The College Financial Health Show for March 18, 2025. College financial health and viability review.

It is Tuesday, March 18th, the day after St. Patrick's Day, and yet Matt Hendricks and Gary Stocker are still going to talk numbers. Hi everybody, thanks for joining us for the College Financial Health Show, where each Tuesday, each and every Tuesday, we look at the financial health and even viability of private colleges throughout the country. And I'm pretty sure we're the only only show that does that on a regular basis. So if you're looking at comparing the financial health of your college with others and it's a private college, drop me a note. Say, hey Gary, add my college or add this college to the show. And I'll tell you, that list is getting long, so make sure you get that request in soon and we'll put it on the list for future reference. We do about 3 every week. Some are doing well, too many are not doing well, and sadly we've got some struggling colleges today, and we'll get to that here in a moment. Hi, my name is Gary Stocker. I'm the founder of college viability.

And I'm Matt Hendricks, founder of Perspective Data Science. Today we're looking at Earlham College, Valparaiso University— both of those schools are in Indiana— and Simpson College, which is in Iowa. And yeah, like Gary mentioned, unfortunately all three of these are not operating sustainably, meaning they have deficits that cannot go on forever. Uh, obviously you run out of cash eventually, um, and I'll, I'll show you those results today, but more importantly, I'll show you some things from the Advanced Compass that indicate some opportunities on the policy side to sort of right the ship on all of, all 3 cases. The Advanced Compass right now is actually really good at identifying expense side policy opportunities. We have another tool that dives a lot deeper on the revenue side and the cost side, but that's a different product that takes much more effort to build and custom for each school, but that's Strategic Compass, and I didn't build any for all any of these schools today, but I'll show you what I, what I can show you on the Advanced Compass today, um, starting with Valparaiso and Earlham. I'm going to do them simultaneously to, uh, make this discussion more efficient. All right, I think you guys can see the Advanced Compass, Advanced Financial Compass. All right, so, um, I, as you, as you know if you've seen previous shows, you can select a comparison group and then have the mean of the comparison set as your like benchmarking group. But I'm going to use a slightly different today. I'm just going to do it so I can show both of these in the same space both times. So here's Earlham and here is Valparaiso. All right, so Valparaiso is going to be green for all the graphs and blue is Earlham. Okay, so the first graph that we always look at is essentially the same as profit. It's called net income margin, though these are nonprofit institutions, so we don't usually like to talk about profit, but this is what it is. Net income is the same as profit, really. Difference between revenue and expenses, operating revenues and operating expenses. And ideally for a nonprofit, you can see ideally for a nonprofit, these net incomes should be positive just slightly, right? Not huge number. This isn't a profit maximizing, um, uh, entity, these are slightly positive just to stay sustainable. That's what a nonprofit typically does. And you can see that's usually about 1%.

Okay.

So the blue is again Earlham. And right when I first looked at this this morning, I was like, wow, they're doing pretty good, right? And then green is Valparaiso. And they've got 1, 2, 3, 4, 5, 6, 7, 8 out of 9 years are negative net income. That's really or not sustainable, of course. And initially my thought was that Earlham looks sustainable to me based on net income. But you need to be a bit careful on this. And if you've seen previous shows, you've seen why. And I'll show you why. Let's take a look at endowment draws.

I know why, Matt.

Yeah, you know, endowment appropriations allocated to expenditure. All right, so the reason you need to pay attention to this is that in operating revenue, you have your endowment draw, and that endowment draw should be about 4.5% or so of your endowment value. And you can see what both of these schools are doing. So 4.45% is the median in 2024, 4.3% in '23. Um, you can see these two schools are pulling a lot out of their endowments, right? So Valparaiso's at 7.5% draw and Earlham's at over 10% draw. Now, that's why Earlham's operating income looked high, right? And their net income was high, right? So that looked like they're sustainable, but they're not actually at all. Okay. So I corrected for this off camera here. If you pull out, so what they actually did is they pulled $43 million for operating that shows up in their operating revenue on a only $420 million endowment. That's a pretty big endowment, but taking $43 million off of it is totally not sustainable unless the stock market does, you know, 13% return every year, 14% or so to cover inflation and all that. But It's not going to happen, right? It's never happened for a sustained period. So they're unsustainable in terms of these draws. If you did a normal draw, which is 4.3% or so, they would be reducing their draw down to $18 million, and their net income then with a normal draw would have been negative $19 million, not plus $6 million. And that's a massive loss of about 42% negative net income margin. So if you followed me all there, their net income margin is very, very low. In fact, it's negative 42% is pretty catastrophic, but they're lucky that they have a big endowment that they can plug that gap with. The problem, of course, though, is that let's take a look at these endowments. You might be wondering why can't they just pull that much from their endowment every year? Well, here's the reason. Let's show their endowment values change since 2016. Earlham's endowment has basically grown. Well, it has grown only 8%.

