In this video, Gary Stocker—who has spent five years researching private college financial health and created the College Viability App—demonstrates how to compare the financial viability of five anonymized private colleges using data from the National Center for Education Statistics (NCES). He walks through key metrics: undergraduate enrollment (FTE) trends from 2015‑2020, tuition and fees revenue changes, enrollment size thresholds, endowment per student, six‑year graduation rates, and admissions yield. For each college he highlights strengths and risks, noting that colleges with enrollment under 1,000 students and declining enrollment or revenue are higher‑risk. College 1 boasts the highest endowment per student and strong graduation rates but suffers enrollment decline; College 2 shows tuition revenue growth despite enrollment loss; Colleges 3 and 4 exhibit multiple negative trends; College 5 demonstrates enrollment growth, strong tuition revenue, and high admissions yield despite a low endowment. Stocker summarizes the “highlights” and “lowlights,” offers his own recommendation (College 5 as the strongest choice for 2022), and encourages viewers to use the College Viability App to assess their own college lists, emphasizing that final decisions rest with families.
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Are you looking for information about the financial health of private colleges you are considering? Or maybe you're concerned they might close. Or maybe just struggle to provide a quality education? Hi, my name is Gary Stocker. For the past 5 years, I have been researching the financial health and viability of private colleges in the United States. In 2020, I created the College Viability App. In this video, I'm going to show you how to quickly and easily compare the financial health and viability of a set of 5 actual private colleges. It's important to note that the data I show is real and is from the data these colleges themselves submitted to the National Center for Education Statistics. However, I have hidden the names of the colleges. I am uncomfortable telling you which colleges are financially healthy and which are not. I think that decision is yours. I have created a tool and a resource you can use to make those determinations, but at the end of the day, it's your college decision, not mine. But it is important to recognize that along with majors and tuition costs and the campus and extracurricular activities, a first review of a college almost certainly must include their financial health. So let's get started. Which of these private colleges would you choose? We're going to do a college financial health and viability comparison And these are 5 different private colleges from 5 different states. And the data source is the National Center for Education Statistics. And the data app used is the 2022 College Viability App. And so what I've done is taken screenshots from the College Viability App and highlighted different data points, 4 or 5 basic ones that we're gonna compare. And you can see I have anonymized the 5 colleges, College 1, 2, 3, 4, 5. The actual data is hidden behind the screen right here. And again, the data comes from the National Center for Education Statistics, and the app used is the College Viability App. So let's take a quick look at two parameters here. The first is enrollment, and this is a reflection of undergrad enrollment. FTE stands for full-time equivalent. It's kind of an insider baseball kind of term. But we can look at the enrollment changes, and it's important to note the changes we're looking at are from the last reported data from 2015 to 2020. As I'm recording this in the late summer of 2022, the 2021 data will be released in early 2023. So there's always a lag time. That's a story for another day. But we can see 4 of these colleges— Colleges 1, 2, 3, and 4— have had decreased enrollment. This is over a 6-year period of time. That's always going to be a concern. We can see College 5 has done a good job increasing their enrollment by almost 2,000 students. In addition, we must remember that tuition and fees are a substantial part of the revenue stream that keep colleges running. It's what lets them keep the lights on, pay the bills, pay salaries, all those kind of things. And we can see that 3 of the 5 colleges had decreasing revenue from tuition and fees. College 1, about $6 million. College 2, about $6.5 million. Excuse me, College 2 had an increase of about $2.4 million. College 3, a decrease. College 4, decrease. College 5, a substantial increase along with an enrollment increase. They're doing quite well. Let's take a look at the next parameter, and enrollment. This is the actual enrollment for the 5 colleges. And you can see the data submitted by the colleges themselves from 2015 through 2020. And we can see that 3 of the 5 have enrollments under 1,000 students. If you read the higher education literature, it is those colleges with enrollment under 1,000 who are at the greatest risk for having financial health issues because they just don't have enough students to help pay the bills. So we can see that College 1, 3, and 4 are below 1,000, College 2 and 5 above that threshold. You can actually see the growth numbers that were reflected in the previous slide here. Let's next look at endowment. And again, to define terms, endowment is the total amount of funds generated by the college from gifts, donations, wills, and other forms of donations like that. And I changed this to not just the total endowment because the Harvards and the Yales and the Wash U's of the world have massive endowments. The smaller colleges just can't be expected to compete. But we can look at the endowment dollars per student, per FTE student, and we can see that College 1 by far has a superior endowment per FTE compared to the other 4. It is worthy to note that the change from 2015 to 2020 is substantially lower. That would be a cause for concern, but it's kind of beyond the scope of today's data. The other 4, their endowments are particularly weak, especially College 2 and 5. And if you've watched my videos before, you know I take a strong position on graduation rates. The threshold that I use, and many others do as well, although