This Week In College Viability (TWICV) for November 6, 2023 - BSC, Fitch ratings, too many comput...

It's November 6th, 2023. This Week in College Viability, and I'm Gary Stocker, your host and college quality assurance coach, providing a perspective on the financial health and viability of colleges in the United States and respectfully asking to be your college fiduciary. And here's the stories we're following this week. Even private colleges can get ratings from Fitch rating services, although you have to send them data. We'll talk about that. There are too many computer science majors. Oh no, we never saw that coming. Where is the college tuition pricing power headed? Birmingham Southern College in Alabama can't stay out of the news, and there are 11 colleges officially hitting the panic button by releasing the College Is Worth It campaign. We'll talk about that. What is an allied health degree? And finally, we're going to do Gary's College Press Release Critical Thinking mini-course. That and much more in our time together on This Week in College Viability. So Fitch affirms— Fitch is a rating service, they rate bonds and other financial products— Fitch affirms and withdraws College of St. Rose— this is in New York— their rating. Which wasn't that good to join to start off with. So apparently this Fitch Ratings is mad because College of the Saint Rose is playing hide and seek with their financial data. So Fitch says, all right, you're going to hide your data, we're going to loan— we're not going to rate your bonds any longer. And this is on some $48 million in 2021 revenue bonds. So we can only speculate why the College of Saint Rose leadership and its board of trustees are are not sharing their financial data with this bond rating service. It's almost certainly not good news that they're hiding. And I, as I always do, I looked at their data. It's not good. And as I always regularly like to tease, it's time, I think, to start to identify the person to turn off the lights at the College of Saint Rose in New York. And the next story is about there's too many computer science majors. The headline reads, "Universities can't accommodate all the computer science majors." This is from Johanna Alonso, Inside Higher Education. She reports that high interest in the field has led to overcrowded classes and other issues. Now some institutions are adding requirements to help force students out of the computer science major. So over the past degree— over the past decade, so many places have said let's add STEM degrees. And it's been in the media, and moms and dads and grandpas and grandmas and aunts and uncles are talking about this. And because these STEM degrees have gained so much popularity, in large part I think because— I know because they have created the perception that they lead to better job outcomes with higher pay, and they probably do in most cases. But it's the supply of IT, information technology, or computer science students, whatever you want to call them, and engineering and nurses and others. The supply has— of these students has increased because we have been told that that is what sharp students do. I mean, some maybe sometimes not so sharp students. So colleges across the country have overbuilt this. Now that's not what this story is about. This story is about the colleges that have been really successful and they're the stronger colleges. And the story in specific references the University of Michigan and colleges like that. It's got to be the smaller programs that suffer even with colleges overbuilding. These smaller colleges just can't compete with the different programming languages, changing hardware, and on and on it goes with, with both the hardware and software piece of technology. So So, the multitude of smaller colleges that have said, "We're going to save ourselves by starting STEM programs," it's not going to work in almost all cases. And like I have shared many times, most of these small colleges generating STEM programs in any combination will only generate absolute startup costs, precious, precious few will generate any new materially significant net revenue. Trust me, I'm right on this. We'll only see that come to fruition. And even if the students at the University of Michigans in the world decide they want to step toward, move toward another college, I think there's still going to be a quality issue. The, the demand for STEM faculty is strong, and the supply of quality STEM faculty willing to take the compensation for teaching is not that strong. And in my experience, sometimes you get hand-me-down computer science folks teaching these courses. Not good. So Rick Seltzer, our friend at the Chronicle, in his daily briefing of November 2nd, talks about pricing power has evaporated. Now he's talking about pricing power of colleges, tuition pricing power of colleges, and he says the bigger picture— colleges, Rick Seltzer shares, are in many cases struggling to enroll students who are price sensitive, debt averse, and fewer in number than past cohorts were. If tuition hikes aren't an option, Seltzer writes, belt tightening will continue to faculty and staff members at many institutions. Now, here's of course the follow-up that I will share, and that is when colleges even think about in their dreams