This Week In College Viability (TWICV) for October 14, 2024

It is This Week in College Viability news and commentary for October 14th. Well, it should have been for October 14th. It's really October 16th. Let me just, you know, tell you about taking technology on the road. It's kind of a problematic adventure. For the first time, I took College Viability on the road. I was at the American Association of University Administrators conference in Indianapolis the first couple days this week, and I recorded this on Monday, but the hotel bandwidth wasn't sufficient to get the MP3 file downloaded. So this should be my best podcast ever because I've already done a full dress rehearsal. Oh my. And I, I want to start off this week's podcast with a personal observation. Last Sunday I watched Some 40 to really 50,000 people run in the Chicago Marathon. It was a spectacle of humanity to see so many people invest so much into a challenging endeavor like running 26.2 miles. As I was watching those tens of thousands of souls, it was easy, because this is what I do, it was easy to make the connection to a higher education number. 40,000, and there were more runners than that, but 40,000 is about the same number of college students impacted by college closures over the last few years. Those colleges have closed and some 40,000 students have been impacted. And that number is almost certainly to grow in the next coming months. And countless times as my family traversed the marathon route in Chicago, jumping on trains and walking, and supporting a loved one, I saw so many times the excitement of people recognizing their loved ones. They were running and the screams of joy that came from their family members, loved ones of some sort or the other. And as I reflected on those encounters, I couldn't help but think about how many closed colleges, how many closed colleges are are taking away that same joyous scream from thousands of their students and families and other loved ones. So for those of you, and there are some, who write off the small percentage of college closures as not a big deal, no impact on the overall market, you're missing badly, you're missing the human point. These are thousands of hopes and dreams being shredded by colleges, shredded by colleges that should not be in the business of higher education because they don't have the resources to do so. So grab a seat at the Chicago Marathon next year, the Boston, New York, or whatever marathon you want. Watch some thousands or whatever the number is, thousands or more human beings pass you by as they engage in that challenge of challenges, just like college is. And College Viability exists to provide financial health and viability comparisons for about 3,000 public and private colleges. I would like to see every student graduate. From their college of choice. But like we saw with the marathoners, on a positive note, on Sunday, so many touching moments of joy. Too many will not be able to graduate from the college they started at. So talking about colleges in trouble, let's get at it this week. Let's start with layoffs and cutbacks. And the College of St. Rose files for bankruptcy. And this was last Thursday, and this is by H. Roe Schneider in the Times Union. I don't see a city reference on that. Uh, it was a long-awaited step and not a big surprise, but here's what was in part of the announcement: the college's filing in the U.S. Bankruptcy Court for the Northern District of New York lists assets for St. Rose, the College of St. Rose, at an estimated $100 million— I'm rounding up— and debts of about $56 million— I'm rounding up also. The college is almost broke, the note goes on. The college, the College of Saint Rose, is almost broke, and it's seeking court permission to take out a $10.8 million, almost $11 million loan to cover its operations and prepare for selling its properties. So it's got assets, somewhere in the vicinity of $40 million in excess assets, but no cash available to take care of business, to actually finish closing down the operation. It's a sad note. It's not an unexpected note. But again, it begs the question, how many more times am I gonna report stories like this for colleges who aren't doing the right thing? And when the dollars aren't there, as soon as they know that, it's time to get out. Drexel University in Pennsylvania lays out a plan for cuts in the face of $63 million in operating losses. And this was in the Philadelphia Inquirer on October 10th. I don't see a reporter's name on this. Drexel University, during a meeting with its employees Thursday, outlined plans to cut and freeze some salaries/benefits and implement a reduction in the workforce this November. As we often see, the story goes on, the university did not say how many people could lose their jobs, but it said it depends on the success of a voluntary retirement incentive program and how many vacant positions can be eliminated. Interesting that the decision on how many to lay off is dependent on others willing to get out. It's probably a logical approach, but it's a sad approach as well. On to St. Louis Public Radio and St. Louis University. The headline reads, St. Louis University faces budget deficit. This is not new news. Plans to cut $20 million in expenses. I talked to— I had this story a couple weeks ago, and academic and administrative divisions at Saint