This Week In College Viability (TWICV) for March 18 2024

It's This Week in College Viability for March 18th, 2024. Hi, it's Gary Stocker doing our regular Monday podcast, and I got to tell you, there's so much content that over the last couple of weeks I've really been pondering looking at doing This Week more than once a week, but then it wouldn't be called This Week. We'll have to see how that shakes out. Hey, here are the stories we're going to look at. And the first one is carbon monoxide. Believe it or not, carbon monoxide detectors turned off at Evergreen State College. There's a financial component to this we'll talk about.

As time allows, I'm going to talk about something called going concern, G-O-I-N-G concern.

It's something accountants reference in financial statements. And if I don't get a chance to talk about it this week, if we're running long, I'll put it on the agenda for another week. And I have a Notre Dame College student impact stories. We've done these before. Sadly, we're going to end up doing them again. And I'll reinforce why colleges need to be more upfront sooner with their students. Public consolidation, public college consolidation continues to jump. And it's in the higher education news cycles every week for sure, sometimes every day. And hold your breath, but the department, the federal Department of Education wants to create what I'm going to call pathetic minimum graduation thresholds. We'll talk about that. A Monday in March wouldn't be complete without a FAFSA fiasco update. Uh, and then EY Parthenon, which is a renowned and highly skilled consulting firm that has businesses in higher education, they came out with a report that I just saw last night. Well done report that we'll talk about, but it really dances around the details about the risk of individual colleges. And I'll talk about that. And then we'll wrap up with a review of the Chronicle's Scott Carlson's article in the last week or two on gauging a college's financial health. So that and much, much more on this March 18th episode of This Week in College Viability. And of course, we always start off with layoffs and cutbacks, and now I'm adding closures. Layoffs, cutbacks, and closures, and that's all I've got this week. Of course, the news was full of the closure of Quad Bond University here in the St. Louis area. I had predicted that for a long time. There are others on my list that I won't share publicly, but I can, I can tell you privately if you want. The University of Wisconsin-Waukesha announced that it will close. I believe that's next year. And then for all intents and purposes, Northland College up in the north part of Wisconsin, they didn't announce their closure, but last week, I think it was the week before, they said they needed to raise $12 million by April 6th in order to stay open. And in their entire existence of many decades, I think they had only raised $6 or $9 million. So that's what I call a higher ed Hail Mary for that one. So for all intents and purposes, we'll add Northland to the list. And I'm going to go to page 2. And Rick Seltzer had a story in his newsletter on March 15th. And this is the Evergreen State College. And they had turned— there was annoying noise made by the carbon monoxide detectors. And so the maintenance folks at Evergreen State College, and I don't recall where that is, maybe in Washington State, turned off the detectors. But it turned out that an improperly installed water heater was in fact leaking. And the student actually died from carbon monoxide poisoning. Now, the financial piece of this, I've again predicted this before, is that colleges are so strapped for cash for everything that stuff like maintenance and preventative maintenance is being pushed back. Now, I don't know the details of this. It's a sad story in so many ways. And I've predicted catastrophe. I think one student losing their life because of carbon monoxide poisoning might be an example of a catastrophe, certainly for that young man, that person, doesn't say, that person and their family. That's a big issue and it's gonna get bigger. What happens if we see these kind of stories again? What happens if the number of students impacted is bigger? Preventive maintenance, fixing things, just not getting the attention it deserves. To Notre Dame College, here's the headline. This is from the Cleveland Signal, or maybe Signal Cleveland, I think. The headline reads, "I don't have control at all of my future right now." Notre Dame College students trying to figure out what comes next as the college closes. And this is from Amy Marona from the Cleveland Signal or Signal Cleveland.

