This Week In College Viability (TWICV) for May 6, 2024

Welcome back to This Week in College Viability for May 6th, 2024. It's a rainy day here in St. Louis, but of course everything has turned green. We are now awaiting the imminent arrival of the cicadas. Hi, it's Gary Stocker. Lots, lots of news and commentary today, and we're heavy, heavy on the layoffs, heavy on the cutbacks, and heavy on the closures this week. Story one is, of course, those layoffs Cutbacks and closures. Wells College closings comes more after more than a decade of money struggle. I'm gonna go with that. I'm also go to the data that shows Wells' preferred teach-out partner is also in financial distress. Northland yet again will stay open with a transformational gift. We'll talk about that. Keystone College in danger of imminent closure. Their accreditor says. And like I talked about last week, experts fear catastrophic college declines thanks to the botched FAFSA rollout. And we'll talk about that as well later in the podcast, leading off with layoffs and cutbacks and closures. And again, like I said at the start, we are heavy on closures this week. And we start off with Keystone College in Pennsylvania is pursuing a rescue plan to prevent closure. This is by Jim Lockwood, who's on the Times Tribune. This was on April 26th. In a letter to faculty and staff, the president of Keystone College said negotiations are underway with an unspecified investment partner to rescue the financially struggling institution. But the president also concedes that if this effort falls through, the college could could close again another Tevyev episode. This is a fishing expedition like almost all of them are. And of course Tevye is the— I've talked about this before— a Tevye response is when a college leader says, "On one hand," and then, "On the other hand," and then, "On the other hand." And of course that reference is from Tevye and the classic musical Fiddler on the Roof. Not only did The announcement come from Keystone, but the Middle States Commission, the accrediting agency for Keystone, said, guys, get it together or we're going to take away your Title IV funds. And of course, Title IV funds are what comes from the federal government to colleges, and almost, almost no private college can survive without those Title IV funds. The enrollment is down. I didn't do a go-to-the-data summary on this one because we've got so much content today, but there was an interesting part to this. And as part of the story, I'm going to quote here. Recently, some small private nonprofit colleges have closed abruptly. We know that. Have closed abruptly in the face of financial and demographic challenges. But Marie Flynn, and she's the library director at Keystone College, argued in a December op-ed piece for Higher Education Dive, and this is the important point, that these institutions owe their employees dignified closures. And Ms. Flynn continues, let's try a little death with dignity through goodwill, honest appraisals, and consensus building, she wrote. Exits, full or partial, can still have some honor, Marie Flynn wrote in Higher Ed Dive last December. And she makes a point that I don't see raised often. Be upfront, and you've heard me talk about it before, you're going to hear me talk about it today. These college leaders are engaged in management by PR. They're not willing to declare the obvious. They're not willing to let their students, faculty, staff, and community get on with their lives. They continue to string them along. Folks, I can tell you, I can tell you which colleges are most likely to close. Why can't they tell their paying customers and dedicated faculty and staff, the closure is imminent. It's not good news. It will impact in most cases, hundreds, if not thousands of people. I understand that fact, but the market has changed. This is the higher education market trauma that we are facing, and it's not gonna get any better anytime soon. I'm not gonna talk about the three phases that I've talked about previously.

Let's move on to another cut.

