TUTORIAL: 2023 Parent's College Viability App

Hi, this is Gary Stocker. There will be many tears this month of May. Almost all of them will be tears of joy. The proud parents, along with other family members and friends, will watch their students walk across stages throughout the country to receive their high school and college diplomas. There will also be tears of sadness at colleges across the nation. Anxiety across even more because private colleges continue to close across the United States. And while some students from closing colleges will get to receive their diplomas, many, many more are scrambling to continue their college education somewhere else after their current colleges announced they were closing. So we have to ask the question: what if these students who must find other college options after the first one they chose closed, what if they had known about their college's financial challenges in advance? As we move beyond the Class of 2023 graduation events, there's a new question to ask: how many students and their families chose colleges to start this fall and were unaware that those colleges will not have the resources, financial and otherwise, to provide a quality college education. How many of those colleges chosen with great excitement in the last few weeks around kitchen tables around the country will become colleges that don't survive? This video is a tutorial for the students and parents of the college class of 2028. They will start their college journey during the fall of 2024, and we've just released a special version of our College Viability app. It uses just 5 simple customizable comparison reports for more than 1,300 private colleges across the country. This tutorial will show you how to compare the financial health and viability of private colleges and how to use the 5 reports with data from the National Center for Education Statistics. You will learn key indicators of both stronger and weaker private colleges. Make it your first stop in creating your private college list. Don't invest time and resources going to colleges who have comparatively poor financial health and might even close while your college— while your student is attending. In the description below, I'll have a link to the Parents College Viability App of 2023, the risk analysis version. It'll be the tool you can use to make sure that initial college list includes just those colleges that compare favorably in terms of financial health and even viability. So let's take a look at the 2023 Parents College Viability App, the risk analysis version. You're looking at the home screen. Let me just show you the layout of the screen. And of course, all 50 states over on the left-hand side. All 1,300 colleges listed individually here. I'll show you how to find those. And I've added types, so colleges that have closed or closing. The super elite colleges are the top 25 in terms of endowment. The elite colleges are the next 25, 26 through 50 in terms of endowment. And then there are regional, which are most private colleges. There are religious private colleges, and there are specialty colleges, ones in technology or nursing, allied health, music, art, those kind of things. Then we have the 5 basic reports that you're going to use to determine which of the private colleges you may be considering compare favorably in terms of both financial health and viability. And I'll also show you the 2 drill-down pages for individual colleges. So let's go ahead, and I'm going to go ahead and grab Iowa. That's a high-risk state. So I'm going to click on the Iowa section. I'm going to just choose Regional to limit the number of colleges that we see. If we want to choose colleges, a select set of colleges in Iowa, we can click and then Ctrl-click on Select Set of Colleges. Let me just grab a couple here. So those, by clicking on Ctrl-click, those colleges will show up, and you'll see we're going to be looking at 6 private colleges in Iowa. And we'll simply go down and look at the 5 reports you can compare. And I would offer some analysis on what to look for in financially healthy or financially unhealthy private colleges. So let's click on FTE enrollment, and FTE stands for full-time equivalent. It's the best, most common denominator to use in terms of comparing enrollment. And we can see those are— these are our 6 colleges. We can sort them alphabetically if we want, or reverse alphabetically. We can sort them by year. But let's go over here to the 2021, the most recent year. I'm going to click on that heading and we're going to support— we're going to sort those by the, the largest enrollment down to the smallest. And you can see that Grandview has largest by a little bit. Interestingly, both DORT and Buena Vista have the same number. I haven't seen that before. And now let's click on the 8-year change. So from 2014 to 2021, these are the changes in full-time enrollment from these 6 private colleges in Iowa. So as we click on that, we can see that Dort has had some growth, Allen College has had a little bit of growth, and that 4 of the 6 colleges have had decreasing enrollment over the last 8 years. This is the first indicator you want to look at. I'm going to click on the 8-year change again, and you can see these 4 had decreasing enrollment, and I've actually even given some color indicators on the right-hand side. So red is not good by comparison, yellow is kind of in the middle, In this case, there's no green dots to show good enrollment trends. If you have a college that has lost enrollment, especially significant enrollment— Buena Vista, Clark, and Grandview— over an 8-year period, that's reason to be concerned. If you're looking at that, if it's really interesting to you, ask your enrollment rep from that