And I'll of course have all the links in the show notes. And I'm gonna talk about Alexis Boyer. And Alexis was referenced in the story, and she had transferred from Quincy University to play soccer at Notre Dame College. The reasons weren't stated, and they probably aren't important. And Boyer, Alexis Boyer at Notre Dame College, is one of 70% of Notre Dame's population who are student athletes. Now, before I go any deeper, you got to wonder, was Notre Dame a college or intramural program with such a high number? I know a lot of colleges have high percentages. That's a big number. And Alexis Boyer says, "This is my life. This is my future. I'm paying money to go here. I had to pay money to move here." But there's not much time for Alexis Boyer and her student-athlete colleagues at Notre Dame College to unpack or process those feelings or any other feelings. It's about 1,300 undergrads at Notre Dame are having to look for another college. Now, here's the question. That I've got noted. It's bolded in my notes. Alexis Boyer says, and this is a quote, it's crazy to think a question I have for prospective colleges, it's crazy to think a question I have is, are you financially stable? She said, I thought this could never happen, end quote. I've said it for a long time, but this is the perfect scenario. This is a building set of circumstances where more and more students and their families, if they're not doing it today, they'll be doing it tomorrow, where they say, hey, show me you're financially stable. And of course, our College Viability App does exactly that. We compare the financial health and viability, the outcomes, the enrollment, and more for some 2,500 public and private colleges for the last 8 reported years. But you know what, there's another big question that Boyer in all Notre Dame, Notre Dame College students are facing. When you answer the question, what happens when your college closes? That second question is most, but not all colleges provide students links to other colleges, introductions to other colleges where they can continue their studies. So being a data nerd like I am, I went and looked at the 7 colleges that Notre Dame College was sending its students to to continue their college education. Ladies and gentlemen, boys and girls, 5 of the 7 in my analysis were financially unhealthy.

What happens if Alexis Boyer or some other number of her students go to another one of these colleges and they don't ask the question, are you financially stable?

And the college is not.

And those students, those student athletes or those students, period, face another college that closes? One more story.

And this one, we're going to Fontbonne University and the headline from the St. Louis Dispatch from Steph Kokolian and Blythe Bernard on March 17th, Fontbonne closure brings tears and questions about the future of higher education. It's one of those things where you kind of look back and say, huh? Because the quote from, um, The Post-Dispatch, and I'm reading the quote here, several students told the Post-Dispatch they were not surprised by the university's upcoming closure. Deferred maintenance, we just talked about that, in various dormitories and academic buildings had piled up over the years. And since the fall 2023 semester, they felt that staff and faculty seemed to put in less effort. That's not good. And it continues, they described what felt like a mass exodus of administrators and professors in January.

No way to run a railroad, no way to run a college.

And the story again, again notes the belated attempts of Fontbonne in this case at mergers with other colleges. And it was referenced in a couple different stories for the Post-Dispatch this week. And just like we've seen I think in almost every other college closures, it's way late.

Those kinds of conversations need to be started years in advance and not when the last dollar is circling the financial drain.

Page 3, as states— here's the headline: As states eye college consolidation, leaders should draw from previous lessons learned. This is a story from The Hill by Martin Kurzweil and Elise Neely on March 14th. And really all it is, And again, I'll have the link in the show notes. This is yet another story about the move among public colleges toward consolidation, consolidation, merger, call it either one you want, they're synonymous in my book. And now the focus of this particular story, thehill.com, is on marginalized students. And that's fine. Someone will focus on that. They're entitled, they should. But the big picture is an increasing realization that higher education, like every other industry that's already been through this, higher education is entering a period of increased activity of mergers and consolidations. And I'm going to bet in some cases, even acquisitions. And the article also makes note of the point of growth versus retrenchment. They make the point that the colleges that should merge or consolidate should be looking at growth and not the colleges that are near financial death, near closing. Those are— those retrenchment candidates are not good for mergers, not good for consolidations. Yet that's what we see all the time. And one of the things you can do, whether you're a college leader, faculty, staff, student, family member, stakeholder, is go into College Navigator and look at the number of grads, graduates, in low-enrolled majors, and then guys, consolidate them in some form or fashion across your public entities. It will be a political screaming and hollering contest, but it needs to happen. And I, it will in some places. And like always, some will, some won't. That's just the way it works. Graduation rates.

