Case study: Using the College Viability App to evaluate 10 Missouri private colleges

Hi, welcome back to another episode of This Week in College Viability. My name is Gary Stocker. Today what I want to do is show how to use the College Viability app to analyze those colleges, in particular the ones that are weak. And what I have chosen, and I've chosen 10 colleges, private colleges in Missouri. Let's take a look at the list right here. And we're going to look at, we're going to start by looking at their FTE enrollment. And these colleges, for the most part, 9 out of the 10 have had decreasing FTE enrollment since from the 2014 to 2021 time period. It's one of the indicators that suggests a college could be in trouble, and I will share with you in this list of 10, I have a couple who I am concerned about their long-term, short-term and long-term viability. I'm not going to identify those, but I want you to take a look at the data associated with these 10 colleges that's mostly on the downside, but a couple have some things going well for them. So you can see the 10 colleges that I have chosen, and you can see the app gives us the data from 2014 to 2021. We can also see the 8-year change in FTE enrollment. So we can see 1 out of the 10, Rockhurst University in Kansas City, has been able to grow the enrollment. We do have some conditional formatting over here, so you can tell red is not good, yellow average, and some greens will show up eventually as well. But take a look at this. Let me flip the order here and look at the colleges who've had substantial losses in FTE enrollment from from essentially flat at Culver-Stockton, 4% decrease, to a 64% loss at Columbia College in Columbia, Missouri. When you start seeing those kind of numbers, you have to be concerned. So here's how we navigate. We're going to go back to home, but I want you to know that each one of these reports— and there are 30 different IPES reports in the College Viability app— offers a quick definition, quick how to analyze each of these reports. So let's go back home, and again, here's a navigation page where we choose the colleges. Let's take a look at the 4-year graduation rate. Now, this doesn't get a lot of play in the higher ed media reporting, but it's important. Now, here's the threshold that I use. Any college that doesn't graduate at least half of its students, 50% of its students, over 4 years, and that's what we're looking at right here, is what I'm calling a coin toss college. You might as well have tossed a coin in the air to see whether your child, your student, is gonna graduate or not. Now, in general, this overall set of 10 isn't too bad. I've seen a lot worse, but you can see that 50% threshold is really only met by 3, but I'm gonna grant that Fontbonne, William Woods, Westminster, and even Drury, Culver-Stockton, you know, they're close enough that they can probably get there, but that's, keep in mind, for every 100 students, For example, that started in Fontbonne in 2014, only 49 have graduated. Let's take it one step further because we've also added a 6-year undergraduate graduation rate. So I'm gonna click on this link right here. And the threshold I use for that, and I think others do as well, is 70%. So if a college can't graduate 7 out of 10 undergrad students in the course of 8 years, I think there's an issue. And so we see a little bit more separation here. We see Rockhurst still doing well in terms of the thresholds. We see Jewell and Fonbonne really not, and even Drury, not really getting to that 70% threshold. And here's the way I would look at this, and here's the way I would encourage you to look at this. If you can't graduate 7 out of 10 of your students in the course of 8 years, I'm not sure you have the systems, processes or student base that you want to be able to graduate them. Would you rather send your student to someplace like Columbia College, which only graduates 20% of its, 27, excuse me, 27% of its undergrad students after 6 years, or Rockhurst, almost 3 times as much, at 74%? There becomes some relative differences here, but look at the gross disparities. Rockhurst versus Columbia, Hannibal-LaGrange, even Culver-Stockton, not even close. Let's go back home. And now I want to take a look at our revenue feature. I want to go to something called the tuition and fees revenue. Now, when you're following the media and news stories, they always report a college's enrollment, good or bad. And that's fine, that's what media folks do. But really, I have shared many times that enrollment does not pay the bills. It does not pay salaries for faculty and staff. So what we're going to take a look at is, this is that same 8-year period. We're looking at the tuition and fees revenue. And it's, I've already sorted it a little bit here. So these are the colleges in the last 8 years from this time period, the most recently reported available, have grown their tuition and fee revenue. Rockhurst and Culver-Stockton are the only ones. Tuition and fee revenue is the primary, if not predominant, source of revenue for these colleges, and yet over the period of 8 years, 8 out of 10 have had decreased tuition and fee revenue. Look down here at Columbia and Drury and Fontbonne, and to a lesser extent, the ones above that. That's not a good indicator. When you're losing that much money over the course of any time period, there's a pattern. Losing $10 million over the course of 8 years is not something that is going to be the best practice. So when you see a college using the app, losing tuition fee revenue, you have to wonder, how are they making up for that? Now, there may be opportunities to make up for that revenue, but certainly when you compare one to the other, Rockhurst is doing something right compared to Columbia College, who's not doing anything right by comparison. Let's go back then, and the other indicator— the other two indicators I want to look at briefly are endowments. And we're going to look at the endowment value The EOI stands for end of year. The endowment value for these 10 colleges, and we're going to focus on 2021. And the threshold that I use is $50 million. So if a private college over the decades, and in some cases centuries, has been around, have been around, if they don't have a bare minimum endowment of $50 million, $5-0 million, then they've got some systems and processes not in place for all those decades or centuries. And when we see here again a decent sampling, about half are $50 million above, but about half are $50 million and below. Go down here to Hannibal-LaGrange, compare it to Columbia College. We saw some issues with Columbia College. One of the issues they don't have is their endowment. They have funds they can use. Typically it's the earnings, not the actual principal of $158 million, but the earnings on that $158 million to support operations growth, whatever the case may be. If you've only got $8 million or $15 or $20 or $30, or in this case Rockhurst, even $40, you have to worry about the college's capacity to easily or at all plow through ups and mostly downs in the economy in general and higher education in particular. So that's another major comparison So that's another financial comparison. And then I want to look at the admission yield and a couple minor ones I want you to be aware of. I'm going to click on admissions yield, and I've done research on colleges, private colleges that have closed, and there are some, certainly some patterns for sure. But the one consistent pattern for every college that I have watched close over the last time period, 2016 to today their admissions yield is down. It has decreased over the last reported period, in this case 2014 to 2021. And look at what we're seeing for these colleges here. 9 of the 10 have had decreasing yield over the last 8 years. Now let me define decreasing yield. It is by definition, and I call it a popularity indicator, it is the percentage of students who after being accepted by a college— and we'll use Drew here after being accepted by a college actually show up. So for every 100 students jury says, "Yeah, come, we accept you," 25 show up. That's not a bad number. You're not gonna get anything close to 100%. 