TWICV for Aug 28 2024 with Ben Unglesbee from Higher Ed Dive

Hi, it's Gary Stalker. Welcome back to a special episode of This Week in College Viability, where my guest today is Ben Unglesby. And Ben is a senior reporter for Higher Ed Dive. And Ben, welcome. Thanks for making time to join me.

Yeah, thanks so much for having me, Gary. Happy to be here.

You are a busy man. I, I worry that you have calluses and blisters on your fingers, Ben, from all the stories that you type about higher education. And with Ben, with all the research and reporting that you do, just give us your unique sense of the stability, really, of private colleges as we, as we just now get started with the current academic year.

Yeah, well, right off the bat, Gary, I'm going to hedge a little bit because, you know, I started in this beat in April, so I don't have a sort of a deep frame of reference for how this year compares to past years. For most of my career, I've been a business reporter, although my very first job coming out of J-school was I was the university reporter covering University of Kansas and for the Lawrence Daily Paper. So I'm kind of back on the higher ed beat after a hiatus. But yeah, it's tough out there, as I'm sure you know well. I mean, everyone is, especially in the private nonprofit world, everyone is trying to fight over a declining, you know, declining student base. And then you throw the FAFSA debacle into there, which I think debacle is just the technical, become the technical word.

It's become an official word, I think, a FAFSA debacle.

They might have, they probably even use that word in internally at the end department. It's pretty hard to deny. But I mean, given all that, folks could be in even worse shape more broadly. But I know everyone is sort of struggling and very carefully trying to manage their costs, manage their retention. We've seen some pretty tough college closures and a whole lot of layoffs and restructuring actions. So it could be worse. Like it always could be worse. Yeah, it's tough. Yeah, it's, it's been a tough year. Yeah.

And then you've got a, I know, a reporting background in retail as well. It's kind of for the listeners, compare and contrast what you saw when you're reporting on retail and what you're seeing now in higher education?

Yeah, I know it's interesting because I draw on that reporting a lot. I mean, so I spent, gosh, 5 years probably with our Retail Dive publication. It's, you know, sort of a sister publication under the same company. And retail has been through a lot of difficulties. Over the past 6, 7, well, almost, you know, almost a decade now. Yeah, they— people called it a bit overdramatically the retail apocalypse. And I covered a lot. I covered many, many bankruptcies. It's, you know, and I think about it a lot. You know, one of the big differences in retail is you do not see the sort of overnight shutdowns very often, partly because I think, you know, retail companies have more of an option to go through Chapter 11 and try to do a sort of structured process. Whereas, you know, in the for-profit college world, and now we're seeing it more, maybe a little more in the nonprofit, we're seeing some of those overnight closures. But You know, it is very different. One of the biggest differences I see is just the way it's just sort of the emotional landscape. I mean, people do get sad when a chain store that they grew up with closes and the employees, you know, can feel sort of, you know, let down. You do see some of that emotion in retail, but boy, in college, I mean, these are multi-generational projects that, that some of them are— some of these colleges that are closing now are 100, 150 years old. They played a formative role in the lives of the people who went there. And they have— they are— I mean, every, every retail brand in the world would kill to have the kind of customer loyalty that colleges do. And they just can't because a college does— is supposed to serve something a little bit higher. Than, you know, a store or a store chain. So I mean, it really is just tough on a community when you see something close, but it is also, you know, there's a lot of similar issues happening. You know, retail for years, one of its, I mean, one of its struggles has been pricing, you know, and you'd see it in the apparel and the department store world. Everyone is in this sort of discounting war because they're trying to move inventory. In college, you see it a little bit. You see the same, I mean, it's not exactly the same, but it's kind of similar discounting on tuition prices. And that's creating a lot of revenue pressure. You know, they're discounting tuition to try and keep their enrollment figures stable. But at the same time, they're losing revenue and no one can really do anything about it because competition is so tough. Yeah, man.