changing their business models, protests follow, protests and votes of no confidence. And it's reasonable to speculate, and I am, it's reasonable to speculate this will contribute to what I see as a developing perception that smaller is not always, and in many cases rarely, better in terms of a college education. Cutbacks mean fewer course sections, fewer faculty to teach those courses, and even the ability to maintain a safe, physically attractive campus, and much, much more. And then Seltzer also had a quick story, a different topic. He says he shows writes about Butler University plans a 2-year college. And he says a private institution in Indianapolis plans to open its 2-year college in the fall of 2025 with degrees in business and allied health. And it would be open to Pell-eligible and undocumented students. And it gives them the chance to kind of have an integrated route to a bachelor's degree. Well, let's go back and let's just focus on allied health. Allied health, some people think nursing is included, some don't, doesn't matter, but they also include disciplines like physical therapy, pharmacy, medical laboratory, radiology, occupational therapy, and if I missed one, I apologize. The challenge with allied health is not teaching the didactic, the course content, the science content. The challenge, and I think I've shared this before, is finding places for students to actually practice those skills. With so many colleges thinking that STEM, and in this case healthcare careers, are their, another form of their salvation, The precious few training slots inside of hospitals and radiology departments and pharmacies and laboratories is not strong. There aren't enough slots to train these students. So I'm always concerned when I see somebody adding a new allied health discipline. I is one. I am an allied health professional in the medical laboratory for 40-plus years now. I've seen this firsthand. I work at it on a regular basis with another healthcare organization here in St. Louis. So what's going on? Private colleges— in this case, there's a couple, I guess— but Butler University is stepping on the market for public that has traditionally been for public 2-year colleges. And if this becomes increasingly common, I have to wonder about its impact on all of higher education. And community colleges, community colleges have started offering bachelor's degrees for a while now. So now we have 4-year privates offering a direct integrated route to an associate's degree. I see this continuing. In no way am I smart enough to guess in what form or fashion this is gonna shake out, but we're gonna have a lot of confusion in the marketplace as students try and figure out where they can get a bachelor's degree, where they can get an associate's degree, the best route to go. Those— stay tuned, we'll follow that in the coming weeks, months, and years, of course. And Birmingham Southern College, boy, they are joining the good folks in Wisconsin in terms of getting in the news all the time. So the headline reads, and this is from Lisa Crane at WVTM NBC in, I guess, Birmingham, uh, Birmingham Southern College president shares in quotes new potential sources of funding, end quote, after loan rejected. So, and again, we always go to the data here at College Viability. And when I did that over the weekend, the last posted audited financial statement for Birmingham Southern College was in— it was in 2020. And my source is the Federal Audit Clearinghouse. You can go there and look for the financial statements of any type of a private nonprofit organization. And back in 2019 and '20, their net cash from operations over those two years was down $10 million. Now, I'd like to tell you what it was for 2020 and 2021 and 2021 and '22, but they haven't posted those yet. And you could look at the thousands of private colleges in the country, and, and maybe a handful or two haven't posted their financials through 2022. So when I see that, my alarm bells just ring big time. If they're not even posting, bad though they may be, their audited financial statements, that's certainly not a good thing. And BSC Birmingham Southern College President Daniel B. Coleman, in a letter to students and families, shared that the Board of Trustees is holding weekly meetings to explore funding options. Geesh, I guess a couple of questions. Has this, has this been going on since 2019 when they first started having issues and they still haven't identified funding options? And if, if it hasn't been going on since 2019, why are they just now— why are they just now getting this Board of Trustee weekly meeting going? The financial writing has been on the wall for 4, 5, 6 years. And they're just— if that's the case, I don't know the exact start, the actual start date of these college savings, College Saving Board of Trustees meetings, but the financial writing has been on the wall for a long time. And then let's look at something else that BSC President Coleman wrote, and I quote, as we move forward, we are encouraged, and I want you to be too, he says. I know this is a challenging time But let's stay focused and remember, and remember that the only viable information will come from me. And this is the college president saying, trust me. And if you followed any of my podcasts, any of