Ouch.

Since 2016, which is catastrophic really when you think about the average school's endowments grown 58% almost over that same period. And the same thing is happening now with Valparaiso. You can see they were doing quite well. But the last 3 years their endowment has shrunk dramatically, again, because of those big draws mostly. And that's not ideal, right? This is really, I can't emphasize this enough, this is going to put your school in a very difficult situation further down the road and maybe even today for Earlham. They used to be in a very dominant position where they can basically charge a very low net tuition price. And be just fine, right? Because they have all of this endowment income coming in. But what happens when your endowment's shrinking relative to all of your competitors? You see where this leads, right? Your competitors can now undercut you and you can't, you can't compete with those schools anymore. So it's a sad story that will just basically make things more difficult for these schools in the future. And so it's really critical that they fix their budgets and stop drawing so much off the endowments as soon as possible. Unfortunately, though, we've seen many cases where this just goes on for decades, right? And it's not fixed. It's really on the board to make sure that happens, right? Make sure they're on top of that.

And Matt, we've seen that happen before. I'm going to reinforce what you just said. Excessive draws on the endowment just to keep the lights on, just to meet payroll, just to meet operating expenses. Is a distinct short-term, medium-term, and long-term competitive disadvantage for any college that does that. That's kind of what you're saying.

Yeah, that's exactly what I'm saying. Um, you know, would you rather be in charge of Earlham 5 years ago or today as a president, right? I mean, 5 years ago their endowment relative to their competitors was much larger than it is today. Uh, they're becoming more— one way to think about it, they're becoming more and more tuition-dependent the more they let this go on. And, you know, it's pretty dramatic, right? This is the bottom 25th percentile right here. 32% growth in the endowment. Their endowment grew by 8%. As a board member, I would be very worried and frankly not happy with that. Right. That is something that should have been fixed a long time ago. Right.

Is it fair to call that a kind of a catch-22?

Yeah, I mean, so you can— I suspect just knowing how this typically works is probably nobody's paying attention, right? They're able to pay their bills, right? Unless somebody on the board is paying attention to and knows what a normal endowment growth looks like, they're not going to know really. They might look at 8% and be like, oh, that's probably normal for the whole higher ed sector. It's not, right? It's not. I'm showing you right here. It is not. You guys are in probably the bottom 5% of all schools. So the first key here for this advanced— this is a huge value for this advanced company, is just to know that your endowment is not going in the right direction, right? It's going in the right direction, just way, way far behind everybody else, right? That's a big, big problem. And I suspect there are some board members that know about that, but they may not know how bad it is. And here it is, clear as day, right? And same thing at Valparaiso. So eventually down the road, 10 years from now, the school could be in a situation where they're extremely tuition dependent and just can't compete really on, on anymore. And one of the problems they have too is that their price appears to be quite low. So let me just show you net tuition revenue.

And while that's coming up, the endowment we all know is effectively in place to allow a college to exist into perpetuity, and that's not going to happen here.

Yeah, uh, yeah, right. So the board has a— has actually a legal obligation to make sure that endowment is growing, um, normally, and it's not right now. So, um, yeah, I would— I would strongly encourage them to use this data and make the case to their finance committee that they're not going to let the school draw that much off the endowment anymore. And demand a balanced budget. How many times have we said that, Gary? Demand a balanced budget.

A couple times, man. A couple times.