college, why has your enrollment gone down for the last 8 years? In some cases, it has consistently gone down year after year. I can't see any examples here, but we can see at Buena Vista it's down, down, down, down, down, down, up just a smidge, and up a little bit more. But for the most part, for 6 out of 8 years, enrollment has gone down each and every year. That's a concerning indicator. I'm going to go back to the home page. I'm going to look at the next comparison report. This time we're going to look at graduation rates. Now you hear this talked a lot about in news reports but you rarely see colleges listed individually by comparison. And what we're looking at now is for the last 8 years, the 4-year graduation rate is for undergrads, not for graduate students. And again, let's go to the last year, and I'm going to click on the 2021 heading. And we can see that in the 4-year graduation rate for DORT and Cornell and even Buena Vista is not bad. Looks like I've picked a pretty decent set of colleges for the 4-year enrollment. I use 50%, um, as a graduation rate threshold. Any college that does not have a 50% or more graduation rate after 4 years, I call it a coin toss college for obvious reasons. So in this case, if you're looking at these 5 colleges and graduation was important, you can see that Grandview has bounced all over the place, but they're around 39%, around 40%. So for every 100 students who started in Grandview in 2014, only 39 graduated from Grandview. Now I'm not going to go back into this, but in most cases you're going to see this 21— this 20-year, excuse me, this 2021 4-year graduation rate. You're typically going to see more colleges below 50% than above 50%, and I may show that at the end. And then you can see the trend that's going down here. Let's go back home and let's go to the next report. And this is kind of an inside baseball. I'm going to click on admissions yield, and you can see I highlighted that kind of as a popularity— I call it a popularity indicator. Now this one catches my attention because Allen College, for whatever reason, for most of these 8 years isn't even reporting their admissions yield. Now there can be a couple things going on here. They don't know how, they messed it up, they did the data wrong, or they've chosen not to, not to post it in spite of regulations requiring they do post that to the National Center for Education Statistics. But let's look at the 5 that did. And again, let me sort this by, sort of by 2021, even though Allen's a little out of whack here. And so we can see that the admission— I'm sorry, the admissions yield for these are really not bad overall. Door to 38, I consider anything around 20% or less to be concerning. But more importantly, let's look at the trend. And we can see 5 of the 6 have a decreasing admissions yield popularity indicators over that 8-year period. And let's go back and explain what I mean by popularity indicator. The admissions yield represents the percentage of students who actually showed up, enrolled, paid tuition to a college that accepted them. So we can look at Doherty University, and for every 100 students who DORT accepted, 38 accepted their offer and showed up at DORT. But look at Clark, look at Cornell, even look at Grandview. Their admissions yield is much, much lower, and I can make the case logically, I think, that these are least or less popular colleges for the students that those colleges accepted. If you see that number around 20% or less, be concerned. There will be many who tell you that they want their admissions yield to be low Yeah, they do, but those are the elite, the super elite, who really want to demonstrate to the world that they are very selective. If somebody in a college like Cornell College says they want their admissions yield to be 13% or a low number, don't believe them. It's just not true. They need those admissions to pay the bills. Let's go back again for the fourth report, and this one's going to be on tuition and fees. Slightly inside baseball, but this is a revenue that colleges collect from you and I, from their students. In tuition fees. It is the predominant source of revenue for almost all private colleges across the country. So let's go ahead and click on tuition and fees revenue. And again, we're looking at trends. We're looking at trends for these 6 colleges. This time I'm going to go to the 8-year change. I'm going to select that so we can see some kind of order here. And again, we can see that Allen, for their other shortcomings in places we've seen before, has been able to raise their tuition fee revenue about $3.5 million. It's still a pretty low number at $12 million, but to their credit, they've raised it from the $8.6 million in 2014. And the fifth report looks at the endowment value. So let's go ahead and click on that. And the endowment value represents the gifts that a college has collected over the years from alumni, friends, family members, students, stakeholders from across the spectrum. And it's an indication of their ability to raise those gifts. So let's take a look at the 2021 values, and it's already been sorted. And the threshold that I use, and many others use a similar number, is a minimum of $50 million in an endowment as indicative of a college having the historical and short-term ability to collect funds from all those folks I talked about. If you don't have— if college doesn't have that $50 million in an endowment, it doesn't have the buffer it needs for difficult times like we're in right now, and it may not have the resources it needs to borrow against that money or other ways to use those funds. So what we're looking at here is 3 of the 6 colleges are effectively at our $50 million threshold or above. Doherty is right at