Gary Stocker analyzes the financial health of Arkansas Baptist College and Hood College using audited financial data. Arkansas Baptist's enrollment collapsed from 900 to 400 students, tuition revenue dropped from $8M to under $1M, and graduation rates sit at 1-4%. Hood College shows stable enrollment around 1,630, growing tuition revenue exceeding $34M, and graduation rates above 50%.
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It's time for the College Financial Health Show with Matt Hendricks and Gary Stocker. Hi everybody. While Matt is away with his family for a bit, I'm doing the show solo today and with a slightly different focus. I'm going to do a college financial transparency show that is for students and their families. And it's important, obviously, for colleges to be transparent about their financial health. This show will help students and families understand basic measures and, more importantly even, comparisons of a college's financial health. We're going to, we're going to do 2 colleges today. I'll talk about those in a second. We're going to look at 5, and only 5, questions: Is the college making or losing money? Are enrollments and tuition revenue stable or growing? Is the college maintaining its buildings? This is a safety question. Is the endowment, the savings account, being used responsibly? The term we're going to look at for that is something called endowment draw. And maybe most importantly, does the college graduate its students? And our minimum threshold here at College Viability is 50% in 4 years. And you'll find out many colleges don't meet that threshold. The two colleges we're going to look at in this show are Arkansas Baptist College in Arkansas and Hood College in Maryland. You can see those highlighted right here. I'm going to be using initially the Advanced Private College Financial Compass that pulls audited financial statement data. It pulls IRS data and pulls data from the National Center for Education Statistics. And the first thing we're going to look at is something called net income margin. Most folks will call that profit, but colleges are hesitant, especially nonprofit colleges, are hesitant to call it profit. But that's what it is. And for our demo, Arkansas Baptist is going to be in the blue for all the charts I will show, and Hood College is going to be in the green. So we can see that Arkansas Baptist, first of all, hasn't reported data yet for 2023 and 2024. That's always concerning. And they have been down probably prior to the pandemic, their profit was down, their net income margin was below zero. It has inched up quite a bit in 2021 and 2022. I'd be interested to see how that happened. That data is not available. For Hood College, we can really see it's hovered around zero, which is really where most nonprofits want to hover, and has inched up a little bit right around the pandemic. That could have been— that could have been pandemic funds, but has trended downward pretty consistently since 2021. Something to keep an eye out for, sure. So in both cases, the colleges show some profit, some net income, revenue after expenses. But I worry about Arkansas Baptist because they're not reporting data, and Hood has showed a general downward trend. Let's look at student enrollment. This is something called FTE, which is, is just a standardized measure, standardized measure to compare and count students at a college. FTE stands for full-time equivalent, and we can see that Arkansas Baptist has gone from about 900 students in 2016, and they are down to about 400 students and change in 2023. Hood has gone from about 1,700 students, not quite, in 2016, and they are just down a little bit, 1,600, almost 30 1,630 students, give or take. So let's also then look at something called net tuition revenue, and I'll type that into the box here. And this is the revenue generated, obviously, from tuition that these colleges charge. We can see that Arkansas Baptist has gone from a little— there's a very little over $8 million in net tuition revenue, which is a really small number, and they're down to just in 2022 not even $1 million, $670,000 in 2022. Students and families watching this considering Arkansas Baptist, be careful. That's a really, really, really small number. There are other sources of revenue for sure, but net tuition is one that drives a lot of the revenue for colleges. And when we look at Hood College, we can see that the net tuition revenue really has gone up. It was at about $24 million in 2016 and now has gone up to a little over $34 million and change. Signs that they're able to raise the prices the tuition prices at Hood. That's good for them, good for the financial health, and students are willing to pay that. We can even take a look at the price per student, and at Hood it's gone from $14,300 per student up to about $21,000, more, a little bit more than $21,000. And even at looking at Arkansas Baptist, down from $9,000 down to $2,000 and change. Really, really, really low numbers for Arkansas Baptist College. I'm going to introduce you to something called CapEx to depreciation. Ignore the inside baseball term. This is kind of a measure of a college's capacity to stay on top of its maintenance, stay on top of its, its equipment like computers and software and those kind of things. And we'll start with Hood this time, and the number needs to be about 1, above 1. And you can see that the median, that gray number here in the middle, is about 1 all the time. The small dashed line is the 75th percentile, and the large dashed line is the 25th percentile. The red line you don't really wanna be close to for a long period of time. That's from a set of 9 recently closed private colleges and not a good place to be. Hood is doing a good job overall over the course of these years. They probably built something here in 2020 and 2021 because the number went really high. But they have been above 1 really since, looks like, 2020. Again, we have data issues for Arkansas Baptist, always a concern. Their 2021 and 2022 values are just right at 1 and a little bit below 1. So really, I wouldn't draw a conclusion from that outside of the fact that, again, we see a college not reporting sufficient data for whatever reason to be able to make these calculations. And then we want to take a look at how responsibly an endowment is being used. And we want to look at something called the endowment appropriation. It's the endowment appropriation— how much of a college— how much money of a college's endowment, its savings account, do they spend for operations? It can be anything from payroll to keeping the lights on to really anything. And again, we see, we see that Arkansas does not have any data here. And we can see that Hood College is really the threshold. You can see it's around 4.5, 4 to 4.5. That's where most colleges want to be. And we can see that hood generally does a pretty good job of staying at that value. It's a little concerning and something to watch that that value has gone up to 5— no, 4.5% and a little bit almost to 6% in the last couple years. Something I would watch if I were a student family. If they're— if you're spending too much of the endowment fund, you're going to run out of resources to use and be more and more reliant on tuition. Let's take a look just the actual endowment value. At Hood. The endowment value is $120— almost $125 million, a decent number for sure. And so they have a long, long runway to make sure they can stay— continue to stay financially healthy and viable. And then lastly, we want to look at something called— not look at something, we want to look at the 4-year graduation rates. And I've got both of our colleges here. Let's change the field to 4-year graduation rates. And we can look at the data again. Arkansas Baptist reports some data except for the last couple years, but these are miserably low numbers. I'm not sure I've seen numbers as low as this. Even as their enrollment decreases, they're not graduating hardly anyone. 4 out of 100, 2 out of 100, 1 out of 100. Not good, not good at all. Colleges are paid to graduate students and and Arkansas Baptist College is not getting that done. On the other hand, Hood College, not bad. Again, the minimum threshold we have here at college viability is 50%, and Hood College is a little bit above that over the last 4 years. We can even look at 6-year graduation rates for Hood. And at 6 years, Hood graduation, the 6-year graduation rates for Hood are strong. And again, not much better at all at Arkansas Baptist College. So how do you use this data if you are a student or a family member or even a community member? And we looked at 5 key questions about a college's financial health, including graduation rates. And this show is really part of a project, part of a longer-term project being developed to provide more and better financial transparency to students and their families about colleges they are considering. The data is out there. The data is out there, it's just nobody has captured it before in a format that is easy for students and families to understand and to be able to compare many, many colleges that you might be considering. The guidance that I will give, and Matt would agree, be careful about choosing a college in comparatively poor financial health. In this market in 2025, it will be very difficult to recover because there are too many colleges, too many college seats, and not enough students, for whatever reason, choosing not to attend colleges at all. During upcoming shows, I will cover both financially strong and financially weak colleges as the show moves forward. If you have requests for colleges you would like to be reviewed, drop me a note. You can send that to gary@collegeviability.com. For Matt Hendricks, I'm Gary Stocker. Thanks for watching. We'll be back again next week with more financial health and viability reviews of private colleges in America.