I mean, that's the most important thing that a board can do. Okay, so here's the deal. They used to have a price that was really close to the median, actually, at Earlham, about $14,000 per student on average. And you can see the erosion of their net price. Just the fact that this is, again, this is net tuition revenue per student. So not only, so I can show you their enrollment is declining, but there's two things that's happening to their net tuition revenue. One is they're losing the quantity, right? The number of students is decreasing and the amount of money each student is paying is less, right? Quite a bit less. They used to pay $14K back long ago, or that in real terms, that was a lot more than $14K today.

Yeah.

Um, and you know, they have this massive erode, their price was very, very low. And, and again, the school is blessed with a major endowment so they can cover that gap. right? But can't do it forever, right? So it looks like they're trying to bring the price back.

It looks like they're trying to recover. Yeah.

Trying to bring the price back up, which is great. In fact, I was at a school that had this very same graph looking just like this, and I said, quite simply, we should probably just bring the price back up. We didn't get any more students when we reduced the price. Probably get the same result going back up, right? And that's exactly what it turned out to be. And, and so this is great that they're moving this back up, but it should actually get way back up here as soon as possible. There's a lot, of course, that's the revenue side. There's a lot on the revenue side to look at what's happening with their funnel, why their enrollment's falling off. There's a lot of things that they may not know about. It could be some simple things just with the application.

So now let me jump in on just an idea that the folks at Earlham could use. You've got just Valparaiso and Earlham on the comparison set. Earlham could take that functionality of select a set of comparison schools. Select colleges in their region and see what their net tuition price was per student to see how they were in their region, because your numbers are national right now.

Yeah, so one way you can do that is just go down to this table. And so right here I have net tuition revenue and just try to find other schools in Indiana. So we can just go in here, only schools in Indiana that are similar in terms of size, and we can look for schools. You can click on this and do really, um, greater than or equal to. And, you know, there are multiple filters you can do. So you can go greater than 1,000 and less than, say, 1,500 or something like that. So one peer, you know, it's a master's level school, but maybe Franklin College could be a school they can compare themselves to. Pretty similar in certain terms of size. I'm just kind of curious now. Let's put in Franklin College. We're just going off script today. I do this prep before this, but then, then I just start playing with this. So Franklin College, yes, they're almost priced the same as Franklin College now. Look at— they used to be priced way higher than them, right? And so again, I think they probably can be priced higher than them unless something traumatic has happened, like something's happened to the quality of, uh, their sort of product, I call it, the quality of the education that they're offering or something. But it's totally possible. Or maybe Franklin is just doing quite well, getting students to pay more. I'm not sure.

We'll put them on the list someday.

Yeah. But that was just a quick snapshot. You can spend an entire day on this. Let me show you, let me put Valparaiso back on here and just show you some. So, so we already saw like on the revenue side, it looks like there may be a pricing problem at Earlham. There's probably also multiple issues with the funnel, right? We can, on the Strategic Compass, which I urge you to look into if you have data that looks like either of these schools. And the reason I say that is their enrollments are catastrophic. Let me just show you that actually.

And while Matt brings that up, for those watching the recorded version of this, and there'll be contact information in the news, in the show notes on setting up a private demo of the Strategic Compass. So take advantage of that just to see what it could do. For your college.

Yeah. So, so both of these schools are looking at catastrophic FTE enrollment losses. Valparaiso is down 37% since 2016. Earlham's down 35%. And you can see things definitely went pear-shaped for Earlham about 2019, right? 1, 2, 3, 4, 5. Exactly the amount of time it takes to get it to a new steady state.

Yeah.

So my best guess is something happened here in 2018 or '19. And it, again, it takes 5 years for that to reach a new steady state. So something catastrophic could happen in 2018 and everything else could be normal for the rest of the years, but you're still going to get this continuous drop in enrollment until you get to a new flat point right here, which is your new steady state. So I'd look very carefully, get a strategic compass, look very carefully at what happened to the enrollment funnel, uh, back here in 2018, 2019.

And Matt, as you said, as you said many times, it took 5 to 6 years to get down there. It's going to take 5 to 6 to get back.