This is Alverno College in Wisconsin. There's a story from Kelly Meyerhofer in the Milwaukee Journal Sentinel and also one from yahoo.com. I'll include both in the show notes. And Alverno, quick study of their data. Their tuition and fee revenue is down $7 million over the last 8 reported years. Their expenses flat. So get that, revenue down, expenses flat, not good. Their 4-year graduation rate is only at 40%. So not, you know, I guess it's a coin toss college even though it's considerably below 50%. Interestingly, Alverno College in Wisconsin in 2015 had a 17, that's one-seven, 17% four-year graduation rate. They certainly improved in that regard, but it's still barely a coin toss college. And then this was interesting, and I don't recall that I've talked about this recently. In the same story, I think this is from the Yahoo story, the US Education Department annually calculates the overall financial health of private colleges, and their scores range from -1 to +3.0. And schools with a score of 1.5 or higher are considered financially responsible. Not necessarily financially viable or financially healthy, but financially responsible, whatever that is. The story goes on, Alverno's most recent score for the year, for the period 2020 to 2021, was 3.0, top of the scale. And yet, and yet their closure appears to be close at hand. Top Department of Education score, 3.0, and yet closure appears to be maybe not imminent, but certainly getting close to that point. And that should tell you a lot. About the Department of Education's financial responsibility score, the first of many today. Sheesh. Wells College closing. It comes after more than a decade of money struggles. This is on May 1st from syracuse.com, and the story is by Rick Moriarty. And I'm not, I'm not going to use any of the faculty or student stories about we are shocked. They're out there and they're part of the story. I'll give you a number: 41,000. 41,000 students as of April 2024, last month, have been impacted by college closures. I think since 2018, 41,000 students. Multiply that times whatever ratio you want, whatever factor you want. To see the impact of faculty and staff and the community at large. It's happened, it's going to continue to happen. We have to face this reality, and I'm here to help us think that through and help colleges like Ms. Marie from the previous story make college closures more humane, more reasonable, because we can tell which ones are in trouble. So the announcement from Wells came from— this is from the story, uh, from Rick Moriarty— College President Jonathan Gibraltar and Board of Trustees Chair Marie Chapman Carroll broke the news to students and the community with an announcement that Wells will close for good at the end of the academic year. And they go on to say, we have a fiduciary responsibility. I'll talk about that in a minute. And then, as you may be aware— this quote ends— as you may be aware, many small colleges like Wells have faced enormous financial challenges, and you know that because you're listening to this podcast. But please quit using the 'woe is us.' Woe is us. We are like all other college closings. We know that. The pattern is obvious. Don't rationalize. You're just like everybody else. You're part of a market that is consolidating. and the closures are a part of that. And the, and the Mr. Gibraltar and Ms. Chapman Carroll talked about fiduciary responsibility. Well, why didn't they honor that fiduciary responsibility if they were there 5 or 10 or 15 years ago, or whoever was leading Alverno College in that time frame, Wallace College in that time frame? This closing, this closing, like almost every other has many advanced signs, has had many advanced signs that the end is near. Wells and many, many others like it are victims of parochial management. A college with leaders so focused on their own really, really, really little corner of the world that they can't or won't look at the bigger picture. Years ago, these college leaders could have— they could have looked to a more secure future by getting outside of their, of their comfortable little academic kingdoms and made nice with other proximate colleges. Although proximity is not important now.

And made nice with other proximate colleges to get their academic and non-academic operations to scale. And now it's too late. It will continue to happen.

I— my best educated guess is into next year sometime before the second phase enters.

And just a sidebar from me: reporters always go to the financial statements and probably the Form 990s after college closes. And one of the main reasons I created the College Viability App was to give the many stakeholders, including reporters, the ability to compare the financial health of colleges, both private and public. And I will again offer to any reporter a courtesy— read that, free courtesy— link to the 2024 public or private or both college viability apps. Drop me a note at Gary—

to Gary at College Viability. That's College Viability, one long word. Gary@collegeviability.com. Page 2. Northland College will stay open thanks to, and I put in quotes, transformational gifts. This is from Jessica Blake at Inside Higher Education on May 3rd, just late last week. And all right, I'm going to read the story. Let me read the highlights of the story. Northland College needed $12 million in March. I covered this back then. In April, they had come up with a total somewhere in the vicinity of $1.5 million, not even 10% of what they needed. And whatever this behind-the-closed-door dollar number is, if it's transformational, they say it's probably not. They're not identifying what that is because it probably doesn't exist. And if, if it is transformational, why is the number less than $12 million that they had back in early March, not the transformational number. What did they— where did the $12 million come from? Dartboard? Is this dartboard college economics? As I've said before, please, folks at Northland, it's over. Maybe I should— maybe I should drive up to Northern Wisconsin and offer to turn off the lights. These folks at Northland are just stringing along their faculty, their students, their staff, community. These It's over, close it, move on. And one more time, this is the details. The refocus model based on this transformational gift, they're gonna reduce the number of majors from 24 to 8. They're gonna do some semblance of some sort of restructuring and layoffs to save $7 million. And they're keeping current athletic programs. There's a cost factor in there. So they're going down to 8 majors. So the students who now go to Northland, I think they focus on environmental stuff, as I recall. Maybe they have a nice enrollment number there, but that's a—

looks like about 200% cut in majors.

