In this video, Gary Stocker examines the financial health of Becker College using data from the College Viability App (IPEDS‑derived figures for 2014‑2019) and the college’s audited financial statements for FY 2018‑2019. He highlights a 91‑student enrollment decline, a $1.5 M drop in tuition‑and‑fees revenue, a $5 M rise in expenses versus only a $2 M increase in revenue, and a 45 % six‑year graduation rate—well below the 70 % benchmark. The college’s endowment is barely over $5 M (far under the $50 M stability threshold). The audited balance sheet shows current assets of about $3 M against current liabilities exceeding $5 M, long‑term debt around $10.5 M, and unrestricted net assets of $18 M. Tuition discounting is extreme: roughly $26 M in discounts on a $60 M list price, leaving net tuition revenue near $33 M. Total revenue and expenses both hover around $46 M, resulting in operating losses of $0.7‑$0.75 M for two consecutive years. Stocker concludes that these financial trends explain the news reports of Becker’s imminent closure and invites viewers to request similar analyses for other private colleges.
Chapters
This is Gary Stocker. Becker College in Massachusetts has been in the news lately. Reports suggest that the college may close very soon. I took a look at their financial health and viability data from both our College Viability app and their own audited financial statements. As more colleges start to succumb to financial pressures, you'll want to see the financial health and viability reports on those colleges as well. Make sure to subscribe below so you can get those updates. If you have a specific college, a specific private college that you want to see, put the name down in the comment section below. I'll make sure to add it to the list of college financial health and viability reports that I do in the future. The first data I'm going to show you is from the College Viability App. The new 2021 version has just now been released. And remember, the data comes from the National Center for Education Statistics, and it's IPEDS, I-P-E-D-S database. Let's take a look. You can see I brought up just Becker College for our purposes today. And the data covers the period 2014 to 2019. That's the most recent data available from the government. And we can see that one of the reasons Becker College is in trouble is over the last 6 years their enrollment has declined 91 students. Not a good number for any business when your business goes down, when the number of customers goes down. Their 6-year change in tuition and fees has gone down $1.5 million. So again, over 6 years, the revenue they collect from students for tuition and fees has gone down almost $1.5 million. I'm going to go to the graduation rate in a second. Let's just jump over to 6-year total expenses. And I'm going to compare that to revenues. So we can see for the last 6 years, the expenses at Becker College have gone up about $5 million and change, but the revenues have only gone up a little over $2 million. Let's take a look at the graduation rates. And it's not really the change, although it's gone up 17 points for Becker, but it's the absolute number. Let's talk about this for a brief second. In their reported year, to the government statistics of 2019, only 45 students out of every 100 who started at Becker College 6 years previous graduated from Becker College. Some may have gone on to graduate other places, some may have graduated from Becker beyond 6 years. This is not a strong number. You want to see that 6-year graduation rate really somewhere in excess of 70%. Let's look at their endowment lastly. And again, we show some changes here. It has gone up 11% over the 6 years. A half a million dollars, not a big number over 6 years. But the real concerning number is the value of the endowment is just barely over $5 million. Not a strong number at all. The standard I know I use and others use is a private college endowment should be a minimum of $50 million to have any semblance of stability for that kind of organization. So again, Becker is on the really, really low end of this endowment. Let's look next at the actual audited financial statement from Becker for the years 2018-2019. So here is the audited financial report, and you saw earlier in the video who the auditors are, for the period ending June 30th, 2019. Now let's stop here for a second and talk. This is how slow private colleges in general, in most cases, are in reporting their financials. This is from data that's now, as I record this, more than 18 months old, almost 20 months old. It shows us where Becker College was about 2 years ago, and we can subsequently do comparisons of Becker to other colleges as well. I've highlighted the things that I want to look at here. And this is the balance sheet for Becker College. And they have total current assets, again in the period ending June 30th, 2019, of a little over $3 million. It was a little bit more than that in the prior fiscal year. We can also note that their current liabilities are $5 million and change, and almost $6 million for previous years. Comparing total current assets at a little over $3 million, and comparing that to total current liabilities at over $5 million, that's not the kind of ratios that you want to see. Let's look at something else that's concerning, and that is long-term debt. It's been about $11 million, $10.5 million since 2018, 2019 fiscal years that are reported here. It indicates that some significant portion of the revenue, and it's a small number that Becker College collects, goes to debt reduction. Just like you and I pay down our car payments and our mortgage payments, Becker has a $10 million debt on their kind of long-term debt. Lastly is the, the net assets. It's something associated with resources that a college can spend. And again, it kind of ties into the endowment that we saw earlier. This is without donor restrictions. And again, $18 million were available in 2019 without a donor specifying its use for Becker College. Not a good number, not a strong number. You want that number to be in excess of $50 million as a general rule. Let's take a look at their profit and loss. And I want to start with how the act of tuition discounting, sometimes called merit aid— it's just a discount— acts on colleges. And Becker is a perfect example. We can see that in 2019 that Becker discounted their tuition $26 million effectively both years. They collected $33 million and change of what was really a list price, if you will, amount of about $60 million. So they've essentially given away about $26 million a year just to get students to attend. That has obvious negative impacts. We'll take a look at that. So the total revenue, adding all these kind of things up through here, was almost $46 million. And it was really relatively equivalent to that in 2018 as well. Total expenses were about $46 million and change, a little bit higher in 2018. The loss in 2019 was a little over $750,000 and a little over $700,000 in 2018. These numbers are not necessarily a big deal on occasion, but you obviously want to show when running a business some profit on occasion, and there are two consecutive fiscal years that Becker does not show that. So we've looked at the financial health and viability from the College Viability App, and now from the audited financial statement. When you see news reports of the financial challenges and potentially imminent closing of Becker College, this is why. Again, if you'd like to see more information on additional colleges, make sure you put that name in the comment section below. And if you want to see videos like this on more colleges, make sure you subscribe.