Yeah. I mean, really simple to think about, even if not a math person, just think if you lose half of your applications today, how much do you, how many students do you lose next year compared to today? And then the year after, and then the year after and the year after you lose like 10% or 12% per year. Right. I think the math works out that way. Uh, because you have a smaller class coming in. About half the size of the class that graduated. And you do that 5 years in a row and eventually get to losing half of your students, right, over a 5-year span of time. But it doesn't happen right away, right? So something again, there's some momentum that's built back here. Something probably happened in 2018, 2019.

Yeah.

Let me show you on the expense side here what we can sort of diagnose here, starting with payroll spending. Salary. It's really important when your school's shrinking like this that you try to keep, let me do actually something a little bit different. Salaries. So I want to do salary, wages, and benefits, like payroll spend relative to total operating revenue. I think I want to do, actually, let's do FTE. Sorry. Yeah. Salary benefits. Let's do millions and then I can do this per FTE. Yeah. All right. I was talking about keeping it constant relative to the size of the school. So. Here's Earlham again. They've always had this really high staffing number or payroll expense relative to the size of the school. And again, they could do that because they have this big endowment, right? Um, but it's, it's very, very high. Again, this is 75th percentile, and it's gotten much, much higher, um, even recently. So basically what appears to be happening is school's shrinking, and they're not shrinking, um, the size of the the size of the, uh, staff, right? It's just kind of staying constant here, uh, which is potentially problematic. So you could argue that there's a, there's a staffing issue. Let's take a look at the number of employees, employees relative to FTE. Yeah, again, they have— so here's again, we looked at a school last week that had more employees than it does students, and Earlham's in that boat. They have 141 employees per 100 students. That's not normal, right? Even the 75th percentile is 86 employees per 100. The median's 61. So again, just way off there. And we can look at higher paid employees. And it appears again, Earlham, they have not only high number of employees, but they have a lot of the employees that are paid above $100K, right? It's just well above the norm here. Again, this is 75th percentile. But see, Valparaiso is still in in that boat too, right? They're a bit high. You're talking about tens of millions here potentially just having, you know, you can do the math. You have 10 more people than normal at $100K. You can do the math right there. That's a million dollars, right? So it adds up very fast. It's very crucial that you have the right number of employees and match that up with your revenues and your student level. And then let's take a look at contractors, contractors paid over $100K, $10 million. I'm sorry. Okay.

That sounded bad.

I think I said 10, but anyway, yeah, the point is still there. I'm trying to pull up contractors per FTE. Yeah, let's do that. Okay. So again, you want to try to scale your vendor contracts with the size of your school as well, um, or at least with your revenue. And again, you got Earlham way up here, highest ever number of contracts.

Um, gotta be like the 98th, 99th percentile there.

Yeah, yeah. They have, for every 100 students, they have 2.6 contracts over $100K, which is quite high, right?

Again, they've got some difficult decisions to make there, don't they?

Yeah. So, you know, it's not 100%. As you mentioned, Gary, you need more than one data. There's lots of data points here, right? All sort of pointing to the same thing, right? You've got potentially overstaffing, potentially overuse of vendor contracts. These are things I need to dig into, right? And you have multiple, I think you said in a LinkedIn post, you need multiple tests, right? And I kind of look at it as these years, right? They got multiple years you're way above, right? So this keeps happening over and over again, it's not a blip, um, then I, I get more confident that that's the potential— one potential problem. All right, so let's move on to Simpson, and I'll do the— I'll show you the same thing. Simpson College is in a lot more trouble financially, um, just because they have a shorter runway mainly, and they have equally— remember I said Earlham's, once you had a normal endowment draw, that their their net income loss was about negative 40%. That's where Earlham is. Negative 41 and Simpson—

where Simpson is.

What's that?

Where Simpson is.

Oh, sorry. What did I say? Earlham? Yes. Sorry. Simpson. Simpson. Yes. Simpson has massive deficits. In fact, they've only had one year with a positive net income, and that was in 2021, probably because of COVID relief. Every year negative. And it's gone much more negative in '23 and '24. I don't know how I'm doing on time, but basically, long story short here, there's a surge in expenses that's happened. Well, I'll show you revenues and expenses actually, so you can kind of see the whole story unfold. This is what I want. Change in unrestricted operating revenue since 2016. All right. So their operating revenues are down 11%. Not ideal, right? Actually, really catastrophic. And you know, that's never going to be good, but you can survive it if you keep, if you match your expense reductions with that, right?

