This Week In College Viability (TWICV) for Apr 7, 2025

Hello everyone and welcome back. It's This Week in College Viability News and Commentary for Monday, April 7th, 2025. Hi, as I write the intro for today's podcast, as I wrote the intro for today's podcast, the stock market is in a free fall. It's kind of slowed down a little bit later in the day, and I have little doubt that it will ultimately bounce back as it always has. As you might guess, my sentiments are similar for higher education. It is certainly a slower free fall than we are seeing with the stock markets, although I believe the equivalent version of higher education free fall is a realistic possibility, maybe even this fall. It won't occur over hours, maybe over weeks or a few months. And, and believe it or not, I also believe that the bounce back like we saw in the stock markets during some parts of the day today, the bounce back in higher education will also occur. It won't be that closed colleges are coming back from financial closure. It will be higher education, the industry, higher education mirroring what other industries have historically done, merge or otherwise consolidate both their academic and non-academic operations in the case of higher education. Now I know this is the point where some number of listeners, some number, will roll their eyes and click off the podcast. That's fine, so be it. Higher education is a business, and only the financially naive will think otherwise. Businesses of all types operate in a supply and demand world. Net cash from operations must at some point at some point net cash from operations must be positive. Costs must be managed in conjunction with revenue, and we're seeing that taking place before our eyes in the nation's capital. Agree or disagree with the mechanisms, but an effort is being made, just like it should be in higher education. An effort is being made to scale costs to revenues, and the bounce back for higher education will ultimately and eventually B, when enough colleges recognize that cost management best occurs— cost management best occurs with scaling operations across multiple colleges. It won't be pretty, but it will happen. College dribble this week. So a college in financial trouble. This is a quote from their news story on one of the services, uh, from the college. A new rule has also stated that students are now required to live in on-campus housing for 3 years instead of the previous 2-year requirement. Hold on. Though school officials have stated that this is unrelated to the budget. Sure, sure, sure. Layoffs, cutbacks, mergers, closures, all that stuff this week. Spring Hill College announces a strategic alliance with Rockhurst University. Spring Hill is in Alabama. Rockhurst is in western Missouri. And this is an academic collaboration. I think they use the term strategic alliance, okay, in their press release. And you know me, I, I, I always want to look at the data. And when I did, the data for Spring Hill College was much weaker than I saw for Rockhurst University. So the graduation rates at Rockhurst, 70%. At Spring Hill, a little below 50%. Rockhurst had almost 10 times as many graduate students, about 1,000 versus about 100+ for Spring Hill. And the unfunded institutional grants were down $20 million at Spring Hill since 2016. Now that shows they're trying to get those discounts under control, but we all know what happens when you don't offer higher discounts. The enrollment pits, and that's what's happened here. The enrollment has shrunk in the time period. For example, enrollment at Rock Hill is up 200+ students, and Spring Hill, it is down 500, almost 550 students, down about 40%. And even looking at the financial stuff from the college, the private college financial health Advance Compass, net income at Rockhurst is up 3%. At Spring Hill, it's down a negative 42%. The endowment value for both is down a little bit, down 1% for Rockhurst. And down 4%, almost 5% in 2024 for Spring Hill. The, the total operating revenue is up 42% at Rockhurst, down 30% at Spring Hill, and on and on and on the list goes. What's in it for Rockhurst is going to be my question. Give credit for the shared programs, all right, I'll grant them that, but I can't, I can't believe any, uh, either of those two colleges will generate the type of materially significant new net revenue for either of these two colleges. And if there's a rep from either colleges and you've got the plan and you can share it, let's get you on the podcast. Drop me a note. I'll leave the contact information in the show notes. And let's talk about the projected financial opportunities, consequences, whatever, of this partnership or strategic alliance, whatever you want to call it. And I don't doubt for a second, not for one second do I doubt there will be more opportunities for students at both colleges. No question. I just don't see this as a financial positive. I see it more of kind of what I've talked about before. This is management by public relations. Rosemont, Rosemont College to merge with Villanova University in a multi-year transition. This is from Laura Fay, Carrie Corrado, and Nate Silves. This was from CBS News in Philadelphia on March 31st. And again, Villanova is in a western suburb of Philadelphia. And let's not forget the real estate potential, potential impact of the real estate that Rosemont College sits on as part of this deal. It's in a Rosemont-like— I believe Villanova is in a suburb, I think northwestern suburb of Philadelphia. If I'm wrong, feel free to correct me on that. It's reasonable in my mind to assume that part of the calculus for this, from, from Villanova's perspective, includes the value of the