Gary Stocker analyzes the nine colleges Fontbonne University offered as teach-out options after its closure. Using enrollment, graduation rates, and endowment data from 2015-2022, he finds only two show enrollment growth, most have declining tuition revenue, and several fall below financial viability thresholds. He warns transfer students that picking another unstable college could repeat the trauma of closure.
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Hi, it's Gary Stocker with College Viability. As we've witnessed recent college closures, many but not all are coming out with teach-out agreements for their students. And of course, a teach-out agreement is when a college, a closing college, almost always private colleges, identify colleges that their students can work directly with to continue pursuing their education. Now, statistics suggest from a variety of sources that only about 50% of students from a closed college move on to another college. But what we're doing in this video exercise is we're looking at the 9 colleges that Fat Bond University in Missouri recommended its students look at for transferring their credits to continue their degree. What we're going to find is most of those colleges themselves have financial issues. I'm doing this presentation, this data review, actually inside the working version of the 2024 Private College Viability App, the Executive Analysis version. We also have more limited versions for faculty and staff and for students and their families. You can see the list of 10 colleges, including Fontbonne University, on the left-hand side. And these are from a report in the St. Louis Post-Dispatch in late March of 2024. And we're looking at FTE enrollment, and you can see that highlighted here in the upper left-hand corner. And the data we look at is from 2015 to 2022. That's the last— 2022 is the last set of data reported from IPEDS. And as we look at the set of 10 colleges, we can see just 2 have positive FTE— that's full-time equivalent enrollment growth— from 2015 to 2022, and the other 8 have negative growth. Now, Fontbonne is one one of those 8 that has negative growth and they're closing. So obviously that's part of the data set. But I'm going to flip this up here. Let's take a look at the colleges that might be having similar issues to what Fontbonne University has. And we, you can look at the colleges on the left on your own, but look at how many of these colleges have substantially decreasing FT enrollment over the last reported years. And for those students and their families looking at these colleges, You want to exercise caution if a college has had decreased enrollment over an extended period of time. What impact is that going to have on their capacity to have you as a full-time student completing your degree, especially if you're already, or already have gone through the trauma of a closing college? Let's look at 4-year graduation rates. And you can see as I bring that up that it includes, the report includes more than 30 different reports from IPEDS, um, I guess 32, including 8-year changes and some ratios that we'll look at. But let's just take a quick look at the 4-year graduation rate. Colleges, of course, are paid to get you to graduation, and the minimum threshold that we use here at College Viability is 50%. And again, I've sorted these colleges by their graduation rates, and you can see the 2022 graduation rates, and for all the other years as well, you can see the 8-year change and the percent change. I don't know why the University of Health Sciences didn't report data. They had a different name back in 2015-16. But for whatever reason, they didn't report it, but their graduation numbers are pretty good. But look at the set of colleges from Buena Vista on down, and of course Fontbonne is part of that, who can't and haven't even graduated 50% of their students. In our parlance, we call that a coin toss college. Be careful, be careful. Let's go back to the main menu and let's take a look at the tuition and fee revenue. Because it's not really enrollment that makes that big of a difference. It's really the tuition and fees that a college collects from their students. Now of course the students want a lower tuition and fee, and there's nothing wrong with that. And the colleges want a higher tuition and fee. That's how they pay, make payroll. That's how they keep the lights on. That's how they buy stuff. And so what we're looking at now is the tuition and fee revenue collected by these 10 colleges from 2015 to 2022, and we've calculated an 8-year average. It's a negative $8 million, $8 million over the last 8 reported years. And we can see the 8-year change for these colleges. And let me just sort it by, um, the losses. And we— you can see, read the colleges on your own. Some have lost significant funds. You can decide if $106,000 over 8 years is a big number or not. Only 3— Maryville, Illinois College, and to a small extent Culver-Stockton— have grown their tuition and fee revenue over the last 8 years. This begs the question, especially for those top 5 or 6, if that pattern continues, Fontbonne students and others, will this college have the