All right, go for it.

Enter the data one more time. They have 500 students. Their unfunded institutional grants are up 33%. From 9 million to 12 million. Their 4-year graduation rate is at 47 points, uh, 47%, down 7 points in the last 8 years. They don't even graduate half their students. And this, this, this is a head-shaking, double-geesh story. I'll keep following Northland because maybe I'm wrong.

I don't believe I'm wrong, and if so, I'll certainly take responsibility for that.

But I see it too many times, too many times. Page 3.

So experts fear catastrophic college declines thanks to the botched FAFSA rollout. We've talked about that before. And this story is from the Associated Press through WIBV4-TV, I believe, in Buffalo. And the reporter is Colin Brinkley. Colin, drop me a note. I'll be glad to send you a free courtesy link to the 2024 college viability apps, public or private. And this story is mostly about the FAFSA and the FAFSA-S. I'm not going to go into that, but I do want to read a quote, and this is from Angel Perez, who is the CEO of the National Association for College Admissions Counseling. NACAC, I believe, is how you pronounce their acronym. And he, Mr. Perez, is quoted in the story as enrollment decreases like those being projected could put many small colleges out of business or necessitate deep cuts in staff. Duh, we've been talking about that. Some colleges are pushing for emergency relief just to stay afloat. Now this is new. I wonder if this was going to happen. Others have suggested it, but I've never talked about it on the podcast. And I'll finish the story from Mr. Perez. He's quoted as saying in the story, if they don't— the colleges— if they don't get checks from the federal government, to basically get them through next year, they will not survive. Now we're gonna follow this story in the coming weeks and months because you heard me talk about the projected catastrophe this fall that would start in October, November, December when colleges realize they can't make their payroll either late this fall or through the middle part of next year. If they start closing in significant numbers, and I can't define that yet, will the feds, will the federal government step in with some kind of relief plan. I'm not even willing to predict how that would go, but certainly it's a possibility because I think Mr. Perez is correct here. If they don't, I think we'll see a catastrophic set of college closures starting this October and beyond.

New story.

This is from Karen Weaver. She's a Forbes contributor.

This was on April 30th, and she says, in a rising tide of college closures, The impact on Division III NCAA Division III athletics become clear. And as I discussed last week, sports teams should be a department of basketball, department of football, department of soccer, whatever, with both revenue attributable from their tuition fees and expenses, but both direct and indirect cost allocations. Because when you do that, I've talked to college presidents, they say no sport outside the big Power Five conferences, no sports nets positive, in the black, revenue. It's the net revenue that matters, not just the gross tuition revenue. And I worry that these folks that have been adding sports programs and will probably continue to add sports programs are only looking at the net. They're not looking— I'm sorry, I'm looking at the gross. They're only looking at the gross revenue and not worrying, not catching up on the net. And, and from this article, I'll read the quote: University administrators at tuition-driven institutions wrestle with this reality each day: prospective student numbers are dropping while the cost of remaining competitive—

I guess he more wins than losses— while the cost of remaining competitive is increasing. And he goes on, while the noise has been around what's going on with the Division I programs This reporter concludes, "Don't forget about the 200 NCAA Division III teams that no longer exist." And in the story link, you'll find a list of those sports and again colleges and the number of losses for each. Let's go to page 4, and the headline reads, "Low enrollment and financial struggles force New York college to close." It's really unfair to everyone. And this is a follow-up to the story at Wells, which we talked about earlier. And this is from Fox News. It's from Alba Cuevas Fantasi. And this is a woe-is-me story for sure about Wells. But here's what I wanna focus on. They've identified their preferred teach-out partner as Manhattanville College. Somebody dropped me a note, it was 250 miles away from Wells. All right, I'll give 'em that. Here's what's happening, because you know what I'm going to do. I'm going to go to the data for the teach-out program. I've done this many times in the past. I'm gonna— let's go to the Danapher-Wells, all right? Wells and Manhattanville. So I've got them lined up here in my notes. The full-time equivalent enrollment, the one we always use here at College Viability, was down 350 at Wells. This is from 2015 to 2022. The number was 350— excuse me, it was down 105. That's down 36%. At Mary— excuse me, Manhattanville, Manhattanville College, their enrollment is about 2,000.

