In this episode of the College Financial Health Show (June 24, 2025), host Gary Stocker and higher‑education finance expert Dr. Matt Hendricks dissect Gardner‑Webb University’s financial condition. They begin by noting a modest 1.5 % deficit and a small endowment of roughly $60‑$70 million, which has under‑performed for several years, falling below the 25th percentile of peer institutions. The under‑performance is traced to poor investment returns—particularly a 2020 dip linked to alternative/hedge‑fund exposure—prompting a recommendation to audit the portfolio and reduce high‑fee alternatives. Revenue analysis shows net tuition revenue down about 20 % and per‑student net tuition at roughly $11,200, placing the university in the lowest quartile nationally. The hosts argue the low price is a “death‑spiral” driver and suggest experimenting with higher tuition to improve revenue. Enrollment has fallen 22 % in full‑time equivalents, yet the institution continues to discount heavily, further eroding net price. On the expense side, staffing levels per dollar of revenue are high, and the university relies heavily on direct employees rather than vendor contracts. Two notable contracts—$1.5 M with a K‑12 Teachers Alliance and $500 k with EAB—appear redundant for enrollment management and could be trimmed. A partial‑year food‑service contract switch (Sodexo to Aramark) is also noted. Student outcomes are poor: graduation rates have stagnated around 36‑37 % (well below the 50 % benchmark), admissions yield has dropped ~10 pts, and first‑year retention sits near 70 %. Institutional grants have risen modestly, but the university continues to give away tuition through discounts. Market‑share analysis shows weak internal and external share across many majors (e.g., journalism, political science, fine arts) and limited presence in high‑demand fields like accounting. The hosts conclude that while the current deficit is small and the runway appears long, the combination of weak endowment growth, declining tuition revenue, high staffing costs, redundant contracts, and poor student outcomes makes Gardner‑Webb financially vulnerable. They recommend a portfolio audit, tuition price experimentation, vendor‑contract rationalization, and deeper cost‑benefit analysis of low‑performing programs. The broader discussion touches on a trend of many private colleges offering unusually low tuition, driven by internal politics between admissions and finance, and warns that without data‑driven benchmarking, institutions risk unsustainable financial trajectories.
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It is Tuesday, June 24th, 2025. Welcome back again to yet another episode of the College Financial Health Show with Matt Hendricks and Gary Stocker. For those of you joining us live, go ahead and turn off your speaker, go ahead and turn off your camera, and we'll get the show started. Each week we look at usually about 3 private colleges and we look at their financial health. And their financial viability. Dr. Matt Hendricks out of Tulsa, Oklahoma. What do we have starting off with today?
Okay. So again, small deficit here. I'm not getting heartburn over this. It's only 1.5% deficit and they're probably still positive cash flow. So not massive, but also not ideal. Again, ideal would be to have this be positive, right? Plus 1% is sort of the norm pre-COVID, probably will be the norm here in the next couple of years again. But Yeah. So let's take a look at— actually, I want to look at— I'll again look at revenues and expenses, but I also want to focus in on this problem. Their endowment has not been growing normally. And I did some work on this when I was prepping for this, and I think I can narrow it down to a disaster that happened in fiscal year 2020. You can see this large dip right here. Yeah, that's not normal. Most of the schools had a growth small growth in their endowment that year and they went down quite a bit. And I'll show you what, what happened there. And hopefully they have addressed that issue so that doesn't happen again.
It's a small endowment value to start off with.
Yeah. Yeah. I think their endowment's only $69 million.
Yeah.
It's $59 million to $77 million. And they may, like I said, they may think that that's good. Like I've said many times before, they may think that that's good growth, but it's not actually below 75% of schools. Schools out there in terms of their endowment growth. So they're in the bottom 25%, which is not ideal, which is one of the reasons why their revenue is stagnant. And I'm going to show you that right now. A big part of revenues for schools typically is their endowment draw, which would show up in total operating revenue. And it's one of the reasons why operating revenues are higher today than they were in 2016, even though you have all these things working against revenue on the enrollment side. Endowments have been surging. All right, it's not the case at Gardner-Webb though, because their endowment has not surged. All right, so one of their issues is the endowment. I'm going to get into that, but their revenue is only up 1.5% since 2016. Hardly ideal. The median is up 17%, so they're not keeping up with inflation for sure. Uh, so this is not great long-term for them, so they'll need to get revenues back up. Um, and their expenses are, to their credit, they're keeping expenses also low, right? Which is why they haven't had deficits, which is great. But let's focus in on first the endowment issue, figure out what happens. So I'm going to do a little bit of a dig on the endowment. Usually when we have endowments that don't grow very well, it's because of this. Appropriations get out of, out of hand. Well above 5% draws, but, uh, shocking.