it's not universal, is after 6 years, a college should have graduated at least 70% of the students who started there. So the definition of that is if 100 students attended College One, in our example, 78 of them graduated within 6 years. Not bad, not bad at all. But look, in the same token, colleges 2 and 3, and the worst case is college 4, for every 100 students who started at that college 6 years ago, only half of them graduated. It's a coin toss college. They don't, an argument can be made they don't have the systems and processes in place to graduate their students. Let's take a look at the next field. And this is the admissions yield. And this is the final field that we're gonna look at before we look at summaries. An admission yield is kind of a reflection of popularity. Again, it's an insider baseball term, but admissions yield reflects the percentage of students who a college accepted who actually enrolled. So let's use the example of College 1. In 2015, for every 100 students College 1 accepted, 16 actually enrolled. 16 actually showed up on day one. That number has essentially plummeted in the last 6 years to only 10 out of 100. And so we can see that 3 of the colleges, 1, 2, and 4, have popularity numbers that are not quite competitive with colleges 3 and 5. And there are a lot of factors that go into popularity, to the admissions yield. But it's important to note that these slides are always comparisons. How does one college compare to the other. This isn't an absolute indicator. I would never encourage anyone to make admissions yield their final determination factor. But when you compare colleges across not just the parameters we're looking at today, but others available in a variety of versions of the College Viability App, patterns and trends start. So let's take a look at the highlights. College 1 has the highest endowment per student and the highest graduation rate. College 2, even though their enrollment has gone down over the last 6 years, they have been able to increase tuition and fees revenue. There are no highlights for Colleges 3 and 4. College 5 has been able to increase their enrollment, their tuition and fees revenue has increased substantially, over $37 million, and they are by far the best of the group in terms of popularity or admissions yield. A higher percentage of the students College 5 accepts show up at the door, pay tuition and fees, than the other 5 colleges. What are the lowlights? Colleges 1, 3, and 4 each has enrollment less than 1,000 students. That's just a high-risk factor in and of itself. We can see they've also had decreases in enrollment. So over the past 6 years reported, 2015 through 2020, their enrollment has decreased. Not a good pattern. In most cases, in all cases really, the tuition and fees revenue has also decreased. At some point, these colleges are gonna need to generate revenue either from tuition and fees or from gifts, and it's a tough road to hoe in the very competitive market that higher education is going through right now. College One has only a 10% admissions rate, so they have to accept a lot of students to fill their classes. College 2 has an endowment below the minimum. I didn't actually show the endowment, but it's below $50 million, as does College 3, and as does College 5. I just don't show that here. And you can see some of the other concerns I have for Colleges 2, 3, and 4. College 4 had the lowest 6-year graduation rate of 50%. You know, coin toss colleges just are ones that are risky because we go to college to graduate, not just to take classes, not just to pay tuition and fees, not just to go into debt. So the decision notes for College One: the decreasing enrollment is always, always a big concern. The strong endowment provides hope. They clearly have in place the systems and processes to gather gifts from alumni, the community, and others. And their really strong 6-year graduation rate is very encouraging. College 2, even though the enrollment has decreased, as I mentioned a moment ago, they have been able to grow tuition and fees revenue. College 3 and 4, in, in our comparison, just not good options. There are too many bad trends. It does not compare well to the other colleges in our small sample. And then College 5, enrollment growth, strong growth in tuition and fees, 30% admissions yield, are all good strong indicators. Their low endowment is noteworthy, but a secondary consideration. And their 6-year graduation rate is strong, showing they've got the systems and processes in place to graduate most of their students. Which college would I choose for my family in 2022? Those are all important qualifications. College One's strong endowment is interesting, but again, it's not enough to overcome enrollment. Enrollment keeps the lights on. Endowment can do that, but that's not the best way to run the business. And as you might imagine, College V shows a strong set of factors that suggest it will be the best choice in 2022. Its weak endowment is a concern, but that's for the long-term future. And again, I'll note this exercise uses data from actual private colleges. The names of the colleges have been hidden. The tool is designed to provide families and other college stakeholders with a simpler method to compare the financial health and viability of private colleges. Determinations on whether a college is financially healthy and/or viable are best determined by students and their families. The College Viability App is a good resource to make those comparisons. By the way, if you would like to see my financial comparison of private colleges you are considering, Leave the list of 3, maybe 4, 5, 6, 7 down below in the comments, and I will compare the list that you submit. Keep in mind, I'm not doing predictions. I'm not doing guesses. I just provide simple comparisons of the data that colleges themselves have submitted. You, your child, your family deserves a quality college education. I want to give you the best information possible to help you choose colleges that can provide that. You will have looked at the majors and the campus and the faculty and the online offerings, the amenities, and much more. Let's add a comparison of a college's financial health and viability to that search list.