And the poster child for that was Iowa Wesleyan. And this was about, it was last spring, spring of 2023. They had actually grown their enrollment 300 students, but they closed because they had discounted tuition so much. They didn't have enough revenue to pay the bills and keep the lights on. Yeah. You talk about the emotional piece and that's a good point that I hadn't thought of. And to tease you for a second, Ben, If you want to write even more stories, you can find all sorts of people willing to share. Here's what damage my college closure did to my career, my family, my income, all that kind of stuff. Because I see it all the time. College closes and the next day the story is about students mostly, and sometimes faculty will talk about that and the trauma that they go through. But I want to go next to the virtual elephant in the room. And we talked about that at the opening of the show, and that's this FAFSA debacle. And this, the standard line so far this year is about one private not-for-profit college per week has closed. It's not quite one a week. It's slowed down over the summer. And, and in a lot of the writing and media that I do, I'm, I'm, I'm doing an estimate of two or more starting this October because those Title IV funds will start coming into colleges late September, early October. And that's when colleges will realize they don't have enough to make it. When you're When you're talking to colleges about whatever stories you're working on, Ben, does the FAFSA debacle play a rationalizing role in their excuse for financials, or is it a big deal?

You know, it's a really good question. And I ask this to go back to retail for a minute. So, you know, I was covering retail and retail bankruptcy in 2020, pandemic hits. Every chain store in the country closes its doors. By that summer, I mean, the Chapter 11 dockets are pretty full now. And every single retailer that filed for bankruptcy mentioned the pandemic, which is not surprising at all. Yeah, but then you look at the ranks of who filed and it's all companies that have been on our watch lists for, for years. So the issue with financial aid, it's like on the one hand, it's the last thing anyone needed who was sort of on the brink. And I think it's probably more like, you know, one analyst I was talking with kind of said it might be like the straw that broke the camel's back. If you are, if you are financially strong, if you have resources, if you're resilient, you'll be able to absorb it better. But if you're, if you're kind of on the margins, it could be the thing that, that kind of knocks you out. And, you know, I've been talking with consultants since the summer who are saying like, we're hearing from people, you know, we are hearing from colleges that this is going to kill them. We haven't seen a ton of it yet. We've seen a few closures or restructurings mention it. I was expecting maybe a little more by now, but maybe we'll see a delay. But it's something we're watching really closely.

And one thing—

It's the last thing small colleges needed right now.

For sure. And here's a question that I'm going to be spontaneous on this one, Ben. What happens if those closure rates increase? And we're looking at a catastrophe of closures. Nobody's really thinking about what happens on the other side of that. And again, educated speculation, 100 colleges closed between now and next May graduation. What impact does that have on higher education? It's not meant for, you know, a question for today's podcast, but it's one I think not very many, if any, people are talking about. And yet it's realistic. It may not be likely, Yeah, it's still realistic.

I mean, it would be, it would be a shock. And I mean, a lot of people talk about overcapacity, but, and certainly it's playing a role in everyone's struggles here. To lose 100 colleges in a short period of time and to lose them suddenly, I think would just do— I think it would do psychological damage to everyone, including college, other college presidents. I mean, you want, even for those that are struggling and have to, you want to have, you want to give everyone enough time. You want everyone to have enough time to downsize if they need to downsize, to merge or have the opportunity to try to merge. And having time is critical there. And that's something I hear again and again and again. You don't, when you're under financial duress, when you're already in a distressed situation, is not the time to go looking for a merger partner. It's too late then. The time to find a merger or some kind of partnership is years before that. So however higher ed is going to deal with the capacity issue, we really want to see it in an orderly way and in a way that preserves as many institutions and as many legacies and as many, you know, as many student careers and whatever as possible. And people need time to innovate, they need time to change, they need time to partner with others. If there is just this hit mass, you know, this mass death of college, it'll be good for the remainders in some ways, but I think it would be bad. It would be tough for the sector overall. And you don't want it to be indiscriminate. 'Cause man, we've lost some good, important colleges this year that were really, really important to higher ed and really important to their communities.

And one of those was University of the Arts. And let's talk about that one for a second. University of the Arts, if there was a big news story this spring, it was UArts because of their short notice closure. And that's really what I wanna ask you about, Ben. So I have noticed just this year, since the start of the year, anecdotally an increase in the short notice closures. Wells was one of those.

Yeah.

UArts was one of those. I don't know if Goddard was or not.

It was a shock to people. I did some pretty deep reporting on that one and they were taking students for the next semester up until basically they announced their closure. It shocked faculty. Yeah, it was another surprise. I mean, they didn't close as fast as you few hearts, but it was, it was, it was, no one saw it coming.

