Gary Stocker analyzes nine private colleges that closed or face closure, comparing enrollment, endowment, graduation rates, and selectivity. Colleges at risk share patterns: declining enrollment, endowments under $50 million, graduation rates below 50 percent (4-year), and single-digit admissions yield.
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Hi, this is Gary Stocker. In this episode of This Week in College Viability, I'm going to be looking at 9 private colleges throughout the United States who have either indicated they will be closing or have recently closed. What you're going to be looking at is a PDF version of work I did inside the College Viability App. Now, this was the 2022 version. The 2023 version will be coming out any day now. And it took these 9 colleges, and you can see them over here on the left-hand side, and they're from across the country. You can see the states listed here, and it compared them across these 5 categories. 6-year changes, the endowment, 4- and 6-year graduation rates, percent admitted, and admissions yield. The logic behind this podcast, behind this video, is to identify the trends. But I'll tell you up front, there are no absolute trends. You can easily see in retrospect which colleges have had issues coming, because keep in mind that the College Viability App looks at data over the last 6 years, and the 2023 version will look at data over the last 8 years. So there are patterns that each college has, but they're not consistent for every single one. However, at the end of the day, it is readily apparent by comparing private colleges mostly that there are some who have trends that are concerning, and there are some that have trends that are positive and not concerning at all. About financial health or viability. Let's take a look at the data. So this is a 6-year changes screen, and what we're looking at here is the changes from the IPEDS data from 2015 to 2020. And you can see the 2 areas that I'm gonna focus on, the FTE, or full-time equivalent enrollment change. And really, of the 9, 7 had decreases. 2 did not, and that's the note that I'm making right here. Then I want to look at the endowment before I touch base on these other 4, and we can see that 1, 2, 3, 4, 5 of the 9 had a decrease in the endowment. Now, I look at a lot of college financial data, and while there are many with decreasing enrollments— I'm sorry, with decreasing endowments— there's not a large number. So to see 5 of these 9 Suggesting that each of these colleges used money from their endowment to keep the lights on is concerning and a pattern to look for when you're looking at other colleges. And even those that had no negative growth or decreases in the endowment— Ohio Valley University, which recently announced its closure, was essentially flat over 6 years. And again, essentially flat means they've not had the systems and processes in place to get funds, gifts from alumni, friends, and others. Let's take a look at the next screen and let's look at the endowment actual amount. And again, Mills College— and that's relatively famous from the merger activity they had— had a nice, subsizable endowment of a little less than $200 million. All other remainder endowments in the end of the fiscal year 2020 were less than $50 million, with the exception of Holy Names, again out in California, which was a little bit above that. The threshold that I use, and I think others use as well, is a minimum threshold of $50 million. No matter the size of the college, is something to look at. Again, we see 1, 2, 3, 4, 5, 6 of the 9 have endowments below that number. Let's take a look at graduation rates. Again, let's focus on the pattern, and again, 50% is the target I use for 4-year graduation rates. If you've watched, if you followed me previously, you know I call these coin toss colleges because that means a student going there has no better chance than 50/50 or less of graduating in 4 years. And you can see that that 50% threshold is only met by Mills. The others are below that, some considerably. You even have to wonder if the data is accurate for Lincoln College. They closed last year. And let's look at 6-year. And again, the threshold for 6-year targets is 70%. And really none of them make it, although Mills College was close. And so think about that. For every 100 students who started at Mills College, or any of these colleges, 6 years ago, only 65 out of those 100 graduated from Mills, only 26 from Marymount, only 50 from Casanova, only 30 from Ohio Valley. That's an indicator that's consistent about colleges that have closed or may close. But not universal. And then let's look at percent admitted. And again, we know from reading the literature that the lower the percent admitted, the more selective. And we can see these numbers range from a low 60 to a mid-90 kind of number. There's not much selectivity here. Reasonable speculation on my part is these colleges have accepted the parameters for which they require students to meet in able to drive more tuition revenue, thus limiting the selectivity and almost certainly impacting the low 4- and 6-year graduation rates that we saw a moment ago. And then here is the final indicator. And this is one that doesn't get much attention, but I wanna focus on this admissions yield. Again, it's a data point from the National Center for Education Statistics and its IPEDS database. I call it a popularity indicator. That's not universally the case. But let's look at this, and this is reflected as a percentage. And I'll just grab this very first example. Cabrini University in Pennsylvania announced its closure. In 2015, for every 100 students that Cabrini accepted, 22 showed up, paid tuition in some form or fashion. That really stayed flat over the 6 years. For better or for worse, it stayed flat. But look at these numbers for some of these other colleges. Casanova is at 9%. 9 out of 100 accepted actually showed up. Holy Name, 7 out of 100. If you look at the pattern for these, you'll notice that those colleges tend to, but not universally so, have decreasing admissions yield. Here's the argument that I make for that. If you watch the admissions yield, a popularity indicator, over the years, you can predict which colleges are more likely to have closure issues, or even more importantly, viability issues because the market is saying, "Hey, even though you accepted me, I'm choosing to go elsewhere." So I'll offer for your consideration, there are two basic audiences for this kind of information. The first, of course, is going to be parents and students. And let's kind of put it in the position of if you were a parent who sent your student to Casanova College in 2017, '18, '19, something like that, and you notice that the popularity was down, that the enrollment was down, that many of the other indicators we talked about in this video were down, would you not have wanted to know that? And more importantly, would that have impacted your decision about choosing Casanova College? The second basic audience is higher ed leaders, stakeholders in general. I don't think we can ever predict which colleges will close in advance. I think we can certainly look at the data and see which ones are higher risk, and that's an approach that I always take. So for those leaders looking to consolidate, looking to merge, maybe even looking to acquire, you can look at this data and see which colleges have the most to gain or the most to lose by considering any kind of consolidation offers you might have. When we start reading the data that we see out there now, it's clear in the last few months that these colleges that are closing— and I think I saw a story on Holy Names— they have reached out to other organizations offering themselves up for merger. And these colleges are looking at this kind of data and saying, no thanks. And thus the colleges are left with nothing else to do But close. I'll leave links below for other information associated with managing and watching the financial health and viability of private colleges. This is Gary Stocker with College Viability and This Week in College Viability.
