Comparing Colleges Side by Side - 7 Minnesota private colleges with decreasing enrollment

As the summer of 2021 begins, we continue to see signs that many private colleges will struggle with both enrollment and finances. Are you looking for information about the financial health and viability of private colleges you may be considering? Are you concerned they might be in financial trouble? Or maybe they might close, or eliminate degrees or programs, or maybe just struggle to provide a quality education? Hi, my name is Gary Stocker. For the past 5 years, I have been researching the financial health and viability of private colleges in the United States. In 2020, I created and released something called the College Viability App. During this video, I'll show you how to quickly and easily compare the financial health and viability of 7 of Minnesota's private colleges. Each of these 7 colleges have had decreases in enrollment for the last reporting period, and that's from 2014 to 2019. This information can help you become more informed, more comfortable, and more confident in your final college decision. The data we use, by the way, is from the National Center for Education Statistics. These are the 7 private Minnesota colleges that we're going to look at. Each of the 7 has had a decrease in full-time equivalent enrollment for the reporting period 2014 to 2019. 2019 is the most recent data available from the National Center for Education Statistics. And we can see as we click on the enrollment button that the decreases have gone from 4% at Augsburg, down 4%, down to almost 24% at Hamlin University. 6-year graduation rates go from really pretty good at Gustavus Adolphus College to not good at all at North Central University at 50%. And what this means is that for every 100 students who start at a college, in this case North Central, for their bachelor's degree, only 50 graduate from that college 6 years later. Now, some may have graduated in 7 or 8 years, some may have transferred and graduated from there, but it gives us a comparison of the colleges who have better systems and processes in place to get your student graduated within that 6-year time period. I will be going over each of the colleges individually in a few minutes, But the next thing to take a look at is of these 7, only 2, Augsburg and St. Mary's, showed increases in tuition and fee revenue over the reporting period. This is the revenue they collect from teaching students and from housing students at those colleges. 5 of the 7 had that number decrease. Not a good pattern, not a good trend. And the last thing I want to look at in the summary screen has to do with the balance between the change in expenses and the change in core revenues. What we can see is 5 of these 7 colleges had a notable, if not substantial, imbalance between expenses and revenue, meaning the expense growth or the expense decreases were not matched by revenue growth or revenue decreases. We'll also look at each college individually for that category. Here are the 7 Minnesota private colleges we're going to look at. Augsburg University, Saint Mary at University of Minnesota, Concordia College, Bethel University, Gustavus Adolphus College, Hamlin University, and North Central University. In these videos, we use a red, yellow, green battery indicator to provide you our analysis of the comparative financial health and viability of these private colleges. A red battery indicator suggests this college does not compare well to others. It could be any combination of enrollment decreases, expense-to-revenue imbalance, graduation rates, or endowment amounts. A yellow battery indicator—as you might guess, this indicator suggests we have concerns. This typically focuses on the risks that private colleges in this category have when they try and balance revenue against increasing expenses. Our experience suggests that yellow battery colleges, private colleges, are at an increased risk of cutting faculty or staff or majors or programs to maintain financial health for the long term. A green battery indicator suggests these private colleges show comparative strength across most, if not all, of the financial, enrollment, and outcome measures that we use. You will see that some private colleges compare well to others, and some don't compare very well at all. Let's work through each of the colleges in alphabetical order, and we'll start with Augsburg University. Their enrollment is down 131 students over the course of the 6-year reporting period. And when we click on the Enrollment tab, we can see they started with about 3,200 students in 2013 and '14, and we're down to about 3,100 students, a loss of 130. Down about 4% 6 years later. Let's click on the endowment tab. And the endowment for Augsburg University in 2019 was about $50 million, $50 million and change. It's fair to assume it might be a little bit higher a couple years later. The threshold that we use is right at $50 million. It's a reasonably accepted convention that small to medium-sized private colleges need to be in that $50 million range or higher to have an endowment to provide them the financial support and reserves that they need. And it also shows they have the capacity historically to raise funds from alumni and friends of the college. I'll go back to the changes over the 6-year period, and we can see in the category of 6-year total expenses and 6-year change in core revenues that Augsburg University has had about, not quite, $10 million in increased expenses. And