25 is above the minimum threshold I use of 20. But look at the pattern. There's what you're concerned about. It's down from 50% down to 25%. If students having been accepted to your college are saying no year after year after year. That's the market speaking. Your college is less attractive for whatever reason than it was, say, in 2014 or even in the years earlier. And then lastly, this is kind of an inside baseball number that I want to show you, and I want to go to institutional grants unfunded. Institutional grants unfunded. Now typically, when students are accepted to colleges, private or public, They typically come with a financial aid offer shortly thereafter that provides references to scholarships and merit aid and those kind of things. What we're finding, and what I know to be the case, in almost all situations where a student is awarded a lower tuition, it's based on a discounted rate, it's based on unfunded merit aid, and it's based on unfunded scholarships. I say the word unfunded on purpose. These are all just different ways to say, hey, we will charge you less, discount, to come to our college. So let's take a look and let's just start with Rockhurst. They were offering $29 million in 2014 to get students to come, tuition discounts. They were foregoing $30 million, $29 million. In 2021, they were foregoing a little over $39 million. Think of the impact that has on their capacity to operate their college. And again, we see the pattern. We'll just look at the change. Culver-Stockton up $9 million. Just, they're trying to give away the store to get students to show up. Look at that percentage. It went from $1.6 million to $11 million in 8 years, up almost $9 million, and they still have decreasing enrollment. Drewry up $8.5 million, and Fontbonne and Columbia. Then interestingly, there are some colleges, and 4 in this case in our sample set, who have tried to manage that tuition discounting at lower fees. And we see Hannibal and Westminster and Stevens College and William Jewell. Even though they have tried to increase their revenue by not discounting their tuition as much. If we looked at the tuition— I'm sorry, if we looked at the FTE enrollment, each one of these 4 is down. And if you recall, 9 of the 10 colleges had decreasing enrollment in the last 8 years. The only exception was Rockhurst. So what we've been looking at here is the executive analysis version of the College Viability App. It is for higher education leaders, reporters, stakeholders across the board in higher education. It's a pricey proposition. I'll, I'll list the price in the description down below. But there's also a simpler version. This is the 2023 Parents College Viability App. It's the risk analysis version. And the risk analysis you want to go through is not necessarily that some of these colleges will close. Some will, almost certainly. But if they are financially weaker, if they can't grow enrollment, if their endowment is low, if their graduation rates are low, If their tuition fee revenue is low, can those colleges provide you or your child with a quality college education? By comparison, it's a fair question to ask. And there's just 5 fields we look at, and we looked at all these before. The enrollment rate, enrollment trends, the 4-year graduation rate, a minimum of 50% is what we use as our threshold. That's probably low, but we use it nonetheless. An admissions yield, if it's gone down for 8 consecutive years, that's a concern because the market is speaking. The popularity of that college, not what it wants to be. If the tuition and fees revenue is down, there's reason to think that the college may not have the cash to continue to operate profitably for sure, and with the kind of quality education that you want. And then finally, that endowment value. If it's above, if it's below $50 million, You just have to wonder, does the college have the systems and processes in place or the resources to survive the inevitable downs in any economic cycle? And then finally, there's a couple individual, individual ones I want to show you here, and it works for all of the versions of the app. And let's go ahead and go back to the full version. Let's just go to the FTE enrollment, and I'm going to show you how to look at individual colleges. Let's go ahead and grab Fontbonne University. So I'm going to right-click on top of that I'm going to do the drill-through, and I'm going to see the single college snapshot. And what that's going to do is going to take me to Fontbonne University, and it's going to show me what it's doing well at. Admission yield, not bad. Graduation rate, not good. Six-year graduation rate, not good. Um, your tuition fee is down, not good. Endowment value, not good. It's kind of a single glance for all these colleges. You can go back to the report. Let's grab a different college. Let's look at William Woods University, and let's look at a different drill-through. Let's look at the 8-year changes. And so at William Woods University, we can see that the admissions yield is down 21%. That's scary. We can see that the fall enrollment is down over 200 students. The graduation rate change is down— is up 6 points for bachelor's. The percent admitted is down. You can compare all these for a single college, but that's what the College Viability app is designed to do. To do. So what does this all mean? At College Viability, we believe that the first checklist item on a student's college list should be, is this college financially healthy, or is it even viable? Why would you want to spend time and resources considering a college, like some that we saw on our example from the 10 Missouri colleges, whose finances, admission patterns, enrollment patterns, endowments are not good. There is a higher risk of maybe closure, maybe not. That's a tougher one to call, but certainly some of these will close. But it goes back to that quality. If a college is struggling financially by comparison, for example, we saw of this group Rockhurst may be the strongest financially, what does that mean? Should you choose a college not performing well or one that's performing better by comparison? I will include links to the Executive Analysis version of the College Viability App and the Parents—2023 Parents—College Viability App, the Risk Analysis version, in the description below. My name is Gary Stocker. Thanks for listening to another episode of This Week in College Viability.