Not the case.
I thought I was going to see it here. I didn't see it. Yeah, their draws actually look a bit low. So what the heck is happening to their endowment that they're not even drawing a lot on it and it's not, um, growing very well? So let's take a look at another thing. Contributions— those look largely normal, although maybe a bit low. Um, this is their endow— this is how much money is being contributed to the endowment every year as a percent of the beginning of the year endowment value. You can see it's a bit low, but I mean, I don't think it's catastrophic and would explain why their endowment's growing so slowly, but certainly a contributing factor. But the one that stuck out when I checked it is their investment return as a percent of beginning year endowment value. And so you can see many years here that there's kind of— let me zoom way in. They're below the 25th percentile twice here in a row. And then they're right about at the median. Then they're like way off by them.
Oh my.
2020. And again, below the median, below the median, below the median, and right at the median. So almost every year their endowment return has been bad. So I did a little digging on this to figure out like what was happening without spending a lot of time on it. I just say generally what I would say is they need to look very closely at the portfolio. It's, it's one thing to be below the median one year and then the next year above it. It's pretty normal, right? But to be below it every year almost is catastrophic. So I did look at their investment portfolio in their audit. And to me, what it looked like in 2020 is they had some alternative investments, hedge funds in particular, that did poorly, it looked like. And just, so basically my advice is to double-check that they're not still doing that kind of stuff, readjust their portfolio, talk to other investment managers. I actually work with some investment managers now in higher ed as like a data vendor. So, I know there's some good ones out there that'll get your portfolio back in line.
And Matt, how possible is it that they don't even know they are below the median? They're just looking at their own numbers and saying, hey, that's fine.
Yeah, how possible? Probably is likely, right? Like, I don't know of any— like, a lot of the— I mean, unless you're working with a vendor that knows what a normal return should look like, uh, and like I said, they're buying data from me now, um, they may not even know. So, so long story short, this is among the best data in the country to see your return relative to other other schools. And to identify this issue, I don't know how else you would identify it unless you use data just like this or use my data to do it. But yeah, it's not, it's not great to be low every year and it's a problem. And it was low in 2022, again low in '23. Again, again, I just think that they're probably investing in too many alternatives. My guess is this, that they have too many hedge funds on the portfolio. They have really high fees and not great performance, and that's probably why you're getting this. But that's just my guess. They would need to check that out, and they should. Okay, so that's one reason why their revenue is not great. Their endowment is not growing very well. The other part is net tuition revenue. There may be others, but net tuition revenue is down 21%, 20%. Okay, again, that's the bottom 25% of schools. And so they're experiencing far worse decline in either enrollment or net price or both. And so let's dig into that than what a normal school is. So per student net tuition revenue. So this is interesting again, a second school in a row here where their price appears very, very low. Average students paying about $11,200 per year for tuition after the discounts and all that. That's very low. That's again among the lowest 25% of schools in the country. I'm kind of shocked about that. And again, I think the— and they're moving in the wrong direction here. I think this needs to go up. So again, if I were them, I'd experiment with a higher price. And see if that can't come up. My guess is it can, right, that they're going to be priced well below a lot of their peers and competitors. And even reducing further probably had no impact, right, if they're already quite low. So that's one issue. Enrollment's also down. It's maybe a reason why they're tempted to reduce the price, but it's sort of a counterintuitive death spiral here. FTE students, they may be pressing to reduce the price because their FTE enrollment's down 22%, which, you know, it seems like, oh, we should reduce our price. But I suspect they're already priced quite low in the market. So even further reducing the price won't really impact enrollment. But we do see a small bump here. So I could be wrong, but you would definitely recognize their mistake, maybe. You gotta look at the freshman class. So see what that freshman class looked like with that lower price and do a real rigorous analysis of this. Again, I can help them do that. I do it with a strategic compass work that I do with schools, get a sense of what the price looks like relative to cross-app schools and stuff like that. So there's some advice on the revenue side. They need to get this price back up, or that's not the price, but that net Net tuition revenue per student is extremely low. And again, they may not know that, right? If they're focused in on the discount rate, they might say, oh, we got to get the discount rate down or whatever. But what they really need to do is get the net price up, right? Back up to normal, at least at the level or just below what your competitors are charging. Expense side. All right, a few things on the expense side. So staffing again, as usual. Total employees per revenue is again very high, just like the previous school. Again, this, this is just a really high staff count for the revenues that they have. Per FTE looks fine, but again, remember their students aren't paying that much, so you can't have a ton of employees. There's another reason why that price has to come up, right? If you want to have this many employees, you have to have your students pay a normal price. right? So it's showing up here, you have way too many staff for the revenue that you have. Again, that needs to be adjusted. Contractor usage, and so this may be one way to fix it. So we don't see a lot of these though, but I do, I do see them a lot in my work, or cases where schools are just not using vendors very often. And this may be causing the high staffing, right? One of the reasons you use vendors is to reduce your full staff or part-time staffing, and they just don't have a lot of vendor contracts. So it could be the case where they could increase vendor usage, reduce staffing, and then that would be more optimal mix where they would save money and actually be more effective potentially. All right, specific contracts. And there are some interesting things in here. Again, I haven't seen— there's some color. Oh, I didn't even notice this when I was prepping. We have 2 food service contracts. So they must have switched vendors from Sodexo to Aramark. So this is a partial year payment.