it. I'm guessing it's about $50 million in 2023. And the other 2, Cornell and Buena Vista, doing quite well in terms of the minimum But if we look at Clark and Grandview and Allen, it just suggests that they don't have the systems and processes in place to raise the funds needed to support the growth and ongoing development for the college. It's an indicator you can use if a college, private college you're looking at, doesn't have an endowment of $50 million or more. Ask them why. Ask them why their competitors may have a higher endowment than theirs. But it really is suggestive they haven't been able to gather those resources. And I think it reflects an inability to maintain financial strength and even viability in the coming years. And then finally, I want to show you the individual college report. So we've selected these 6 colleges in Iowa, and I've got 2 single college snapshot, snapshot reports. And to do that, we're going to go ahead and select one of these colleges. Let me just go to FTE enrollment. And I will grab Cornell College. I'm going to right-click on that, and I'm going to say select Drill Through, and I'm going to drill through to a single college snapshot. So this is a single college snapshot for Cornell University, Cornell College, I think it is, for Cornell College in Iowa. And what I've done here is provided just all the data about Cornell College in Iowa in one screen. And then I have provided some, some conditional formatting to suggest when areas that they're doing well. We can see that in the financials for, for a tuition fee change and endowment value. And we can see areas of concern. Admissions yield, not that great, not awful. 4-year graduation rate above 63%, that's, that's really not bad at all. And the 6-year graduation rate is 64%, that's not much of a gap. I use 7 years— I'm sorry, I use 70%. As a threshold for the 6-year graduation rate, but a chance to look at all the numbers on a given screen. So I'm going to click on the back arrow. I'm going to go back out to that same screen. Let's grab something different. Let's grab Buena Vista. I'm going to right-click. I'm going to drill through, but this time I'm going to drill through the 8-year changes snapshot for just Buena Vista College. So again, what we see is, is the changes over 8 years. The college will pop up here, Buena Vista in Iowa. And we can see the absolute value changes. So admissions yield, that popularity indicator, is down. The fall enrollment is down 400 students. We can see the core expenses are down $6 million, so the college is trying to get their expenses under control. And as we look in this case at the one next to it, the revenue is down about $6 million, so they're clearly trying to balance those two. But those are concerns. Yes, they're trying to keep their expenses in line with the revenues, But if the revenues are going down, and what I see in most cases with colleges is it's not necessarily the expenses, they're just falling behind on collecting revenue, it's a reason to be concerned. It's a reason to consider whether that college really belongs on your search list or not. And you can see some other indicators as well. And then to make that to a standard comparison, I converted some changes. So their net price for tuition is up about 6%. Their fall enrollment that we saw was down 400 students, that's 20%. Percent admitted, that's another field that we use from different reports, is down a little bit, not a big deal. But that's how you can compare a single college using the College Viability App, the parent's version of the College Viability App, and the risk analysis version. So what does this all mean? And I think it's important first to share there are many, many financially healthy colleges that will continue to do well, private and public both. The challenge you face as you start developing your college list is really starting to realize that there have been closures of private colleges, and there will continue to be more private college closures. Here's why. There are too many colleges and too many college seats, if you will, and with that imbalance of seats and students available to, to sit in those seats, to pay tuition and fees cost to sit in those seats. Colleges are discounting tuition. That's good for you. But when they discount tuition, they don't have the revenue to continue. And I know from the research that I do, from the experiences I have across the industry, that there will continue to be colleges that close. Your challenge is to create a list of colleges that are financially healthy and viable when you first start putting that list together. So if your student is going to start college in the fall of 2024 and you're just starting the process now, throughout mid to late 2023 and through the first half mostly of 2024, you want to make sure that your list focuses initially on financial health, and then you start to look at majors and faculty and campus and tuition prices and all those kind of things. It doesn't bode well to choose a college early on in the process whose financials are modest at best, and they may not be financially healthy enough to even be viable to make that one of the colleges on your list. Because let's think back to those colleges who just in the last few weekends have done their— have hosted their final graduation event. And think of all those students in those colleges who are freshmen, sophomores, juniors, maybe even incoming freshmen, and the, the emotional and financial challenges and trauma they face in trying to find another college. The stories are too frequent, they are sad, and they don't need to continue for those that look at the financial health and viability of private colleges. My name is Gary Stocker. We'll talk next time.