core revenue decreases, losses if you will, of over $2 million. So that's an $11 million imbalance. And then lastly, we'll look at the 6-year graduation rate. And the 6-year graduation rate in a year ending 2019 was 57%. Again, we use a threshold in our analyses of 70%. So 57% of students who started at Augsburg University in 2014 graduated by 2019. And again, some may have graduated after that, some may have transferred and graduated other places, but it provides you a comparison of which colleges do the better job of graduating students in this 6-year time period. With all these considerations, we're going to put Augsburg University in the yellow battery indicator. The concerns we have are with enrollment trends, with flat revenues and increasing expenses We just worry this might be one of the colleges where there are cutbacks in either faculty, staff, programs, something like that. Bethel University is next on our list. We're going to give them a yellow battery indicator as well. You're going to note that their enrollment is down a little over 260 students over the 6 years. They are down about $2.4 million and change in the revenue they collected from tuition and fees. Look at the graduation rate separately. And their expense-to-revenue imbalance is about $7 million to the negative. They've lowered their expenses about half a million, but their revenues are down, decreased about $7.5 million. When we look at the endowment, we can see that Bethel has grown from $28 million all the way up to almost $50 million in the 6-year reporting period, up $20-some-odd million, up more than any of the other colleges in this group. But still, they're hovering just around that threshold $50 million, certainly that meets the threshold that we're looking at, but you'll see some of their competitors are well beyond that $50 million threshold. And then finally, we'll look at Bethel University's 6-year graduation rate, and at 73%, it is strong for sure. They do clearly have systems and processes in place to get their students, their bachelor students, graduated at a high rate within 6 years of starting at Bethel University. So with all those considerations, we will continue with a yellow battery indicator for Bethel University. They will be challenged to balance expenses and revenues. We have the same concerns about Bethel University that we do almost all of our yellow battery indicator colleges, and that is they're going to have to find some way to better manage their expenses. And as we have shared before, that could involve cutting up faculty, staff, programs, majors, courses. Next is Concordia College at Moorhead. We'll stick with a yellow battery indicator for Concordia College. Their endowment is strong at $135 million. We can see that as it compares to the others, $135 million. Their graduation rates at Concordia, 72% of every 100, look strong. When we go back to the 6-year changes, we have concerns. Their enrollment is down over 500 students over the 6 years. They're down about $8 million, $8 million decrease in the tuition and fee revenue they collect from their students. And again, not that big of a difference on the expense-to-revenue match, but we can see expenses are up about $2 million, revenue down $300,000, $400,000. Not a big gap, but again, it's, it's cause for concern for Concordia College. It is important to note that their expense-to-revenue imbalance is better than most colleges that I look at. The only exception here, I think, is Gustavus Adolphus does show a stronger balance between expenses and revenues. But Concordia, to their credit, has done a better job than most. I like Gustavus Adolphus College. I'm going to give it a green battery indicator. And in large part, they have done a really good job of balancing their expenses and their revenues. While their expenses are up a little bit, the revenues are up a lot more by a factor of about 17. They do have some issues with revenue generator from tuition and fees, and down about $7 million, but they're getting other sources of revenue that help balance that expense-to-revenue imbalance that we see in other places as well. In addition, when we look at their enrollment, there are some concerns, down a couple hundred, but when we look at their overall enrollment at Gustavus, It's 2,400 students about 6 years ago, down to 2,200 students now. That's still a decent number. You can balance that. There are some risks at that level. And then graduation rates for Gustavus at 78%, the strongest of the group. They're to be commended. Clearly they have the systems and processes in place to graduate students in 6 years. It's also important to note that I use a 6-year graduation indicator. Other analyses sometimes will use 4 years. It's still a comparison of apples to apples. It's just a longer period. More students will have graduated. It's a better indicator of a college's capacity to graduate students than just one at 4 years. In this group of 7, I'm going to give Hamlin University a red battery indicator. You can see that their enrollment is down over 1,000 students. And if we click on the Enrollment tab, Hamlin is down from 4,200 students down to 3,200. That's a 24% decline in full-time equivalent enrollment over the 6-year reporting period. You have to ask yourself, when is that going to end? You can also look at their 6-year tuition and fee changes, down over $10 million over that time period. Obviously, when you're losing 1,000 students, your tuition and fee revenue is going to go