Colleges in Dire Financial Straits

[Hibush]

Update on St. Augustine's:
Saint Augustine's University's $7 million loan comes with 26% interest, risk of loss of university property

Other points of interest:

• Most of the campus was put up as collateral
• Most of the loan is going to overdue payroll taxes and other money owed to US DoEd
• The school has dropped from 1,108 students in '22-'23 to 200 students this year.

I can't see how this ends in any way other than the venture capital firm acquiring the campus.

That was not a loan, it was a down payment.

In contrast Wells College, which closed in May, is for sale: https://www.loopnet.com/Listing/170-Main-St-Aurora-NY/33719036/
No price.
They claim "centrally located", but not central in the same sense as St. Augustine. That will reduce VC interest.

[lightning]

Apparently things are dire in Utah even when they aren't: https://www.insidehighered.com/news/admissions/traditional-age/2024/11/08/utah-colleges-face-budget-cuts-despite-record-enrollment

They want to get in on the demographic cliff budget cutting action, now postponed to 2032, since it didn't materialize for them this academic year, as they had counted on ten years ago.

[spork]

Averett University. Deficits of $6.3 million and $5.3 million for FYs 2022 and 2023, respectively. Bachelor's degree programs in art, chemistry, math, languages, and religion have been eliminated.

Story from July about unsupervised administrators looting the endowment: https://cardinalnews.org/2024/07/29/as-summer-furlough-days-wind-down-at-averett-questions-remain-about-the-financial-damage-discovered-there/.

[apl68]

Averett University. Deficits of $6.3 million and $5.3 million for FYs 2022 and 2023, respectively. Bachelor's degree programs in art, chemistry, math, languages, and religion have been eliminated.

Story from July about unsupervised administrators looting the endowment: https://cardinalnews.org/2024/07/29/as-summer-furlough-days-wind-down-at-averett-questions-remain-about-the-financial-damage-discovered-there/.

Well...they say that they don't think any actual embezzlement occurred.  So perhaps it was simple incompetence of some kind, or misbegotten attempts to hide a bad situation while trying to find ways to paper over the cracks.  That's an old, old story for financially stressed institutions and businesses of all sorts.

That's an alarming deficit for a college of that size, though.  Given that it's a church-affiliated school, the reported elimination of a religion major smacks of desperation.  It doesn't take many years of bad finances and panicky decisions to put a small college like that into real trouble.

[Hibush]

Averett University. Deficits of $6.3 million and $5.3 million for FYs 2022 and 2023, respectively. Bachelor's degree programs in art, chemistry, math, languages, and religion have been eliminated.

Story from July about unsupervised administrators looting the endowment: https://cardinalnews.org/2024/07/29/as-summer-furlough-days-wind-down-at-averett-questions-remain-about-the-financial-damage-discovered-there/.

In the current social climate, if you are an administrator seeing that your school will be going down the tubes no matter what you do, shouldn't you help yourself to a chunk of the endowment before you go?

[Hibush]

Things are looking dire in UK:

The Guardian
England's universities face financial turmoil with nearly three in four expected to be in the red next year, according to gloomy forecasts from the higher education regulator.

The Office for Students (OfS) said the sector would have to take "bold and transformative action" to compensate for a £3.4bn drop in income forecast for 2025-26, with universities needing to consider mergers or cost sharing.

The government's decision to raise tuition fees for domestic undergraduates by £285 to £9,535 next yearwould add £371m while higher national insurance payments would subtract £430m.

[apl68]

Things are looking dire in UK:

The Guardian
England's universities face financial turmoil with nearly three in four expected to be in the red next year, according to gloomy forecasts from the higher education regulator.

The Office for Students (OfS) said the sector would have to take "bold and transformative action" to compensate for a £3.4bn drop in income forecast for 2025-26, with universities needing to consider mergers or cost sharing.

The government's decision to raise tuition fees for domestic undergraduates by £285 to £9,535 next yearwould add £371m while higher national insurance payments would subtract £430m.

What's the reason for the deficits?  Do they have falling enrollment due to a national "demographic cliff" effect?  The article mentions a projected 16% drop in overseas student enrollment over last year.  That would have a disproportionate effect if many UK institutions have become as heavily dependent on high-paying foreign students as many North American schools have.  But what's causing the sudden overseas enrollment drop?  Brexit was years ago at this point.

[Hibush]

What's the reason for the deficits?  Do they have falling enrollment due to a national "demographic cliff" effect?  The article mentions a projected 16% drop in overseas student enrollment over last year.  That would have a disproportionate effect if many UK institutions have become as heavily dependent on high-paying foreign students as many North American schools have.  But what's causing the sudden overseas enrollment drop?  Brexit was years ago at this point.

Reduced support from the government is a major cause of the deficits. Health care costs are up.

Rich get richer phenomenon, plus fantasy forecasting by those in trouble: 
Top Schools e.g. Russell Group predicted level enrollment and had a significant 10% increase.
Small and medium schools (half of all UK undergrad students) predicted a 5-12% increase but saw a 2-5% decrease.

Overseas enrollment was down 20% from the top country (India) and 40% from #3 Nigeria and #5 Bangladesh. China (#2) was steady.