resources to provide you with the college education that you're looking for? Let's look how they get students in the door. Let's go ahead and take a look at something called unfunded institutional grants. So I'm going to click on institutional grants right here. And we're going to the bottom section, and what this is— unfunded institutional grants are effectively the discounts that can be in the form of merit aid, in the form of scholarships, but they're unfunded. There's no actual dollars behind them. They're discounts from these colleges. And I'm going to look at the— let's start by the 2022 number just to give us a base reference. And you can see that Maryville University and Webster, you know, are both approaching $40 million in unfunded discounts. The colleges are welcome to do whatever they need to get students in the door, but these colleges are walking away from these numbers just to get students in the door. Again, nothing wrong with that, but it's important to look at that. Even more important to look at is that next column. Look at the 8-year change. From 2015, Maryville's had to add an additional almost headed toward $19 million in unfunded discounts to get students in the doors. You can look at the numbers on your own to see if that makes a big difference for you, but if colleges are effectively having to give away the store to get students in the door, that should be somewhat of a red flag for you to consider. Let's go ahead and take a look at something else. I want to look at admissions yield. And admissions yield, as I click on that, is by definition the percentage of students who a college accepts who actually show up, attend classes, and pay tuition. And there's some colleges that want a really low admissions number. The Harvards, the University of Michigans, Illinoises, Ohio States, those kind of places. Single-digit number or low double-digit number is what they're looking for. And for everybody else, maybe 50 or 100 of those colleges are really selective, they want a number somewhere, the higher the better. When it's 20 or less, that's not a good number. And most of these, let's sort by 2022. We can see that Missouri Baptist, it's a religious college, faith-based college, they tend to have higher admissions yields. 42%, pretty good. And Quincy, not bad. Maryville, not bad. But all of these really are approaching that level where students are saying, you know what, I've got better offers, or I've got better deals, or there are other colleges that I'm looking for. And again, what we want to look at here is the 8-year change. Only 2 of the 10 colleges, and of course Fontbonne is part of that, have had a positive increase in admissions yield. But look at the ones that haven't. More and more students— and look at University of Health Sciences, the former School of Pharmacy in St. Louis. What's going on? What's going on? And then finally, I want to look at endowment value. You can see the other reports there. They're available from the website. I'll give you access and links to that in the show notes. But let's go ahead and click on endowment value. And there's endowment assets per FT. It's kind of a standardized comparison. I'm going to pass on that today. I want to show you the 2022 endowment, and this is the total endowment value for each of these 10 colleges. And again, at College Viability, we have our own minimum threshold, and we assume that any college that hasn't been able to collect $50 million or more in an endowment will never be able to collect substantial funds in a pinch when they really need it. So when we look at that, you can see the colleges on the left, you can see the 2021-2022 endowment values. And you know, this first set are above our minimum threshold. It really looks like about half or more than half are. But look when we get to these colleges, Culver-Stockton, Quincy-Oliveet, Fontbonne, Missouri Baptist University. Throughout their entire existence, and of course Fontbonne is one of these, throughout their entire existence, they haven't been able to raise even $50 million. If they get in a bind, and I've seen this happen before, and they announce they're gonna raise $12 million in a month, it's not going to happen. And this is an indication— this, this endowment is an indication of the college's capacity to solicit and collect gifts from donors. So what does this all mean? It simply means buyer beware. Caveat emptor is a Latin phrase for that. When you're looking at these colleges, whether you're a Fontbonne student looking for a new home, or really any student looking for a college, to attend, you want to be able to compare the financial health and viability of these colleges, and these simple parameters we've given today are just the ones associated with the teach-out agreements that Fontbonne University has arranged as part of its teach-out program because it's closing. If you're a former Fontbonne student, please be careful. Look at the finances of these colleges. There are stories that students from one closed college have chosen another college that also subsequently closed. Doesn't happen much, but it does happen. This is Gary Stocker for College Viability.