That's not what we're going to see.

No. So the issue is percent change in total operating expenses. You know, I see a lot of people say you can't cut your way out of whatever, but honestly, if you're high, of course you can, right? You can't have more. You probably, it's probably not going to be a good idea to have 1.5 times number of employees than you do students, right? It's just not, you gotta scale this thing right. Okay. So if you're high there, then of course cut, right? And you can, you can match other schools that are doing just fine with a smaller staff. So I don't want to say it's, you know, you can't cut your way out of it. You obviously can. I've seen it happen many times. But yeah, if you start going in and hacking all of your academic programs, then of course I worry that you're going to, you know, lose your revenue side, right? You don't want to do it that way. Anyway, so they're up 16% on expenses. So this is one of those cases, Gary, that we've seen several times where it's like, it's almost like they ignore the fact that they have these massive deficits. I'm sure ignoring is maybe not the right word, but you kind of wonder, right? Like, why are your expenses moving along like everybody else when you're clearly not like everybody else, right? Your revenue is down almost 11%. And that's not normal. You can't just cruise along and have your budget, you know, just be negative, have losses every year, right? This is obvious. Okay. So the question is, why are they having budget problems again? And so again, let's take a look at the revenue side again, net tuition revenue per student. So again, you see this erosion here. They're down to $13,500 for the average student's net tuition revenue. And so again, students used to pay quite a bit more to go to Simpson several years ago, long before we had massive inflation, right? So they used to pay a lot more to go to Simpson and there's fewer students. So they have this big problem here.

And that just reinforces, Matt, the intense pressure on tuition discounts, I think.

Yeah. So discounting more, and I know, I know they know that, right? Everybody's focused on that. But, you know, we can, we can understand what's happening. It could be that their applications are low, right? Maybe they're still requiring testing. I've seen really weird things with the application. They've got essays, right? When nobody else has essays and they have to compensate by like, you know, basically enrolling everybody that applies, which is not realistic. You can't, your yield rate is never going to be 100%, right? So, um, yeah, it could be some problem early on in the funnel that they just haven't really pinpointed yet, but you can pinpoint it with the Strategic Compass. Um, let's take a look on the expense side again. Employees, yeah, per FTE employees, again, they're at the 75th percentile, right? So again, Yeah, I'd argue they can make some cuts here and they could probably cut areas that have nothing to do with students, right? You can cut a lot of office assistants, probably you can share office assistants, you can probably centralize the IT departments, maybe in fact make the school even better with fewer employees, right? That's the idea. I wouldn't recommend going in and hacking all of your majors, right? Which is totally different from what I'm saying. But when you've got almost as many employees as you have students, you probably have a lot of employees that I just perhaps doing things you don't necessarily need done or can be done more efficiently or with fewer people. All right. That's employees. They're high here. Here's the main reason why they have— it looks like anyway, it looks like the main reason they have this big deficit in the last couple of years is this, Gary, what do you see here?

Paying a lot of money to a lot of contractors.

Yeah, they brought in a bunch of contractors, right? Like Doubled them more than double the raw value on that one, man. Let's see the raw values here. So they went from 12 contractors over $100K to 29.

Ouch.