If you're a follower of my podcast or my social media posts, you know, I spend a fair amount of time enthusiastically and sadly noting the horrible state of graduation rates among really most private and public colleges in the United States. And now the Biden administration— and this is not a political commentary because I don't do politics here— the Biden administration wants accreditors to set benchmarks for student outcomes and read outcomes as graduation rates. And the subheading says advocates have argued for years that accreditors aren't doing enough to ensure that students get the education they're paying for. Katherine Knott at Inside Higher Education on March 15th wrote this story. And the feds, of course, can do whatever they want on mandating graduation rates. Although their standards reported by Katherine Knott appear to be pretty low, I think their standard, their threshold was 25%. Here at College Viability, our minimum threshold for 4-year graduation is 50%. And I think that's low. And still more than half of public and private colleges don't even meet that. But here's my point. What will happen long before, long before the public agencies get their act together, the market will have already pushed aside colleges that can't graduate students. And I've asked this rhetorical question many times before. If you can't graduate half, at least half of your students in 4 years, you don't, but you don't deserve the title college or university. And you've heard me coin the phrase, it's a coin toss college. You might as well toss a coin just to see whether a student can graduate or not. And there was a quote in that story. And this was from, uh, Joni-Ann Steadley, and she is the president of Western Association of Schools and Colleges. Senior College and University Commission. I don't know what that is, who represented institutional creditors on the federal committee. She makes the case that you— I'm reading the quote— you need to look— this is from Ms. Studley— you need to look at multiple dimensions, applying them together to get a picture of how the institution is doing requires the judgment that an accreditor can bring to it. Ms. Studley continues. "It speaks to the idea that we recognize the value of data and outcomes as flags," she said, and then ends with, "We just don't want them to turn into axes." I think I know what she means on that. Baloney. That's my response. If you can't graduate 50%, What are you doing? There was another quote. Emily Rounds, who's an education policy advisor at Third Way, said the accrediting institution should signal that the college provides a quality education— read that as to be graduate students— and use taxpayer dollars responsibly. She goes on to say that isn't currently the case. Based on her research, Rounds found that $20 billion— that's 2-0 billion— of federal financial aid went to colleges in 2021 in 2022. I'll say that again. $20 billion in federal financial aid went to colleges in 2021 and 2022 that graduated less than half of their students. And of that $20 billion pot, $4 billion went to colleges where fewer than 25% of students graduated. That's a triple geesh, and I haven't used a geesh description in a long time. That's— we'll talk again more about that, I know. And I know it— I don't know how you define a quality education. I do know how to define graduation, that piece of paper. And for those who will weakly argue that a college can just start graduating everyone just to meet the threshold, First of all, they can't because so many will never make it to their junior and senior years. And second, do you really believe, do you really believe that a large number of colleges will graduate students just to graduate them and risk their reputation as being described as something similar to diploma mills? Page 4.

The FAFSA fiasco. We haven't talked about that.

Let's keep it on the, on the front burner here. This is from Liz Willen on the Hecker Report, and her headline reads, the FAFSA fiasco could roll back years of progress and must be fixed immediately. Urgent solutions, not finger-pointing, are needed to help students and parents, blah, blah, blah. This is on March 15th at Hecker, Liz Willen. And, and Ms. Willen does a fine job of detailing the entire FAFSA story that started probably last summer sometime in terms of the delays. And folks, I've, I've talked about this before. Of course, I'll include a link to the full story so you can read it in the show notes. But, but we'll look back. We will look back at this FAFSA delay mess. And in retrospect, note that it was, it was a major contributor to even more closures and probably some consolidations in higher ed.

And remember that, that many smaller colleges stay alive or not with that last dozen or so students who enroll, register, and pay tuition. And there are so many factors contributing to the market's perception that college is too risky for many that this FAFSA delay, I think, I believe, will be a final no-go determinant for those last dozen or so students at many colleges. Forcing some of those who would not have otherwise done so to say, no más, no more, we can't continue. EY Parthenon, their story that I just saw last night, notes that IVM, and it stands for Institutional Viability Metric, I love it, Institutional Viability Metric, IVM finds heightened risk in higher education as stimulus funds expire.

This is a duh.

This kind of headline has been out there for a long time. And the authors do a good job. And the authors for EY Parthenon are Kasey Alundi, Haven Ladd, and Miriam Elbaz. And again, they do a good study.

They really do.

