Gary Stocker compares Mills College's closure to two other struggling institutions using enrollment and financial data from 2014-2019. Mills had a 55% graduation rate, declining enrollment, and shrinking revenue that outpaced expense cuts. Even its $200 million endowment couldn't offset the losses.
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This is Gary Stocker. With tonight's news that Mills College in Oakland, California is for all intents and purposes closing, I wanted to bring together a quick comparison of 3 colleges just to give you a better handle on the patterns and trends that can indicate a college that's not in the best financial health, that may have some long-term or even short-term viability issues. So I'm bringing together Mills College, which made their announcement tonight that they are ceasing undergrad enrollment and offering degrees, with Becker College, who in recent weeks indicated a strong likelihood that they won't be able to survive, along with McMurry College in western Illinois, which closed about a year ago. Let's take a look at the patterns and trends using the College Viability app to see if they'll help you make some judgments about private colleges you may be considering. As more and more of these private colleges continue to close, it gives us a chance to compare the numbers, to compare the data from colleges that effectively have closed to colleges you may be considering for your family members or as a student for yourself. So let's take a look at how Mills College compares to a college that's closed, McMurry College, and one that may very well close, Becker College. You can see on the screen that I have brought up the three colleges. This is from the 2021 College Viability App, and the data is from 2014 through 2019. The most recent available from the National Center for Education Statistics. And there are patterns. We can see that the 6-year enrollment change is down over the course of this period for each of these 3 colleges. It's just 3, it's a small sample set, but nonetheless it gives us a comparison, and for all intents and purposes, a real-time comparison, even though the data is a little bit old. We can see another pattern. The 6-year change, the 6-year change in tuition and fees has gone down for each of these colleges. Let's put this in context. Over the course of the 6 years reported, the revenue they collected from their customers has gone down. Not over 6 days, not over 6 months, over 6 years. That's a trend. I'll come back to the graduation rate, but then we always look, when you've seen these previous YouTube videos on college financial health and viability, let's look at the total expenses, and we can see Becker College, for the 6 years reported, expenses were up over $5 million, revenue up a little bit over $2 million. McMurry College, one of the obvious reasons they closed, expenses were up almost $3.5 million, revenues were down a little over $3 million, a $6 million-plus gap. And then look at the numbers from Mills College. It's kind of sad that we have to look back a year or two to see this data, But their expenses went down about $9.5 million. They knew they had troubles, but their revenue went down about 3 times as much in the same period. Let's look at graduation rates. Graduation rates really for Becker and McMurray are not good at all. Mills College with a 55% graduation rate over 6 years isn't good. It's not as bad as some, but anytime you're below 70% is kind of the number I use. Not a good number. So we can look at this as a predictor as well. If you can't graduate students, they're gonna quit coming. Let's also take a look at the enrollment, just the absolute numbers. And for the most part, these colleges are similar size. McMurry was a fair amount smaller, but you can see in each of the 3 cases, the numbers went down from 2013-14 to 2018-19. And let's take a look at the endowments. This is where there's an interesting observation, and one that's not quite consistent with what we've talked about before. We can see for both Becker and McMurry, the endowments are puny. And again, the standard that we use is endowments should be at least $50 million or above. We can see that Mills College is about $200 million. So it's not just that the endowment is small, In this case, Mills didn't see a future, and when we go back and look at the losses they were having when balancing decreasing expenses with really decreasing revenues, they didn't see a future. I'm sure they kept in mind the competition they have for students and didn't see any reasonable way to generate the kind of tuition revenue they needed to be successful. There will be more private college closures. The numbers just support that as a reasonable assumption. If you want to get access and be able to see the reviews that we do of these private colleges, make sure to click on the subscribe button down below. And if you want to get alerts to your email, click on the little bell that gives you reminders when those videos are posted. And the last thing I would offer, if you have specific private colleges, especially in high-risk states in the Midwest and Northeast, put those college names in the comment section, and I will add those colleges to the reviews that we do of financial health and viability of private colleges in the coming days, weeks, and months.
