In this episode of This Week in College Viability, Gary Stocker addresses growing public anxiety about the financial stability of private colleges, citing a Milwaukee Journal Sentinel story that highlights parents' concerns about whether institutions will remain viable through a student's graduation. He proposes four concrete questions that prospective students, families, and advisors can pose to college representatives to gauge financial health and long-term viability. The first question probes full‑time‑equivalent (FTE) enrollment trends over the past five to ten years. The second focuses on the four‑year undergraduate graduation rate, with a 50% threshold that separates “coin‑toss” colleges from those that effectively support student completion. The third asks for the current endowment size, recommending a practical minimum of $50 million as an indicator of an institution’s capacity to weather financial shocks. The fourth examines admissions yield trends over a decade, interpreting declining yields as a warning sign of waning desirability. Stocker ties these metrics together as interrelated “systems and processes” that reflect an institution’s financial health, and he encourages listeners to use the College Viability App to compare multiple schools across these indicators.
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Welcome back to another episode of This Week in College Viability. My name is Gary Stocker. I have posted recently about a tipping point developing around the public awareness of private colleges that are closing around the country. Recently, the Milwaukee Journal Sentinel moved that tipping point needle forward with a story about private colleges in Wisconsin. Here's a quote from the reporter on that story, Kelly Meyerhofer, that caught my attention. It says, "At admission days, it is increasingly common, it's an increasingly common question we get from parents or prospective students about the degree of certainty that the college will still be viable when they graduate." It's a fair question, says Northland College President Chad Dayton out of Wisconsin. And so what I'm going to use this podcast for is to give students, parents, family members, and others 4 basic questions that they can ask college representatives that will be the best indicators of a college's financial health and even their viability. The first question is, has your enrollment increased or decreased in the past 5 to 10 years. And now colleges can cite many enrollment sources, and the one you, you really want to ask for is the FTE enrollment. FTE stands for full-time equivalent. It's just a standard way to do reporting. So ask the question: has your FTE enrollment increased or decreased in the past 5 years? The second question, maybe the most important question: what is your 4-year Undergraduate graduation rate for the past 5 to 10 years. This may be the most significant and maybe overlooked indicator. If a college has not graduated at least 50% of its undergraduate students in 4 years, there's reason to believe that the mix of students is not academically strong and/or that college doesn't have the systems and processes in place to graduate students, to guide students toward graduation. I call those colleges with 4-year graduation rates under 50% coin toss colleges. It's essentially tossing a coin whether a student will graduate or not from those colleges, and there are way, way too many of those colleges in the country. The third question to ask is, what is your current endowment value? Now, I use a minimum of $50 million Some use a different number, some are unwilling to quote a threshold. But if a college is below that number, you can pick a different number if you want, it suggests that again, they don't have the systems and processes in place to solicit gifts from alums, community members, students, and others. A college unable to reach something like a $50 million threshold over decades cannot reasonably be expected to do so on short notice when a financial crisis develops. And finally, the fourth question, and this is kind of an inside baseball question, but let me step you through it. The fourth question to ask is, has your admissions yield increased or decreased over the past 10 years? Admissions yield is a popularity indicator. It shows what percentage of students that a college accepted actually show up and start paying tuition. If the admissions yield is decreasing over a period of years— in the College Viability App, we track that over 8 years— it strongly suggests that students are finding more acceptable options. Now, a sidebar to this: the really selective, some call them rejective colleges, like Harvard and Yale and the big public colleges keep their admissions yields low on purpose, typically in the 5% range, because that's a big value to them. They want the public to know they only accept the best. It also helps keep their finances in health because they can charge more money for that selectivity. Now I referenced systems and processes twice above. The reason that a general category is important is that it's a function of financial health. If there are not enough financial resources available to raise donations and graduate students, it is reflected in low numbers for each of those indicators. And remember, it's the comparisons that are important. As the Milwaukee Journal story indicated, there are no surefire data points that can be used to predict the closure of any college. However, the data is available to compare colleges, and it's the comparisons that are important. Do you want a college that is growing with a strong endowment and solid graduation rates? Find colleges that fit that profile, and you can use our College Viability App to do so. Are you looking at 2 to 3 colleges only? Compare the 4 questions above, the 4 points above, to get a sense of their financial strength.