And what's disconcerting about that, and you know the work I do with the College Viability app, is I can tell you right now which colleges are at greatest risk. And I, you know, I will never publicly say these are going to close, but I know which ones are likely to close.

Yeah.

Why am I one of the few that can say these set of colleges, you know, on our College Financial Health show yesterday with Matt Hendricks, we had 3 colleges from Ohio. I'll try the names. One was Kenyon, one was Defiance, and the other was Wittenberg. And Wittenberg has been in the news recently. 2 of those 3, I don't know if they make it.

Yeah.

Uh, Kenyon. Kenyon is very strong. That gives away the answer. Kenyon is very strong because we like to role model positively, uh, positive financial colleges. Is the short notice closure, man? Um, Ben, the short notice closure Could that do even more damage if the public recognizes that the college they pick may close on Monday? Yeah.

I mean, again, I mean, those sudden closures are, I mean, they leave a bitter taste in the mouth for everyone. I mean, I was just in Philly last week talking to people about University of the Arts. And I mean, they're still trying to figure out what happened. I mean, it's— I mean, first of all, no one knows. No one knows what happened. People feel very betrayed because they're like, we— I mean, people, there is a lot of passion for that institution still. It's not like it had become totally irrelevant. It was an important piece of the Philly arts environment. I mean, Philly is a good— it's a strong arts town. University of the Arts played an important role in that. It was in the heart of the city. It was on the Avenue of the Arts. Working artists taught there. It produced artists that gave back to the city. One of the things that I heard again and again and again is like, well, if we had known this was coming, someone could have helped. The city, people with the city said they could have helped. People at the state government said they would have liked to have tried to help. We've We've seen some, it doesn't happen all the time. We do see some colleges come back from the brink. We saw that, we kind of saw that with Northland in Wisconsin this year. Did the big fundraising push. They didn't quite hit their target, but—

They weren't even close.

They weren't, no, they didn't. That's true. I mean, they're like 10% of the way there, but it was that and doing an exigency restructuring seemed to help. But so yeah, when it happens overnight, I mean, students, students probably bear the brunt, they get burned. But faculty, I mean, faculty are left without jobs. I mean, I talked with people at Goddard College who had been there for decades, and they're not going to get severance. Because they weren't, you know, some people had their status changed from full-time to part-time in preceding years. And for whatever reason, they're not going to get much or any severance. And they're at the end of their careers trying to figure out how they're going to make an income. I mean, it is brutal. So that is the worst kind of closure and any way that it can be avoided. But yeah, And I know that accreditors are trying to, or at least some accreditors are trying to figure out, get better at predicting it because, you know, you just need to know if it happens overnight, it's just devastating. You, we got to get, we got to get faster at predicting it from the outside. And we really need as much transparency from leadership as it—

Well, Ben, have, have those accrediting agencies call me. I'll tell them.

Yeah.

That's, I'll tell them in about 5, I can bring it up right now. We can look at all, we get all the colleges that are going to be, are going to be in tough shape. But I'm going to change the tone of, of the questions a little bit. And, you know, decades ago when I went to college, and I assume when you went to college as well, the culture for that search has always been on the college, the campus, the amenities. The majors, the minors, the tuition fees and that kind of stuff. And from your reporting, do you sense that we might be reaching another tipping point where students and their families, maybe the first thing they start to look at, especially for private spend, is financial health before they look at anything else?

I think it's, I mean, I think it's very possible. In fact, I just, Like a couple of weeks ago, I was talking with someone I'm close with and their son plays soccer and might go play for a school and they're thinking probably a private school somewhere. When I told them what I've been covering lately, they're like, could you maybe help? Like, look at some of these schools.

I'm like, sure.

I mean, I can take a look at their enrollment financials and give you some kind of idea. So even people who don't think about this every day, look at this every day, it's very much on their minds. Okay. Interesting. And it's, I mean, it's going to make it all the more difficult for the schools that are struggling. I mean, you do have to be concerned. I mean, that there could, it could, in distress situations, a lot of times you see sort of death spirals. So I mean, these are colleges that are already struggling with enrollment. Well, if people start taking a sharper look at financials and decide not to go to schools based on what they look like, it can make things even worse. But if you're a student, you have to protect yourself. Or if you're a parent, you have to protect your student and whatever. So I think it would be totally rational for students to take a close look at finances to the extent that they can.

