average, the reverse is true, this is important I think, the reverse is true

for traditionally high value majors like computer science, nursing and economics, and students who pursue a degree in one of these fields at a liberal arts college. These students who pursue high value majors are likely to do even better than the average for their major. So it's possible, and we've heard this story before, and I tend to think it's probably true, it's possible that the well-rounded undergraduate education

at liberal arts colleges better prepares, better prepares future nurses and economists and programmers and the like for a successful career, according to Dr. Cooper, to Preston Cooper. But liberal arts students, liberal arts students without that high value major cannot neglect their choice of major if lifetime compensation is an important consideration for them. Page four.

Some colleges aim financial aid at a declining market students in the middle class. And again, John Marcus on October 24th at Hekenger, the Hekenger Report, and again, all these links will be in the show notes. Increasingly stretched, Americans in the middle have become less likely to pursue degrees. John Marcus from Hekenger notes, middle income Americans have borne a disproportionate share

Gary (15:32.716)
of college price increases. The net cost from 2009 to this middle America, middle income American has been from 12 % to 22 % again since 2009. Compared to about 1%, Markham reports, me, John Markham reports to about 1 % for lower income families. This of course is from data, from federal data. Now a handful of schools, and he notes many of them private nonprofit institutions.

trying to compete with a typically lower priced public universities are beginning to designate financial aid packages specifically for middle income families in attempt to lure them back into that college student market. Colby College, for example, has announced a program, John Markham reports, announced a program that will take effect next fall against 2025 to attract prospective students in the middle.

Here's the detail, it will cap the cost of tuition room and board at $10,000 a year for families who earn up to 100,000 and will cap it at 15,000 per year for those with family incomes from 100 to $150,000 per year. Now that's compared with the current net price at Colby of about 53,000 a year for people in those income brackets after existing discounts and financial aid, part of John Markham's story.

And the new guaranteed lower price, because I wondered about this, the new guaranteed lower price for these middle income families is being underwritten by a $10 million gift from an alumnus. And this is a big part of this outreach program. right, so two points. That's basketball season. We'll give them three points. Grade A plus for Colby College on innovation, on using that gift, finding a way to stretch the gift. Well done, well done.

The second point though is one that I wanna throw out for consideration. What happens when the 10 million runs out? Maybe the alumnus does another 10, I have no idea. In 2022, there were a little bit more than 2000 full-time equivalent students at Colby. So the freshman class back in 2022 had been somewhere in the 70 to 500, 500 and change. The 53,000 in net tuition.

Gary (17:57.17)
even at a 50 % discount, which is about where colleges are now, is more than twice, it's gonna be about 26,000, half of 53,000, is more than twice the $10,000 being offered per student. Now there's gotta be a lot more details to this program, and if you're at Colby College and wanna reach out to me, I'd be glad to have you on the show, we can talk about that. But I just worry what happens to these students, either freshmen or continuing students, when that grant runs out and how Colby College...

is going to take how Colbert College is going to deal with that.

And how about understanding the future of higher education by looking to the past of healthcare. This is a story written in higher education dive by Dr. Ricardo Aziz. This is back in October 1st. Here's something you would expect to hear from me. I'm gonna read from Dr. Aziz story. A skim of recent headlines mentions 20 closures in 2024, 17 institutions closing departments or ending services and 55 institutions cutting jobs.

Is this a typical week in higher education? No, Dr. Aziz reports. This is a typical week in healthcare. Ricardo Aziz noted these points in this higher ed story if it was earlier this month. And so what about closures and mergers? Healthcare used to be primarily dominated by inpatient facilities, hospitals all over the country, small, rural, urban, suburban. We all wanted hospitals, kind of like we all want colleges in our communities.

And hospital leaders were convinced that they were indispensable to their communities. And they probably were. But regardless of the realities of their business models, they ran into financial issues. And much of like what is happening in higher education, many of these small hospitals have either closed or merged. And the fight to keep these smaller hospitals open was ferocious and continues to be ferocious.

Gary (20:02.496)
with board members and hospital executives and citizens and local community leaders all leading the charge to say, you can't close our small local hospital. Again, kind of like colleges. But despite these valiant and often ineffective efforts, disease reports the past 30 years has seen significant consolidation, significant consolidation, just like we're seeing in higher education for both hospitals and provider physician practices.

Here is a lesson I want to focus on from Ricardo Aziz's story.

And this is applying to higher education. Market consolidation is inevitable. Market consolidation will happen. Regardless of how special we believe our institutions, our peers and our colleagues, and our communities to be, market consolidation will occur when there is excess capacity, exactly like higher education, decreasing demand, exactly like higher education.

and increasing cost, of course, as higher education is experiencing. And perhaps it might be better, Ricardo Aziz concludes, better to predict what the future of higher education may be by looking at the present and the future of our health care industry. I'm going to wrap this podcast with an interesting story that came out a month or two ago and then a new twist to it late last week.

Vanderbilt University gets approval for a $520 million Florida graduate campus. Now this follows on Vandy's, Vanderbilt University's announcement a few weeks ago that they were moving into downtown Manhattan, opening a new facility, opening a new branch campus, if you will. That's not the term they used, I don't think. Branch campus in Manhattan. So I had Dr. Laura DeVoe on as a special guest on the podcast last week. You can get it on our podcast website.

Gary (22:03.722)
And the main reason I had her on was to talk about higher education mergers and acquisitions. And in particular, was Vanderbilt's move into Manhattan. So after I had finished recording the podcast, I saw the story that Vandy is also moving to Florida. And now in my mind, we didn't talk about this in the podcast, but in my mind, this is an in your face and in your face move by Vanderbilt University. This is a perfect example.

of a first mover action in higher education. It'd be fascinating to watch, here is what's more important to watch for.

Which of the big boy universities, which of those well known top 25, top 50 big boy universities will now mimic this approach that Vanderbilt University is doing in both in Manhattan and in Florida? For example, will Harvard grab a closed college in downtown Chicago? Will Southern Cal grab a closed suburban college in the Midwest somewhere? Will others in this high quality, high

low acceptance rate college population, the elites, if you will, will they look to expand their geographic presence just like we saw and continue to see with college athletics and the coast to coast expansion we've seen in athletics? And if so, if so, what will that be the leading edge? Will that be the leading edge of a massive move to consolidate small and medium sized private and public colleges just to compete?

Would these moves into new geographies drive more colleges, even more colleges, to financial ruin and force them to turn off their rights? If indeed this is the first move toward a large scale consolidation and large scale mergers, it is a route I did not see coming and I did not see coming and I don't know that I've seen any others suggest anything like this. And I'm gonna follow it closely because it caught my attention.

Gary (24:15.052)
I believe it has the potential and the business logic to impact higher education in ways that no one I know of is talking about. Let's keep an eye on this one. Hey, thanks for making the time to listen. Let's call that a wrap for this October 28th podcast. As always, I am grateful for your time and making the time to listen to the podcast. If you questions, comments, concerns, topics you like,

Send them to me at gary at college viability. That's college viability one word, gary at college viability.com. Until next Monday, I am Gary Stocker for College Viability. We'll talk then.