my postings, any of my writings, college presidents are paid to protect the fiduciary. They are the fiduciary, and justifiably so, of the college. He's looking out for the college's best interests. I'm here to help look out for your best interest. And if this president says the only reliable information will come from me, how many times has a college says we're fine, we're fine, we're fine, and the next day we're closed? This is at least, at least a double geesh for me. Now, the history, just very quickly, The Alabama legislature earlier this year approved a $30 million bill. It didn't have Birmingham Southern College's name on it, but it was effectively for them. But after the bill was passed, the Alabama State Treasurer Young Boozer says no. And of course, that's when the word slinging started. And it came out like this: the president of Birmingham Southern says Treasurer Boozer acted arbitrarily to deny the loan. Maybe, maybe not. Boozer, the treasurer, responded saying that the president was wrong. Watch those words flying through the air. He went on to call— Boozer went on to call the college a terrible credit risk, and it is, comparing it to junk bonds, and they probably are. So because I like to provide customer service— I'm sorry, consumer service information— I'm going to provide a potential new job posting at Birmingham Southern College and the posting could read, "Lighting engineer needed to turn off the last lights. Start date is soon." And this one, let's go to Illinois, and the headline reads, "Illinois public universities see continued upward trend in freshman enrollment." Now, when you look at as many of these stories and as many of these headlines as I do, the alarms just blare because this is an exercise in arbitrary and capricious and vagueness. And this comes from Kate Stevens at CI Proud— I presume that's centraillinoproud.com. And one of the many things I do at College Viability is to take you through the data manipulation and reporting coming out of higher education and the news media. And this press release that Kate Stevens wrote about is from the Illinois Board of Higher Education. Now it's just a single-page document, and there's 11 or 12 bullet points. And the first couple says undergrad enrollment in all public universities in the state of Illinois was up 0.3%. I hope so. As I've said before, this is coming out of a pandemic. I surely hope it's up a little bit. New freshman enrollment was up 1.5%, and then there's a bunch of ethnic enrollment data that showed ups and downs, mostly up, I think, as I recall. It's line 8 and then line 9 in this press release that I want to focus on. Line 8 in this press release document from the Illinois Board of Higher Education notes that graduate enrollment was down 2.5%. All right, 8 bullet points down, we'll take it. It was the 9th bullet point that really shows the level of honest, though manipulative, public relations and even reporting that Kate Stevens did. 9, 11, that's right, 9 bullet points down. The bullet point reads, "Overall, fall enrollment at Illinois public universities decreased—" yes, that's decreased— "by 0.6% from the previous fall." You got it here. The colleges are not dishonest by any stretch, but they are manipulating the data. And I'm not sure it's wrong for them to do that. I'm not sure I agree, but they can do whatever they want. That's why I'm here. To say, guys, I see what you're doing. And let's go to Higher— Inside Higher Education. And this is actually almost a year old, from December of last year. And Liam Knox, who we have reported on his stories before, and the headline reads, College Is Worth It. And it's by— it's from the National Association of System Heads, and this includes 11 public higher education systems. And I'll leave the website for you to take a look at on your own in the, in this, in the podcast notes, show notes that I always do. And it's not an issue that college is worth it. It absolutely is worth it. And you can check out our College Viability Manifesto where we reinforce college is really, really, really worth it. But there are important qualifications, and it's certainly not for everyone. And for colleges to try and sell it to those who are not ready, who are not capable, or not naturally interested is not good. It's not good for the individuals and not good for society. And of course, when you read between the lines, it's the college debt that's the big issue associated with trying to sell college to those not interested, not capable. And, and I guess the second bullet point is some colleges are worth it, no question. There are dozens, probably hundreds of colleges, maybe even a little bit more than that, that are worth it. But there are also something along the same numbers, hundreds, that are not worth it. And it's easy to tell because they have bad graduation rates, and you've heard me talk about that before. Too many colleges can't graduate even half of their students in 4 years. Those are our coin toss colleges, and we can easily see in the data that report— that we report in the College Viability Apps. The financially unhealthy are very easy to identify, and for a lot of reasons, they are almost certainly not worth it, especially compared to those in a much stronger position. And let's wrap this up with graduation is worth it. Graduation in 4 years or 5 years or 2 years, whatever it is, is worth it. But attending college classes but not graduating— attending college classes but not graduating is not worth it. And then finally, my mini-course. I haven't done this before, and I don't know how often I'm going to do this, but this is Gary's College Press Release 'Critical Thinking Mini Course.' Colleges are offering mini courses, so am I. And so let me just take a couple of examples. And this is a headline. I'm making up the headlines to make a point. 