down. On the other hand, they have done some some good balancing of the expense-to-revenue ratio. Expenses are down $7.6 million, revenue's down about half of that, it's $3.6 million. So they knew what was coming, they knew they had issues, but the challenge of losing 1,000 students over 6 years is one to be concerned about. Their graduation rates at 70%, not bad at all, and their endowment at Hamlin University at $95 million gives them some flexibility. But at some point you have to ask, when does a decline in student enrollment impact a college's long-term financial health and viability? North Central University is also going to get a red battery indicator. If we go to their enrollment right off the top and look at that tab, we can see their enrollment is only about 1,000 students, a little over that, and has dropped from 1,100 to about 1,000 students. It's a small college, not much room for flexibility. That's almost a 10% drop in enrollment. Let's go back to 6-year changes, and we can see that they've lost about $2.5 million in decreasing fees from tuition and fees. We can see that their expenses have gone down not quite $200 million— excuse me, not quite $200,000— but their revenues have gone down about $2.2 million. So that's about a 10-fold decrease to the negative for North Central over a really small base of of students. And then when we look at their endowment at $3 million, just not good. Next is zero flexibility with their endowment or earnings to use on the endowment, and historical inability to put systems and processes in place to raise funds, raise gifts for the university. A red battery indicator for North Central University. The final private Minnesota college we're going to look at is Saint Mary's University of Minnesota. We're going to give them a yellow battery indicator rating. Their enrollment is down almost 800 students. They have been able to grow tuition revenue. It would be interesting to see how they did that. Their expense-to-revenue imbalance is about $17 million. Not good. Expenses up $9 million, revenues down about $8.5 million. When we look at the enrollment, St. Mary's at 4,700, you know, in the 5,000 range, has dropped down to 4,000. A 16% decrease over the 6-year reporting period. Their endowment at $65 million— excuse me, at $61 million, almost $62 million— is above our threshold. But given their issues with enrollment, there's reason to be concerned that that's not enough should they have some challenges like pandemics, market challenges, and those kind of things as well. And like we saw with Hamlin University, such a hemorrhaging, such a decrease in full-time equivalent students over this 6-year reporting period is not a good indicator. The revenue from colleges at some point has to come from students paying tuition and fees, and Saint Mary's has shown a 6-year history of not being able to grow that student base. But a matter of fact, they have lost substantially. So a yellow battery indicator for Saint Mary's University of Minnesota. So it's important to note that these aren't predictions of the success or failure of a college. Some with financial challenges continue to do well. Some that are doing well financially don't always graduate a large percentage of students. These aren't guesses. I just simply provide comparisons of data that colleges themselves have provided to the federal government and information from the auditors that the colleges have hired to prepare their financial statements. It's all publicly available information. You deserve a quality college education. I want to give you information to help you make the best possible college decision that includes comparisons of private colleges' financial health and viability. You will have already looked at the majors and the campus and the faculty, the online offering, the tuition, the housing rates, the amenities. Let's add a comparison of the college's finances to that decision-making process that you're going through. So today, that means you need to check on and compare the financial health of private colleges you're considering. Granted, very few people have the skills or interest in analyzing college finances. That's why I have made the comparison simple and easy to use with the College Viability App, and I'll make a link to that app available in the description down below. Higher education experts across the country are predicting college closures in the coming months and years. Our research shows that choosing the wrong private college, for any reason, can cost somewhere in the vicinity of about $50,000 for just a 1-year delay in graduation. There's a link below in the description to a free worksheet to calculate what your costs and lost income could be if you have to change colleges for any reason. Now that you know how to compare the financial health of private colleges, you can feel more comfortable with whatever your final decision may be. If you'd like, invite me to a meeting at your high school for the parents of seniors. I'll provide a virtual review of private colleges in your area. If you found this video helpful in providing you with more information about private colleges, click on the like button below, and if you like, even subscribe to make sure you get all the updates that we post on private colleges across the country. I will share with you that our focus is on Midwest and Northeast private colleges. Those are the areas, and the states in those areas, with the highest risk of private college closure in the coming years.