land, includes the value of the land as much as the value of the college. Right, two-part story on colleges and athletics. Bryn Athene College in Pennsylvania. The headline reads, Bryn Athene— I think I'm pronouncing that correctly, if not correct me— Bryn Athene College in Pennsylvania axes all sports programs citing budget constraints. This is from Bucks County Today on March 31st and written by Michael Paul Kidd. And the college, Bryn Athene College, is going to convert to all club-level competition due to these financial challenges. So the president, Sean Connolly, said the 11 NCAA Division III programs will all be cut and converted to club-level competitions. All right, that's fine. That's a business decision. They're certainly more than welcome to do that. Athletes or athletics account for about 12% of Bryn Athene's overall budget. More than double that 12%, more than double the typical 4 to 5%, 4 to 5% spent by most D3 institutions. Interesting. This transition is expected to save the equivalent, equivalent of 11 full-time positions. Impacted students will receive full support, full support, and I believe I saw in that article that the scholarships they've been offered will be continued through the end of their education. All right, that's number one. College 2, same story, different details. Academy of the Art University in California, in San Francisco, announces discontinuation of intercollegiate sports programs. And this is on April 4th. I don't see a name for the author, for the reporter on this. Let me read to you. All scholarship-eligible student athletes will have their athletic scholarships honored— good for them— in full accordance with NCAA regulations. The cancellation will impact 36 of the school's approximately 1,260+ employees. This college, again, the statement goes on, has funded a program, a sports program, since 2012. That's really not that long, but they've determined that these programs are no longer financially sustainable. How many times, how many times have I talked about that colleges adding sports programs are not looking at this as a cost center? They're looking at this as a supplemental revenue center, and they don't look at the cost piece. And I worry that we will see this kind of story more and more and more and more. So, so interesting dichotomy taking place here. We've got many colleges adding sports programs, like I said, in an effort to increase revenue. And now we've had 3 colleges, at least the ones that I can recall, announce not just cutbacks in sports but complete elimination of sports programs. And I, again, I look at the whole, at the whole industry perspective. I have to wonder have to wonder if the sports pendulum is entering a phase where the financial reality of athletics at almost every college, not just the small ones, is, is not financially self-sustaining, if it has to be subsidized from other sources of funding. And, and having said that, there will be many colleges, many, many, many colleges with the financial resources to dedicate to athletics. Directly, indirectly, whatever the case may be. But we have to start asking ourselves, what happens? What happens if— what happens if more and more colleges move from structured sports, NCAA Division 1, 2, 3, whatever, NAI, whatever, to club programs? I have pondered this and discussed it even with others. I just can't wrap my arms around what the consequences might be if massive, and I don't know what that is, massive athletic program cuts continue. All right, Gary is right again headline, Georgia Tech sets new record with nearly 67,000 applications for fall enrollment. I think I saw the same kind of story about UConn who just won the women's basketball championship yesterday. And of course I'll have the link in the show notes. And this is from WSB Radio. Graham Carroll on April 1st. And this is just more anecdotal, anecdotal evidence that students may be moving toward larger colleges and big brand names. Georgia Tech, of course, is one of the, is one of the Power Four conferences. And let's go to Wisconsin. And over 100 employees— long list of bad news this week— over 100 employees to be laid off as, as a college in northern Wisconsin closes in May. All right, this is about Northern College. And this is from Adam Rosen and from where we are, greenbay.com news, posted on April, posted on April 2nd. So it was just about this time last spring when Northern College in Wisconsin announced they needed to raise something like $12 million in about a month, 3 weeks, a month, something like that, and they were unable to do so. But it wasn't until earlier this year, something close to a year later, They announced their closure, I believe it's in May of this year. Now I bring this up, I bring this up because if you go to the podcast website for This Week in College Viability, you're going to notice I have an interview posted with John Nichols, Jonathan Nichols, that I recorded just late last week. And we discussed the upcoming release of the second edition of his book, Requiem for College. If you're at, if you're at Northland College, it's probably too late to read this book. But if you're at other colleges where the financial, the enrollment, the outcome signs are not good, Jonathan Nichols' book, both the first edition, the original edition, and the second edition due out later this year— John Nichols' book talks about the human and emotional consequences of financial closures. He also writes in detail about the no decisions and bad decisions that his college where he taught back in 2017, and that was St. Joseph's College in Rensselaer, Indiana. He talks about the decisions they made, the bad decisions they made there. The