They note that 19% of colleges were at risk in 2019. It's now 24% in 2022. They note that bigger colleges were better off than smaller ones. Okay, easy to understand that. Selective ones were better off than non-selective. If you think about it, that makes sense. So to the good folks and the talented folks at EY Parthenon, nice work on macro, really nice work on the macro. But I don't see a list of the colleges. Could somebody share, maybe like Forbes does? They did a study, there were 1,597 colleges in the study. The 24% of those at risk would be 383 colleges across these 50 United States, maybe territories, at risk. Could we see them please? Or what about the 27%? The 27%, the 431 that EY Parthenon categorized as to monitor. I don't know what that means, but it's not always going to be positive. And it would be, would be even nice to see the 49%, the 782 that were stable. If I had children looking at college, that would be where I started my list. The 482, I'm sorry, the 782 that were stable. The macro analysis is nice. It's good for the resume for the 3 authors, but it does nothing. It does nothing for college leaders or faculty or staff, students and their families. And that's, that's, that's why the 2024 private and this week the public college viability apps are valuable. It gets at the microdata. It's a college-by-college, year-by-year comparison, 8-year comparison of data that colleges themselves submit to the National Center for Education Statistics and its IPEDS database. College viability, Gary Stocker will never say this college is going to close publicly.

It's not worth it, I'm not going to, because I'm not sure.

But as users, and whether you're a college leader, faculty, staff, student, family member, stakeholder, do the comparisons, make your own decisions. I provide the data through the College Viability series of apps, and it's easy to tell which ones are doing better and which ones are not. I'm going to do going concerns next week. I'm running just a smidge long on this episode, so I'll put that together for next week. I'm going to wrap up with Scott Carlson's story. This was in the Chronicle. Earlier this month. And the headline reads, why it can be so difficult to gauge a college's financial health. And first of all, Scott Carlson quoted me extensively in the story, and I'm grateful. I'm grateful for his recognition of my work at College Viability. We had chatted for about an hour earlier this year about college financial health and viability and my College Viability app. And he had some interesting content that I hadn't seen reported previously. One of which was Scott Carlson referenced enrollment trends, which is always important, not a year or 2-year piece of data, but a 5 or 8 or 10-year data piece. We use 8 years in the College Viability App. He also referenced his research showed that banks that he interviewed are looking at $150 million as a minimum endowment for bank loans. Now, I don't know how widespread that is, our minimum threshold for comparison purposes here at College Viability is $50 million. And then he quoted Robert Kanser, who's the managing director of the higher education and not-for-profit advisory group at Janney Montgomery Scott. And Mr. Kanser— I think I'm pronouncing it correctly— reported that enrollment, while important, can be a little misleading if you're not looking at the revenues that are generated from that enrollment. Now, a couple things on that.

Media always focus on enrollment, but enrollment does not pay the bills. It is mostly the tuition and fee revenue from enrollment that pays the bills. And I'll tell the Iowa Wesleyan story. They closed about this time last year in 2023. Their FTE enrollment, full-time equivalent enrollment, had actually grown about 300 students over the last 8 years. But the amount of discounts they had to offer students to enroll in Iowa Wesleyan had gone so, had gone up so much. The tuition discounts, the merit aid, the scholarships, whatever you want to call it, had gone from like $5 million to $13 million, something like that. It's in the app. And they couldn't stay open. They couldn't make payroll. They couldn't keep the lights on. So it's not the enrollment piece that matters. It's the trend. And that's why we look at 8-year trends. And then Larry Goldstein, Goldstein. He's with an organization called Campus Strategies. He uses 4 measures of an institution's composite financial index. And they're good. They're good indicators. And again, I'll have the link that you can look at for the story. And they make sense. And as far as I know, we can't get access to them for individual colleges. You can't automate them. And the 2024 College Viability Apps have really added a series of ratios that simulate— they're not identical— that simulate what Mr. Goldstein is using. But we use it with data that can be automated. I don't think you can automate financial statements. And I think that's what he's looking at. I could be wrong, but I don't think so. And remember, college viability does not predict closures.

Never, ever, ever.

In my own mind, I'll tell you which ones are high risk. But never publicly. And our app lets users easily and quickly compare 8 years of data, the changes in those 8 years of data for something like 2,500 private and public colleges. And what does this all mean? Sadly, sadly, very sadly, it means that Alexis Boyard, we talked about earlier from Notre Dame College's women's soccer team, She will not be the last college student to wish she and her family could have easily compared the financial health and enrollment and graduation outcomes of colleges they were considering. Until next Monday, I want to close with 3 points from my College Viability Manifesto, because I spend a lot of time Poking the Bear of Higher Education. And the first 3 parts of my College Viability Manifesto: College is good, really good, go if you can. The second one is graduation is better. And the third of the 10, and the last one I'll read today, is some colleges will not survive. Many will. This is Gary Stocker for College Viability. Hey, let's do this again next Monday. We'll talk then.