Yeah. And again, that's one of the things that the College Viability App does. I've got a student and family version just for simple comparisons. But let's, again, kind of a different spin here, spin. So this is the time of year when colleges spin their enrollments. They've either got really strong enrollment, they make that pronouncement. I get Google or it's just rolling out as you and I speak, even with colleges saying enrollment is good. And I've always said that this time of year, no news is bad news. If your college is having bad enrollment, you're not telling anybody about that. But the spin question, I'm guessing as a reporter that you have to fight your way through a lot of spin. Has that increased much in the few months you've been doing this in higher education?

Yeah, no, it's a really interesting question. Well, and like I said, I mean, my very first job and that was 10 years ago was covering a major, major university. And yeah, I mean, it's especially the larger universities have very sort of sophisticated communications operations, but also thinking about it as a business coming out as a— in the intervening time I've been covering business. I will say, compared to private businesses, corporations, we actually get a lot more transparency, I think, than we do in the private sector or the world of corporations. It's been kind of refreshing how even at the sort of top levels, you do there are a lot of just sort of public-minded people out there. Now, we need more transparency for all the reasons that we've just been talking about. You know, we need a lot more transparency. And, you know, what I find that in the, at the president level, especially at the, of those bigger, especially at a bigger public university, where the role is, is educational, it's operational, and it's political, because you have to deal with your state legislatures and funding. One of the most frustrating things as a reporter is listening to a president, college president trying to speak to every single stakeholder at once, and end up saying nothing at all. But, you know, it's a firehose of information in the higher ed world compared to what I've been doing for the past, you know, 9, 9, 10 years in between my stints as a higher ed reporter. And if you're not getting information from leadership, which I've been surprised at how much we have been getting from college leadership and their media teams, faculty will talk to you, students will talk to you. There's a lot of people who care about the institution and want everyone to know about it. So I actually encounter a lot of information, but we need more. We, it's still not enough. We need more. And we do need less spin and more just like real talk. I mean, I think this time now more than ever is probably the time for real talk.

And let's do one last question and let's make August 28th our anniversary date. And let's get together for fictional examples. Let's get together again on August 28th, 2025. Ben, what's going to be different? About higher education next year?

That's a tough, that's a tough question. Why? I hope the financial aid forms are working. Well, I mean, yeah, there you go. Number one, let's hope that's, that's not what we're talking about a year from now. I mean, I think we'll, I think we'll be short some colleges. I'm not going to venture a number. Ask me in like 5 years and maybe I'll be able to— I'll be a little more confident and trying to be forward-looking. But I think the conversation could still be the same. I don't think we're expecting any enrollments to start surging anytime soon. I mean, we are headed into this demographic shift, which we should have known. I mean, we've known about for 18 years. I would assume like how many babies were born 18 years ago and will be going to college? So, but I don't think we're expecting enrollments to start magically surging. It also depends on the outcome of the election. And that, that could have, that could have an impact on, on a lot of things from, from, you know, international student numbers down through accreditation and every other aspect of higher ed. But hopefully the FAFSA thing is settled. We're going to lose some colleges. There's still going to be a lot of, probably a lot more restructurings and program closures and mergers. I think, I think it looks a lot like this year, honestly. And the next few years could, and hopefully not too much worse. Hopefully, you know, colleges need time to figure things out, to innovate, to merge, to to experiment, or to wind down gracefully, if that's their only sort of path. I hope we don't have that 100 colleges closed that you warned about. Yeah, it might not be out of the realm of possibilities. But let's hope everything happens. Everything that's going to happen, let's hope it's a little more orderly. And, um, yeah, good point.

Yeah, good point.

We'll see.

Well, my, my guest today has been Ben Unglesby, who's the senior— a senior reporter for Higher Ed Dive. And Ben, thanks for your time. Thanks for your perspective. Thanks for your guidance on where this market is headed. I'm grateful.

Gary, thank you so much for, for having me.

And we'll have the regular Monday episode of This Week in College Viability next Monday. We'll look forward to talking with all of you then. Thanks for listening. This is Gary Stocker with College Viability.