second edition of the book is going to have more details. There have been many, many more college closures since then, and Jonathan Nichols is expanding on that along with his publisher Kate Kate Colbert from Silver Tree Publications. How about one more? Stanislaus University, California. Faculty members decry layoffs amid budget shortfall. And this is from Steve, um, Julieta Bicharin on April 3rd from the Modesto Bee. I believe that's in the Modesto Bee. I believe is in Sacramento. Stephen Filling, the story goes, a faculty member in the accounting and finance department at Stanislaus State University, said the administration's approach has left the faculty in the dark. Well, okay, probably. What else is new? Mr. Filling goes on to add, and I'm quoting here, noted that, that California State University System audit reported for 2023-2024 reveals there's more than $8 billion with a B in cash and investments. Okay, all right, I don't doubt that for a second. I didn't check on it. Well, Mr. Filling, I think I'm pronouncing that correctly, this is a cash issue. This is not an issue about assets. I'm hoping somewhere in your accounting and finance department you talk about the differences. Colleges and their leaders have a fiduciary responsibility to preserve the assets of the organization in theory and in practice into perpetuity. If the operating budget is short $6 million— I think that's the number from Stanislaus— if the budget is short $6 million or more, as we stated in the article, as was stated in the article, the management team has a responsibility to manage their budget to that number for subsequent years. The $8 billion referenced in the story, it's generally not intended to be available to meet payroll. And to keep the lights on. It could be, and it is in too many colleges. And while it's certainly possible and maybe even likely that the leadership in the California state system and at Stanislaus will draw down some of the earnings from those funds, and there's nothing wrong with that, they will never want to touch the principal because of their responsibility to maintain the organization's existence into perpetuity. So if there's other faculty members out there looking at the long-term investments, looking at the endowment, Yes, it's there as a crutch. It's not there as a piggy bank to be broken when you need money to keep the lights on and to meet payroll. How about something a little bit different? Let's move away to page 2. City Council— it was a long page 1— the City Council, and this is a city council in Philadelphia, to investigate the state of higher education following a string of mergers and closures. Rosemont merging with Villanova. We talked about that earlier in the podcast. And this is an announcement, phillyvoice.com, by Michaela Althaus. April 3rd looks like the date on that. Here's a quote: Following Monday's announcement of a merger between Rosemont and Villanova, Philadelphia, the Philadelphia City Council will hold hearings to investigate a growing trend in higher education. That trend is mergers. Well, it's growing, but not significantly yet. All right, so why am I including this story in the podcast? This is a story, this is a story contributing to the tipping point that I've talked about many times. There will be sooner rather than later a tipping point where higher education or college students and their families recognize that there is at least a two-tiered system, those with resources and those without. All right, I understand a politician has to say something. All right, we understand that, we expect that, no big deal. But I've often talked about the tipping point for higher education. This is when the public, like I just said, en masse realizes that the college you choose may or may not be financially healthy. And we may already be in a period where students and families are showing their concern about smaller, mostly private colleges by making the decision to enroll in larger colleges that are bigger and more recognized brand names. We talked about that a couple minutes ago at Georgia Tech. And as I have shared previously on this podcast and elsewhere, I think, I believe, we're headed toward a fall of 2025 when we see an increase in the number of college closure announcements. Now, I made a similar kind of statement last summer for the fall of 2024. I was wrong. I missed that one. Somehow the FAFSA folks recovered enough, at least enough so that colleges had enough money to continue to operate. And, and why I think it could happen in 2025 is because with all of the media about changes in higher education, along with all of the financial challenges that have been in place for many years, And maybe even we have another facet of the debacle this year, which is the federal policy changes that are in the news everywhere. And here's the challenging part. The challenging part is if I'm right, and I think I am, and there's a series of a dozen, two dozen, three dozen, whatever number of colleges closed in a period of months, 3 months, 4 months, 6 months, 9 months, whatever that would be, what happens next? What happens next if there are a few dozen college closures? What kind of college and media hysteria will change the market? I don't know. I don't— I think about it. I don't know of anybody who's thinking about looking, who's thinking about what that might look like if there are a rapid rate of closures. For the colleges that close, for the approximate colleges that are able to stay open, for land-grant publics, for regional publics, for larger privates. It's scary because nobody's thinking about that. Page 3, Matt Hendricks. He and I do the College— Matt Hendricks, he and I do the