Louis University are expected to cut expenses by about 4% or to about $20 million. The new— the news on this is the deficit reported by the college, by the university. The deficit is largely due to a sharp drop in international student enrollment. Last fall, fall of '23, the university enrolled 1,400 new international graduate students. I assume most of those paid full freight, full freight, and most of them did, and he paid the full tuition of $36,000 or more. This year, the, the university expected 1,300 and only enrolled about 300, so 1,000 short. And they go on to this— the university goes on to blame the U.S. government for far fewer visas. Maybe, maybe not. Um, this source on this is David Heimberger, who's the St. Louis University vice president and CFO. Now remember, the number of 4% that I just talked about, it was 2% As late as early September of this year, not even 2 months ago, it was 2% cut. So I figured $10 million, which is not much more than couch money for that college, for that university. But again, the, the part that gets me the most— this is a strong college, this is a good college, it graduates lots and lots of high, high, high percentage of students, and it still has substantive, materially significant challenges. Now, of course, Saint Louis University isn't going anywhere. They will be around forever, but it's a strong college, and their college is much, much, much academically weaker than Saint Louis University, who are not upfront with their faculty, students, families, communities. At least give Saint Louis credit, they're upfront. Page 2 had an interesting call from a higher ed faculty member with a story about cancellations for a conference I think they were scheduled to attend on the West Coast. Attendees, so the story reported to me was, attendees were canceling because their colleges had cut or decreased their continuing education funds for the year. Okay, nobody's gonna fall over in shock from that story, but this is yet another indication, and maybe a minor one, that suggests that there is a scaling back across the board of public and private colleges across the country. Now, another source, different source, shared with me that faculty, this is interesting, that faculty at their school were working to enhance their own departments, working to enhance their own departments, almost certainly at the expense for the greater good of the college. I'll have more on that topic in a later broadcast sometime in the coming weeks. And months. Fitch Ratings has a headline, pressure mounts for U.S. colleges as students head back to school. Now this is kind of contrarian because I've talked about the last few weeks how many colleges since mid-August have announced exceptional enrollment. They're doing great things and everybody's going there because they have a great college. And I'm sure that's true in, in most cases, probably not all. Some are probably spinning it to the point just so they can delay closure. That's just educated speculation on my part. Fitch Ratings on October 11th out of Chicago, a modest uptick, okay, a modest uptick in this fall's enrollment will not be enough, Fitch says, will not be enough to stem intensifying pressure for many U.S. colleges heading into 2025 and likely beyond, according to Fitch Ratings analysts. A closer look, they report, at overall steady enrollment expectations for 2024-2025 reveals clear winners and losers. And I've talked about this before. The source on this is a senior director for Fitch, and I've reported from her data before. Her name is Emily Wadhvahani. She's head of Fitch's US public finance and higher education group. She says, for example, some flagship public institutions, selective private institutions, and HBCUs are achieving record enrollment numbers. And I've talked about this. Conversely, and this is kind of the no news is bad news, conversely, Ms. Wadhwahani shares, many smaller, less selective colleges continue to see their enrollment decline. Ms. Wadhwahani's sources are probably much better than mine. She's a little bit slow getting out the gate, but she's just confirming what I've offered for many, many weeks, if not many, many months now. And I don't think she even references the FAFSA debacle. And the other thing she nicely said is institutional discounting levels have ticked up. All right, it's good to see her documenting that. It's a likely scenario in either case. Discounting, Ms. Wadhwahani says, is at its steepest for every incoming freshman class, which then becomes a trailing reference point as those students head towards graduation. Now, this is what Matt Hendricks talks about all the time. One bad class, whatever the year is, 2024 or 2014, One bad class, either with enrollment or tuition discounts, merit aid scholarships, whatever you want to call it, lives on the books of a college for 4 years. One bad enrollment year is not— that doesn't exist. One bad enrollment year is 4 bad enrollment years for that class. And while most Fitch-rated colleges maintain stable outlooks, the downward outlook revisions reported by Fitch The downward outlook revisions have risen over the last several quarters. This could indicate, again according to Fitch, more downgrades are ahead, particularly for colleges unable to maintain positive operating performance. And again, when, when Matt Hendricks and I do the Tuesday, the