Matt explains why colleges struggle with expense management: they overspend on ads like Facebook and Google without realizing it until comparing themselves to peers. Mixed incentives and agenda-driven budgets let costs spiral. Large mergers of 10-15 schools are now a strategy to cut costs and impose financial discipline.
So, Matt, we've done more than 130 shows, and, and we're in a position, I think, where we can make some informed generalizations. And one I, one I think comes from today's show is not every time, but, Matt, week in and week out, we see colleges with a chronic inability to manage expenses as a standalone and in conjunction with that, to match the revenue to the expenses in any form or fashion. Is that a fair summary from what you've seen?
Yeah, I mean, certainly we're looking from outside in. Of course, I can't say for sure that they're mismanaging, but there are some strong indications that that's the case. I mean, usually where there's smoke, there's fire, right? So, yeah, I think generally More so than in just probably private industry, you've got a mix of incentives at universities where the bottom line is maybe secondary to some like agenda that some folks have or whatever. So expenses can spin out of control really fast and it's not really obvious that it's a problem until you start doing the benchmarking, right? You're like, oh my gosh, we're spending that much on Facebook and Google Ads, right? That's not normal.
Yeah.
What are our peers doing? Oh, maybe we should try doing that. I mean, this is the kind of conversation we have with clients like every day.
And you heard me talk before that I, I, we're in the consolidation phase of higher education. We're in the kind of the closure phase now. But I think evidence like this and other colleges that we have seen, Matt, that haven't done a good job of managing their expenses, that lends itself to logically believe, in my mind anyway, that, that the merger phase is going to include large mergers, 10, 15 colleges in one, because you can look at these kind of silly expenses compared to others. And you just, you just made that point. You can't just look at your own data. You've got to look at the comparisons to others, other college, other, other funders, whatever source you want to term, are going to look at those expenses and say, hey, we can make this work by cutting the expenses.
Yeah, I actually, I don't know if this is too much information, but I know for sure there are schools out there that are run really well and they're like looking around at schools that they can just, you know, merge with, acquire, and just simply change the expense structure, right? And here you get all these assets, you take over a school that really didn't have structural problems, it just had budgeting problems, right? And voilà, you've like doubled the size of your school and assets. For really nothing, right? It's, it's a