And then 24. Yeah, they've doubled the number of contractors they have on the books, at least, right? This is just over $100K. They probably bought a bunch more contractors under $100K. And you saw that this is exactly the reverse we see for the net income, right? So you got to wonder, it's been 2 years now since they've had this surge in contractors and has their revenue jumped up? Probably not. Right. So I would look very carefully at these contracts if they're not generating revenue at this point, need to get rid of them and go back at least to here, but probably even below that and right-size the staff. And then maybe you can get your net income back in line and then work on growing the revenue back up. right? And then bringing staff back on as you grow. That would be my recommendation based on this data. But again, you can see it a lot more clearly with the strategic compass. We can see exactly which staff areas you're high and kind of pinpoint the departments, the types of staff, you know, it could be just office assistants or you might have a lot of business staff for whatever reason. Just inefficient practices in the accounting department or something can cause that. IT, you can have centralized IT versus IT in every little college or department, which doesn't make a lot of sense. I'll tell you right now, not every academic department needs their own assistant. I know that by first experience. Yes, they can share, right? And not everybody needs an assistant, period, right? Some people don't need assistance at all. So those are the kinds of things that are really obvious when we do the strategic compass. All right, so how to wrap this up. Ultimately, again, The first 2 schools, Valparaiso and Earlham, not sustainable, right? They have deficits. Earlham has massive deficits, but they have big resource bases. And I think they have pretty long runways, especially Earlham. They've got a $416 million endowment and $71 million unrestricted net assets. That's going to last them for a while, even if they don't make any of the changes that I'm recommending, which would be a big, big mistake because the just going to be harder and harder for them as going forward, right? They might not close, but it's going to be just way harder because they're going to have to do much better competing on net tuition, and they've never had to do that in the past, and apparently they're not great at it. Um, same thing with Valparaiso. They have a $322 million endowment, $100 million, $100 million in unrestricted, $111 million unrestricted net assets. That'll last them for a while. Um, Simpson is a different story. Um, their runway I think is pretty short, and that's why I think they, they need to probably start this cost side, right? Immediately go after these contracts if they can, um, and then right-size the staff. The reason is they have a $12 million deficit, about a $7 million cash deficit, and I'm saying 7, it's actually 11 on their audit, but they, they have— they're one of those firms that or one of the schools that pulls out their endowment draws. I put it back in and they have about a $7 million cash deficit. So you're about $7 million short every year. They only have $4 million left in unrestricted endowment funds, which won't even cover a year. All right. There's only $13 million left in unrestricted net assets. So that covers like a year and a half. Right. I know that's pretty rough because, I mean, we saw Drew, they just go way past that, right? They might be able, they might have a longer runway if their attorney general is like in New Jersey that will just let them keep borrowing against the restricted endowment, which is $83 million. So that gets them probably another 10 years if the attorney general's going to let them borrow all of it, right? But assuming the attorney general's not going to do that, they probably just have a couple-year runway. If that. So it was pretty urgent, I think, in the case of Simpson. Um, but yeah, with that, I'll pass it back to you, Gary.

So, Matt, as I, as I look at this, these colleges in almost all cases in my experience are just looking at their internal data. They're maybe looking at their IPEDS data, maybe their 990s, maybe their audited financial statements. But Matt, you and I both know they're not— they're rarely, if ever, comparing their financials, comparing the enrollment to others. And I wonder if they're just looking internally— we'll talk about Simpson College as an example— they don't even know where to start because they don't have any comparisons to go to. And the private college financial compass and the strategic compass that you reference, it's the comparisons that matter.

Yeah, you can almost see, you can almost see it just like in press releases, right? Like when schools don't know what's happening to their finances, they'll just say, oh, it's COVID or it's, oh, it's the enrollment cliff. But frankly, COVID didn't affect most schools at all.

Right.

In fact, it helped them short term.

Got a couple bucks.

And, uh, you know, enrollment cliff's not here yet. So I mean, you, it's pretty clear that schools that are releasing that kind of stuff, they don't really know what's what the problem is, probably, right? And they can see it here if they look more closely at the data. And again, we—