College Financial Health Show on every Tuesday. He said, Gary, the market is down, which we knew, and that's not only going to impact individuals like you and I— talking to me— it's also going to impact the returns. It's also going to impact the returns that colleges get on their endowments. Now I said to myself, duh, Gary, why didn't you think of that? Like many, I'm watching my portfolio go down although it will come back up. And, and this will be— if that's the case, and then it's got to be— what happens to you and I happens for industrial investments as well, is my understanding. It's going to be just yet another factor, another factor putting extreme financial pressure on more and more colleges. And again, I recognize most will be private colleges that can't keep the lights on, that can't meet payroll. but the pressure on public regionals and even medium and large-sized privates is going to be much more challenging to face. And the final story, page 4, a college guide raises questions on Baptist colleges. This is out of Texas on April 2nd, thebaptiststandard.com. Callie Keener is reporter on this, and what we're looking at is for colleges in Texas. So I want to continue talking about one college in particular, this BaptistStandard.com story. It's Wayland Baptist in Texas. And let me just share the numbers on Wayland Baptist. And this is from data from 2016. To 2023, the 4 and 6-year graduation rates. A 4-year undergraduate graduation rates at Wayland Baptist University in Texas, 4 years undergraduate graduation rate 15, that's 1-5%. The 6-year, the 6-year graduation rate is 25%. The retention from year to year is 40%. Interestingly, their enrollment is up 300 students and their percent admitted has been all over the place from 100% I think it was in 2016, down to 54%. I believe that was in 2023. But tuition and fee revenue was down almost $19 million over the last 8 reported years. The endowment, however, the endowment appears to be managed pretty well based on the data I looked at. Now, while the Wayland representatives referenced in this story indicated an understanding that the numbers require better context, they were also clear— this is the tough part— they were also clear on Wayland's commitment to improve student success. Let me take them to task. We talked about the 4-year graduation rate at Wayland University from 2016 to 2023. Let me read each of the single data points for those last 8 years. 4-year graduation rate 2016: 12%, 18%, 10%, 6%, 11%, 10%, 14%, 14%. Who, who are we kidding here? At what point around year 2 or 3 of that period should someone have said, hey, hey, I think we have a student success issue. I think we have an issue graduating our students. Now, on the other side, Mr. Wesley Null, who's the Vice Provost for Undergraduate Education and Academic Affairs— get that on a business card— at Baylor University says Baylor University has first-year, no prior college students, 4-year graduation rates has improved from 54% to about 74%. This is for the 2021 incoming class who'll be graduating this May. I didn't go back and look what the data was prior to that, but odds are it was in those strong numbers as well. During Mr. Noll's tenure, Baylor's also seen a 10% jump And fall-to-fall retention from 81% to 91%. Good numbers all across. So, so why doesn't Wayland— again, tongue is somewhat in my cheek here— why does Wayland not send the students to Baylor? Or why not contract with Baylor to use their graduation systems, their retention systems and processes? This story, this story is just spin on what is really a bad actual narrative. And I don't doubt for, again, for a second that the good folks, the good folks at Texas Baptist Universities are trying to graduate a higher percentage of students. No doubt. Best of efforts. But at what point though do they admit an inability to do so? I think we're well past that. So let's do the wrap. And there was a story in Inside Higher Education by Liam Knox on March 27th, and the headline read, 'Is the FAFSA Poised for Another Fiasco?' And he said the federal student aid form had just begun to stabilize after a disastrous launch. We don't know about that from last year. Then the Trump administration gutted the agency that manages. Okay, that's, that's the tagline for the story. So I've been looking at some taglines I could use to describe what I believe we are headed for in this fall of 2025. My good friend ChatGPT provided me some possible phrases. Let me just read a couple of them. Private college plunge of '25. The 2025 collegiate collapse. The Collegiate Cash Crisis of Fall of '25, The College Contraction, and one I like because it's got a lot of alliteration, Fall Financial Fiasco. Now, I don't know if or how I will use any of those. I, I look at college financial data many times, almost every single day. I do this podcast every Tuesday. I do The College Financial Health Show with Matt Hendricks. I don't have any skin in the game. I operate from the College Viability National Headquarters, which you and I would always also call spare bedroom. This has become a data-driven passion. Outside of a highly unlikely national bailout, there will be more and more and more and more colleges that decide to turn off the lights for good. Will that free fall like we talked about the stock market today— will that free fall be this fall? I think there's a reasonable risk, a reasonable if not stronger risk, that it will be. So hey, let's do this again next Monday. Maybe the free fall in stocks has slowed. I doubt it will have slowed in higher education yet. Hey, thanks everybody for listening. I'll be back next week with another episode of This Week in College Viability.