Yeah, it looks like it.
Okay, so it's hard to say what's going on with the food service contracts, but it was a bit high for their revenue before, but it doesn't look terrible. The ones I was going to flag are these. Okay, so this is a $1.5 million contract with this K-12 Teachers Alliance. I had never seen this as a recruiting vendor before. Usually you see EAB, and they also have EAB in here at $500,000. This is a $1.5 million contract with K-12 Teachers Alliance and then another $500K with EAB. So a couple things hit me right away. Those seem to maybe be overlapping in what they do, but I may be wrong on that. I know EAB helps with recruiting and enrollment strategy, and that seems to be what this K-12 Teachers Alliance is doing as well for $1.5 million. So a couple of things. That's a really high contract for enrollment management, right? So you've got the colors here, but you also have this one, which is probably also enrollment management. So really, this is like $2 million for enrollment management. Anyway, long story short, I'd say look at both of these contracts, see if they're redundant.
And the enrollment went down, Matt, over both of those.
And then from what I could tell, I went to this website because I was really curious, what is this K-12 Teachers Alliance and what are they doing in higher ed? From what I could tell, they're helping, they're like providing marketing in K-12 schools for, say, like advertising Gardner-Webb in K-12 schools, but I think specifically advertising or like encouraging students to go to Gardner-Webb to become a teacher. I may be wrong about that, but I have lots of questions about that, about that strategy. I don't know if there's much we can do about Yeah, there's a lot of things that just sort of come to mind. For one, those ed degrees are just becoming less and less popular for reasons that have nothing to do with higher ed. It has more to do with K-12 pay, right? I actually worked in this field for a long time. I, long story short, high level, they need to look at both of these contracts. You got $2 million here that could probably be reduced substantially without impacting your recruiting effectiveness at all.
Um, because it's not working because the enrollment's gone down. You know, before I start talking about my stuff, you noted for Gardner Webb, and I've seen this pattern over the last couple of months, there are a disturbing number of colleges that we have reviewed— it's now approaching 120, Matt— with really low tuition. And what's your thought process? Are they just not reading the market right? Is it just a function of discounting? We see that more and more in the last few months.
Well, I think my guess, again, I don't, I don't have evidence necessarily to support this other than just my own experiences, but, you know, there's politics happening at these schools. You have the admissions office with a lot of pressure to meet their freshman classes, and then they complain that their price is too high. And usually, you know, say we, we could meet our class if you reduce the price, right? So they have, they're always pushing to reduce the price. It's in their interest to do that. It's easier to recruit a freshman class if the price is really low. And then you have what's supposed to counter that is the financial side, the CFO, the financial aid part saying, hey, we need to get a reasonable amount of revenue from the freshman class, not just a big freshman class. So you have this political battle and I think a lot of times the enrollment people are winning, right? So the price is getting lower in real terms, and in nominal terms. And there's not a lot of resistance to that until the school starts having financial issues, I think. And then, then it becomes, oh, our price is low because students don't want to come here, which is a lot of times not true. It's just low because you guys haven't experimented with a higher price and you haven't really found out what the market price is. That's my experience.