Matt, you and I know we do demos. If you're a college, if you want to look at just comparisons and you want to look at the private college financial compass, drop me a note. I'll give you the contact information. If you want an in-depth demo of the strategic compass, drop me a note. I'll set up a demo for you and show you what it can do. But the comparisons, you got to be doing the comparisons. You may think I'm wrong. That's fine, feel free. But I'm right, because every other industry compares themselves to others to establish that median, that 25th, that 75th that you saw on Matt's charts. And if you don't do that, you're running serious risk. Even someone with a massive endowment at Earlham, you know, 20 years from now, I don't know, you got to worry. 20 years from now, 2 years from now, not at all. But 20 years from now, you got to worry just a little bit. Now let's take a couple minutes, let me share my screen. Show you a couple things on the 2025 College Viability App. So I got the 3 colleges that we've chosen, and we always start with graduation rates. And Matt, again, this, this is a concerning table for me, and for good reasons. Look at how strong each of these colleges are in graduating students in 4 years. They're all, all 3 of them, at really strong graduation rates, in excess of 60% in 2023 and hovering around 60% for the last 8 years. And Matt, you know, for me jumping up on my soapbox, we don't see that very much. So these are 3 academically strong colleges graduating most of their students, at least half of their students or more, still with substantial unsustainable short-term and long-term finances. That's what concerns me. That's what suggests it's not just the individual colleges. It's the industry. It's the higher education industry that is in trouble. And yes, individual colleges will be a component of that, of the outcome of that. They won't be able to survive. But these are, you know, I would send my child to any one of these three colleges just based on graduation rates. Now, based on finances, not so much, but based on graduation rates, I would do that in a heartbeat because too many colleges— look out, Soapbox— too many colleges, too many colleges don't graduate students. You can watch Matt giggling on the screen, on the top of the screen there. Because he sees me get on my soapbox. Admissions yield, and again, we're seeing declines, but that's not uncommon. We see admissions yield, which of course is a percentage of students accepted into a college that actually show up, pay tuition, and attend classes. And all three are down. Interestingly, how low Valparaiso's has dropped. You know, 11% is a pretty low number. 23% Simpson, not bad, which makes me think that's got a strong regional presence. In that part of Iowa where they are, even with their finances in consideration. So just something to watch by comparison. You might look at which has dropped more than others if you're comparing 3 colleges like this. And again, there's almost 2,800 private 4-year colleges, public and private, public 2- and 4-year colleges in this database. I'm gonna look at a couple other things before we look at undergraduate enrollment. Again, Matt showed this in his numbers. All 3 are down. We regularly see that. It's a shrinking market. If you think you're— if you're watching this video, if you're thinking You can market your way out of this, you can grow your way out of this. It's not a likely scenario. Higher education is a shrinking market. You've got to, as Matt said, you've got to manage costs in relationship to revenue. You cannot reasonably be expected to grow your way out of it. It's just not going to happen. And unfunded institutional grants, Matt, we always like to talk about that. You and I know that as most merit aid, or almost all merit aid, and most scholarships, and we can see a kind of mixed bag here. Earlham and Valparaiso have tried to limit those discounts over the last 8 reported years, 2016 to 2023, the last available data from IPEDS. But Simpson has continued to try and, and give away the store, I guess is what I call it, give away the store to get more students in the door. They're welcome to do that, but you saw the impact on the revenue. You saw Matt talk about the challenges they're facing with the revenue, and in part because— small part, probably but in small part because they're giving away so much in discounts that they're forgoing those revenue opportunities. And then I want to go down to the last one I want to look at is tuition fees. And news, news articles always talk about enrollment is up, enrollment is down. You know, colleges will spin this. On my Monday podcast, This Week in College Viability, I always talk about how colleges spin enrollment data. And what we see here is the dollar reflection of decreasing enrollment. And we can see for each of the 3 colleges on the right-hand side here, each of the 3 has had substantial decreases in tuition and fee revenue. And as almost all of us know, private colleges heavily depend on that tuition and fee revenue. And this just reinforces what Matt showed you earlier on in the show— the tuition and fee revenue is down. If it's down over 8 years, Matt, it's going to take something close to that to recover from just the last 8 years. It's just not a good scenario. And then lastly, college majors. This is an app that takes all of the data from the National Center for Education Statistics and its IPEDS database and compares majors. And I have over 60 common majors in here for, again, all the public and public 2- and 4-year colleges and private 4-year colleges. And I brought up our 3 colleges and just— I've got the master's degree selected for a reason here. and what we can see at the master's level— I've got master's selected for the last 4 reported years— we can see that Valparaiso has a substantial 100+ graduate students. Um, 100, 100+. Earlham and Simpson are mostly just playing in the graduate, in the graduate space, not made much in volume at all. But when I change that from master's to bachelor's, this is where most colleges focus. What we always look at is for colleges too reliant on a small set of majors. And we're looking at Earlham here, decent numbers, but look, Matt, what's happened to their business and management majors over the last 4 years. It's gone down from the number of 40 down to 14. The percent has gone down from 30, which is too high, to a mid-20 kind of number. That's just reflecting the overall decrease in volume. And we can do the same thing for Simpson— yeah, Simpson College. Looks like they offer more majors. And let me just point out, why do we at Simpson have, continue to have fine arts, fine and studio arts, 1, applied math, 1, marketing, 1, chemistry, 1, philosophy, a handful, not even a handful over the last 4 years. This is the kind of data that lets you compare internal market share, which is what we're looking at here. And the same kind of data is available for Valparaiso. I'm not gonna spend time talking about that. But this is where the value comes. We look at it by major. I've got our 3 colleges, and for right now I have selected— oops, I have selected accounting and accounting-related services for just a small set of colleges. Matter of fact, let's do it differently here. I've selected a larger set of colleges in Indiana. These are both private and public. Yeah, both private and public. And I've got selected— let's just select accounting, and we get a reflection of market share. So holding the pointer on top, we can see that Ball State has a dominant— this set of 10 colleges has a dominant market share. We can see that Butler less so, and Indiana State University kind of in the same manner. I don't know, Matt, that anybody else takes majors completion data and does market share analysis. I could be wrong. Maybe consulting firms do. But if you're looking at making cuts and you're just looking at internal data, you're making a mistake. You want to look at what other colleges are offering in terms of majors completion And yes, maybe some of it suggests you cut Franklin College. What are you doing in accounting? You've got 2. But look at these 3: Indianapolis, Valparaiso, Indiana Wesleyan, and Trine University. This might be a perfect opportunity for them to look at majors, majors consolidation, course consolidation, to get more scale across just this accounting and related services. And you know, there are countless, there are countless majors here. Let's look at biology, and you can see biology typically has a nice even spread, um, you know, again, Ball State dominant. We can look at the business one, which is common, and again, a decent spread, but Indianapolis is focusing on business. You know, if I want to start the Matt and Gary College in Indiana, I may start on business administration management. I may want to take a piece of this. That's one of the ways to look at this and say, hey, there's some opportunities to take a piece of this market share. So that's, that's the value of the college majors market share. And when we look at this, man, it goes back to data. It goes back to comparisons. I know for those that watch the show on a regular basis, we beat that to death, but we're right. It's the comparisons that matter. And in the sense of comparisons, Matt, you know, I've started the College Financial Health Rating. And let's briefly just reinforce where we have, what we have for our own subjective but based on data, College Financial Health Rating. What do you have? Matt, for Earlham College.