College Financial Health Show, Matt's showing you the stuff Ms. Wadhwahani is doing at the macro, looking at the macro level. Matt and I look at the college-by-college level. And we're just showing you which ones. Ms. Wadhuhani and others are just saying big picture, it's going to happen. Matt and I tell you which ones are at greater risk just by showing you the data, just by showing you the comparisons. And again, this ties in with what I talked about at the conclusion of last week's podcast. Many colleges are reporting strong enrollment numbers. I don't doubt that. In most cases, many, many, many more are not. They are silent on enrollment, and we know why. They don't want to report bad news. They don't want to create a perception that their college is in trouble. And some won't be, some will be. Again, I remind listeners that enrollment does not pay the bills. It certainly helps. It is the net tuition revenue, though, from the enrollments that do so. Miss Wadruhani says tuition discounts are up. It will be interesting to see which of these colleges, since mid-August reporting exceptional finances, in the coming weeks and months either report cutbacks, layoffs, or even closures. Now, Wittenberg University, uh, sends fall 2024 enrollment data to its bondholders. Now, this had to be embarrassing for Wittenberg University. They have bonds, and as part of the requirements, because Wittenberg did not meet some of the covenants of that bond The bondholders said, hey, you gotta show us your enrollment numbers for 2024. They were down, they were down about 200 students, down about 200 students. And again, Matt Hendricks and I on the College Financial Health Show had a serious and substantial analysis of Wittenberg's financial situation. And you got to wonder what the bondholders will do when they see enrollment is not just down for this year, but it's been trending down, I think, for the last 4 or 5 years according to the document that Wittenberg itself sent to its bondholders. Page 3. Oh goodness, another tuition reset. Hang on while I wipe the sarcasm off of my mouth. Touting transparency, okay, Hartwick lowers tuition by 60%. And this came out of bestcolleges.com and Dr. Mark Drusdowski at Best Colleges. And they do some good stuff at Best Colleges. Here are the bullets. Hartwick College will reduce its tuition— now get these numbers— from roughly $56,000— yes, that's 5-6 thousand— to $22,000. Let me get my fingers and toes out. That is $34,000 reduction. And this begins in 2025. It's part of a rebranding strategy. The tuition reset aims to add transparency to college financing and save families money. Maybe Hartwick hopes to attract more families opting for public universities with this lower price. I don't know what that means. And of course, Hartwick joins a growing number of colleges lowering tuition costs. That's not true. They're lowering the list price. And I still, you know, Hartwick is going down to $22,000. What happens this year, next year, the year after, when a student wants to go to Hartwick and they say, well, I've got another offer for $19,000 in tuition, can you match that or beat that? And if Hartwick stays true to their transparency, they'll say, no, sorry, we can't do the $3,000. They're welcome, you know, colleges are welcome to do whatever they want. And even in this case, the story didn't say, is this $34,000 reduction for all students in all 4 years of their grade, their college years at Hartwick? I assume so. And without fingers and toes, it's a 60% reduction in the list price of tuition, uh, probably very similar to what the high tuition price and a high discount model was at, at Hartwick. But there, that, those details weren't in the stories. Antioch University and Landmark College announced a new partnership. All right, good for them. So I went into the financial statements, and this is what caught my attention. The financial statement for Antioch University comes from, or is listed as, the Coalition for the Common Good. The Coalition for the Common Good doing business as DBA Antioch University. Now, I've not heard of the Coalition for the Common Good. If somebody has, please feel free to drop me a note to my email address, gary@collegeviability.com. It just makes me question what's going on here, not necessarily for the worst, but it could be. When I read their mission statement, the quote from the story— I'm going to read it to you verbatim, no editorials— So the Coalition for the Common Good Doing Business at Antioch University and Landmark College, here's what they said together: "We have the opportunity to transform counseling and education for neurodivergent people by preparing knowledgeable and skilled professionals who value accessibility, equity, and inclusivity." End of quote. I have no idea what that means. 