Yeah. Wait, let's just quickly look at the College Viability App, the executive analysis version. Graduation rates, Matt, not good. Gardner-Webb University, 37% in 2016, really flat, essentially still at 36%. A couple years that are higher. Matt, if you can't graduate more than 50%, what kind of college are you? You can't toss college for obvious reasons. And, and, you know, you see Matt giggling on the show here because he knows what I'm going to say. Colleges are paid to graduate students, and Gardner-Webb is not graduating anything close to half of their students. If you're a student or family looking at Gardner-Webb, ask them, why are you not graduating at least half of your students? Let's take a look at admissions yield. It's probably going to be down because it is for most colleges. Admissions yield is down quite a bit, 10 points over the last years, you know, 9%. That's really low. And even with the low prices, Dr. Hendricks, they're still not getting students to accept their offer of admissions. And let's just see if they're keeping students. Let's take a look at retention rate. And there's dozens of reports here on this College Viability app. And, you know, we had an earlier college today that we reviewed, Maryville University, 83%. You know, 70%, give or take, not that good. It's not awful, we've seen worse. But that means out of every 10 students who start at Gardner-Webb, only 7 of them show up for year 2 Nothing to write home about. And how much of the store are they giving away? We should have a contest, Matt, and guess, but I'm not going to do that. Institutional grants, Gardner-Webb University, not bad, up from $26 million in 2016 to almost $29 million in 2023. So they're giving away the store. The increase isn't that much. We've seen others, but again, they continue to discount tuition. They're welcome to do that, nothing wrong with that. But as you showed in the Advanced Financial Compass presentation that you did. You got to generate revenue. Admitting students just for the sake of admitting them is not a win, especially not a financial win. Let's take a look at Gardner-Webb for, for internal market share, and we can see what programs from our 64 that they do well in. This is the internal market share here. And Dr. Hendricks knows where I'm going next because look at all of these low graduate major programs. And we'll start with journalism, political science, music, fine arts, drama, and on and on. Why, to the good folks at Gardner-Webb University, are you still in this business when you're not graduating hardly anybody over the last 4 years in any of these majors? Have you done some kind of cost-benefit analysis to see if you're netting more in tuition revenue than you are in expenses for salaries and space and opportunity costs? And those kind of things. And then let's look at North Carolina as a state. This is the external market share. So we'll look at North Carolina, and we'll take a look at bachelor's degrees, we'll take a look at accounting. And again, this shows the market share— make it bigger here— the market share for accounting-related services, external market share, all the private colleges, Dr. Hendricks, in North Carolina. And we can see which colleges have strong presence, and you can highlight it getting over the top of each of those bars, and you can see which ones don't belong in this market because they have such small market share. And then finally, let's take a look. And again, there are dozens of majors here. I just got one related. There are dozens of majors you can compare this on. Let's take a look at trends and market share. We've got mathematics. That's, that's biology. That's a more common one. So 5 colleges, private colleges in North Carolina. And again, nothing jumps out at me at this, but we're looking at the last 4 years, 2020 through 2023. This data shows comparisons. You can select the colleges that you want. You can select the degree level, and again, you can select the major that you want and even the set of colleges that you want. So, Dr. Hendricks, Gardner-Webb has challenges. How would you assess their, their financial health in terms of a rating? Are they sustainable, unsustainable?
Oh yeah, um, I mean, they have the deficit in 2024, so that's not sustainable, but they have It's only small deficit for one, and they have a longer runway. I mean, it's really small given that size of that deficit. They have a very long runway. So not really worried about them. Just hopefully they can take some of the stuff that we've shown here and look deeper and figure out, you know, ways to cut costs and bring that revenue back up. Like I said, experimenting with a higher price is probably their best best bet. They just need to have the courage to do it, right? And you can do it in different— you can go one shot, big increase in price, or you could try experiments with just small groups of students and see what happens. That's what I recommend.
So, Matt, we've done the East Coast, we've done Middle America. Let's go out to Washington State. Best year— so we've talked about colleges today, we've talked about your colleges, and as we share at the end of each episode, It's the comparisons that matter. It is the trends that matter. If you're at a college, if you're a college leader in any form or fashion, if you're a media member, if you're a student or family, look at these trends. If you're inside that college, looking at your data alone does not get it done. We talked earlier during one of the colleges that we reviewed, if they're just looking at their own internal data, they're missing the big picture. You just can't operate in this day and age of the moneyball era of higher education. And Matt and I are just two of many folks who look at this data. And if we can look at it and share it, others can as well. And soon enough, we will have these kind of products available for students and their families. And as we continue to work to educate students and their families about the financial health or lack thereof, or viability or lack thereof of these colleges, there'll be more and more pressure on colleges that don't choose to use comparisons don't choose to use trends, they'll find themselves in even deeper financial trouble than they are today. So for Matt Hendricks, always a pleasure. I'm Gary Stocker. We'll look forward to doing the show again next week on July 1st, 2025. We'll talk then.