'Anywhere University Posts Enrollment Increase.' Anywhere University— name your college— posts enrollment increase. Well, first of all, it's probably a true statement, but it's the details that are not forthcoming, that are not forthright. Because is the enrollment increase over 1 year? That's not a big deal. Is it over 2 years or 3 years? Still not a real big deal, because what we do with the College Viability Apps is we look at 8 years. So really, you want to look at a 5 to 10 year trend, then you can tell me that the increase is materially significant, is useful. Don't just say the enrollment increases. That's a nice headline, but again, that's why I'm here to point out, guys, it doesn't mean that they're doing well. It means they selectively grab some data points to try and share with the public they're doing well. And again, there are some colleges doing quite well. It's not a very big number, but there are some doing quite well. And then the second headline, trends looking good for anywhere you— now, I don't know about you, But I, when I took my statistics course way back in the day, the minimum number of data points to be statistically significant was about 20. Now, I'm not going to propose to look at 20 years of data trends. That's just too long for what we're talking about. But this is a long-term projection based on short-term data, a year or 2 or 3. 2 data points does not a trend make. It makes a straight line for sure. And even 3 data points doth not also make a trend. You need, again, back to that 5 to 10 years' data, 5 to 10 years' worth of data. Don't let colleges use headlines to convince you they're doing well. We have to look behind the data, and that's why I encourage you, and the link will be in the show notes, to grab your copy of the 2023 College Viability App. And there are versions for parents and students for faculty and staff and a version for executives along all sorts of college routes as well. And a couple inside baseball or inside higher education notes: colleges can manipulate this. And we saw this, I think, at Webster University here in St. Louis when they were talking about enrollment increase. There's two basic kinds that I follow, and one is total enrollment and the other something called FTE. And FTE stands for full-time equivalent. Total enrollment— here's the Gary Stocker definition— if you're one student and you're taking 15 credits in a semester, and I'm a student taking 3 credits in a semester, we're counted the same. That's 2 students. And so that you can get a bias on that, because if you have a higher percentage of part-time students, your numbers for total enrollment look better than they really are. So FTE enrollment is calculated by taking the total number of credit hours in a given term, semesters for the most part, and dividing that by the enrollment numbers. And so now we get an equivalent number. So you can't really bias it with using the FTE. The app, the College Viability app, uses just the FTE. I would never use the total enrollment. And then again, I'm going to beat this until the cows come home, the importance of graduation rates versus enrollment numbers. Why do we so often tout enrollment numbers and so regularly ignore graduation rates. And I know folks will say graduation rates aren't the best indicator. I don't believe that. They can make a reasonable argument, and I'll say, like I've always said, it's the comparisons that matter. If you're looking at two colleges and one has a 60% four-year graduation rate and the other has a 40%, don't tell me that the 60% doesn't do things better. It does do things better than the 40%. And don't tell me that that college that only graduates 4 out of every 10 undergraduate students in 4 years is as good as the college that graduates 60. And that's it for this week. I'm— I do want to give a couple heads up. I am starting to work on the specifications and the layout for the 2024 version of the College Viability App. If you have any ideas or suggestions or even concerns, send them to me, gary@collegeviability— that's one word— collegeviability.com. I'm also looking for a Microsoft Power BI— that's a software tool I use to create the app— I'm looking for a Microsoft Power BI resource to help build out the 2024 version of the app. I've done it the last few years, but I'd like to be able to add a little bit more functionality, and I don't know that I have the capacity or time to do that. So contact me at the same email address, gary collegeviability.com if you're interested or can refer me. And I'm already lining up next week's— next week's This Week in College Viability podcast. If you have leads on stories, send them to me, gary@collegeviability.com. Next week we'll talk more. See you then.