It's down 500 and change from 2015 to 2022, down about 22%. The 4-year graduation rate at Wells is just below 50%, so they fall in my category of, of, uh, of a coin toss college. And Manhattanville, to their credit, is just above 50%. If you think just above 50% is a good 4-year graduation rate, tuition and fees are down $3 million over the last 8 years at Wells. They're down $4 million from 2015 to 2022 at Manhattanville. The endowment in both is around $28 million. At Wells, it dropped $5 million. They were keeping— they were, they were pulling from the endowment to keep the lights on, meet payroll. At Manhattanville, the endowment was down not quite $5 million, $4.6 million from the IPEDS data in the College Viability App. Revenue was down $5 million at Wells, down $8 million in Manhattanville. You know where I'm going with this. Expenses were flat at Wells. They knew they were in trouble, but they increased in the face of decreasing enrollment. Expenses increased at Manhattanville from 2015 to 2022. I'm hearing more and reading more and more reports of students who were impacted by one college that closed Going to another one that closes. And if you're concerned about that, the student and family version of the 2024 Private College Viability App for students and families will let you compare the financial health and viability of those colleges.

And so let's go on to Drake University. And headline reads— this is from Ben Inglesby at Higher Education Dive on April 30th— Drake University to cut 3 academic programs as it tries to balance budget. All right, so here's the story. The leadership at Des Moines-based Drake University had an $8 million shortfall to cover, and they proposed cutting 13 programs. But the Board of Trustees, the fiduciary responsibility— responsible Board of Trustees, agreed instead with a faculty plan to cut only 3 programs: a religion major, an East Asian studies major, and a graduate certificate in evidence-based higher education. Again, this is from Ben Unglesby at Higher Education Dive. So let me give you a sarcasm alert and a jeesh alert here. I've been working on another app that's called Program Completion. I've got it pretty much ready to go for the private side, not the public side so much. But I'm gonna go to that even though it's not released yet. I'm going to look at the 2022 bachelor's program completion data for Drake. Parks and Recreation had 4 students graduate in 2022. Foreign Language had 5. Physical Sciences had 13. Math and Science had 9. Liberal Arts had 5 for a grand whopping total in those 5 programs of 36 students. Not quite 3 times what the collaboration between faculty and the board of trustees was. So for what it's worth, the top 3 programs at Drake in 2022 were business, communications, and visual performing arts. We need some more artists. Sarcasm on my part, remember, sarcasm alert. I'm guessing that the good folks at Drake see an improving market this fall and beyond. They must see the FAFSA debacle is over, and colleges will probably quit discounting tuition to get students in the door. So there must be no need to be concerned about expenses or revenue. And this is where the jeesh comes in. The board has clearly chopped the legs out from underneath— the leadership legs. Of the college president. 3 cuts, 3 programs, and the total number of students— I can't— what that was, 14 total students. Figure the net, probably $20,000. That's $280,000 per year. The deficit was $8 million. It was $8 million. Don't even need a calculator to do that math.

All right, that's enough.

Let's do a wrap.

You know, this was a heavy week. As I said at the top, this was a heavy week of bad news. And it's, it's, it's expected to continue because it's going to. And remember, as we wrap this podcast episode up, remember my role is to serve as your unofficial college financial quality control resource. You may agree with what I say, you may disagree with what I say, you may like the news and commentary, you may disagree with the news and commentary I provide. Yet it still serves— I'll offer it still serves as another perspective for every stakeholder in higher education to make decisions based on having as much information perspective, agree or disagree, as possible. So hey, it's Monday, May 6th. Let's do this again on May 13th. My name of course is Gary Stocker. This Week in College Viability is over. We'll do it again next week.