3 public Virginia universities have some viability risk. This comes from virginiabusiness.com and Beth Jojak, I believe. Jojak, um, on October 8th. Radford, VSU, and Mary Washington are not in danger of closing. The subheading reads— the heading reads— the title of the story reads 3 Virginia universities have some viability risks. But those three are not in danger of closing. Now, that's what I want to talk about for the story. But here's, here's what caught my attention, and this is essentially a meandering article citing negative enrollment trends. Of course, they're all across the country, and the responses of each of the colleges quoted, referenced. But it does show that at least in Virginia, at least for public colleges in Virginia, somebody is watching the college store. It does potentially suggest that the higher education market— maybe, cross your fingers, cross your legs— is moving to an era of improved accountability. And I'll have a story for you, I think, next week on a conversation I had in Indianapolis this week with the college leader about accountability. Page 4. This is from the James G. Martin Center for Academic Renewal, and I've used their stories on occasion. And F. Andrew Wolf wrote this story, released the story on October 9th. Universities are doing education badly, is the headline. By regurgitating high school curricula and ignoring the virtues, higher education is delivering a flawed product. Again, this is from the James G. Martin Center for Academic Renewal. From the story, suffice it to say, in the West today, and especially in the US. That's in the story. A type of schizophrenic malaise. Yes, indeed. Schizophrenic malaise has crept into colleges due primarily— this is a fascinating point— due primarily, Mr. Wolff says, due primarily to an ineffective K-12 system and overreliance on developmental college curricula and general course requirements, he says, that essentially reiterate or redo high school learning. He quotes some numbers. About half of U.S. adults, 51%, say the country's public K-12 system is generally going in the wrong direction. Okay, surveys do what surveys do. College residents, Mr. Wolff shares, college readiness for students has declined, and now only 1 in 5 who take the SAT test, 1 in 5, 21%, a little higher than 1 in 5, is ready to succeed in college, in core college introductory classes. Yet, he goes on, some college students are expected to move toward what secondary education experts call specialization. All right, that's inside higher education crap stuff, excuse me, by selecting a major course of study, whatever that may be. In the pursuit of any such degree, college undergraduates must also take a core curriculum that's been around for forever, which again, he makes the case, is comparable to a high school course, to a high school course of study. Consequently, Mr. Wolff makes the point, due to time constraints, students receive insufficient instruction in their specialization area, thereby creating a need, a felt need, to pursue further study at the graduate level just to be competent in their specialization. The United States, he says, has a daunting 39% college dropout rate. I thought it was a lot higher than that, but we used his number. Underpreparedness is surely to blame in large part. College undergraduates— this is important— college undergraduates spend time and money taking general education courses under the guise, general education courses under the guise that these will make their education and therefore them more well-rounded. He goes on, yet these courses offer only a superficial treatment of subjects that should have been mastered, should have been mastered in high school. Given the testing results we talked about, the 1 in 5, and the dismal college completion rates, the only thing that truly gets well-rounded— I think he has some sarcasm here— the only things that truly get well-rounded are the coffers, the university coffers, university financial coffers, into which student tuition money flows, amounting to thousands of dollars worth. Thousands, probably tens of thousands. Of dollars worth of wasted time and effort. And regular listeners will know I'm all over how bad the 4- and 6-year graduation rates are in this country. On occasion, I've referenced that a significant culpability lies, I believe, with the K-12 education system. But that topic is way, way beyond the scope of what I want to do at College Viability. But what we are seeing, I think, I believe, in the Martin Center story Is that concise telling of where this country is with higher education? A poor K-12 system, a really poor K-12 system overall, there are exceptions, a poor K-12 system followed by a higher education system whose main focus, whose main work is to drive incremental revenue. Nothing wrong with that. Drive incremental revenue by reteaching high school stuff I can make the case there's something wrong with that. It's evident to me, it's evident to me that the market somehow knows that the value of higher education for too many of its students is not much more than reteaching high school stuff. And I don't doubt for one millisecond that is part of the negative perception that the market has for higher education. I'm going to hold off on any wrap this week. I want to ponder for the next few days what I experienced at the first-ever higher education conference I went to with higher— with College Viability on the Road. And I will say, I always appreciate the opportunity to be in the presence of higher education professionals. It helps me focus on what matters in the bigger higher education picture and I'll have more about that in the coming weeks as well. Until then, thanks again for listening. I'm always grateful for your time and your support. Until then, this is Gary Stocker with College Viability. We'll do it again next Monday because I know I'll be in St. Louis. We'll talk then. Take care.