Yeah, Earlham, like I mentioned, unsustainable but longer runway. They have a lot of resources and, you know, depending on how generous the Indiana Attorney General is going to be, and they can go for decades pulling money out of the restricted endowment, right? Same with Valparaiso. And then Simpson is not in that situation. They don't have a long runway. Similar deficits to the other two, but they don't have resources to pull and fill the gap for very long. Even with a generous AG, right? They, what did I say, they get maybe 8 years tops. Yeah. With a normal AG, probably only going to get a couple of years out of their unrestricted funds.

So before we started recording the show this morning, Matt and I were talking about sports and, and I love sports as appears Matt less so. But the reason I bring that up is all of this we talk about goes back to sports. And back in the early 2000s, the Oakland A's— now they're the Las Vegas A's here in a couple years— developed data to make them better without spending so much money. And that's really what Matt and I and maybe a small handful of others do, kind of higher ed data entrepreneurs, is we use that Moneyball approach. And this is data that comes from the colleges. Matt and I aren't pulling this on our own. We're not making up the data. It's from the college's audited financial statements, from the IRS Form 990s, in some cases from their iPad's data. We're just making it easy to compare. This market is a mess for lots of reasons. Those are stories for another day. I encourage you, reach out to the email address I'm going to put in the show notes. Set up a demo. A demo means no commitment. but we can look at it. We can answer your questions. We can look at your college. For the Strategic Compass, I can show you some examples of what that could do for your college. Don't wait too long. Don't wait too long because there are too many colleges in the category that we have called unsustainable with a short runway of less than 5 years. If that could be your college or that is your college, it may be too late, but you might want to start taking a look at the comparison so you can see if nothing else, Matt, how to look at ways to cut your data based on comparisons to others. So for Matt Hendricks, I'm Gary Stocker. As always, thanks for making time to watch the College Financial Health Show. Matt, let's do it again next Tuesday with 3 more colleges. Until then, thanks again. We'll be back next Tuesday.