Colleges in Dire Financial Straits

[Hibush]

Post-closure profile of College of St. Joseph: https://www.insidehighered.com/news/2019/12/02/college-leaders-grapple-best-way-reopen-closed-campus.

I give them credit for stepping back and looking at what the local community needs that might be met by the infrastructure of the campus. They probably also have a small advantage in having what could be two independent facilities with different development trajectories. Each would be scaled to the smaller local needs.

The marketing language is too "aspirational" to hook me. Leading a telecommuting-based back-to-the-land movement from urban America to small-town Vermont is too tall an order for me to buy in. There is already far more supply than demand, some with much better finances and operational institutions as anchors.

One good quote about a pitfall that derives from the blind spots of the people who end up with residual responsibility: "When you recreate it, you recreate some of the same elements that caused it not to be successful in today's context."

[spork]

The Evergreen State College lost 40% of its enrollment over the last decade:

https://www.theolympian.com/news/local/education/article237591209.html.

[spork]

"the only way we're going to succeed is by putting other colleges out of business, because you have to take market share."

[dr_codex]

"the only way we're going to succeed is by putting other colleges out of business, because you have to take market share."

Disturbing.

[Hibush]

"the only way we're going to succeed is by putting other colleges out of business, because you have to take market share."

Disturbing.

With a declining market, this statement is the obvious conclusion from doing a little algebra. The person who said it was frustrated that his college's board didn't get it, that they were expecting secular growth.

Here are the stats from the article:

Public colleges have 6.4% excess capacity, growing at about half a percentage point a year.
Private colleges have 12.4% excess capacity, growing at about triple the rate of public colleges
The smaller half of private not-for-profit colleges, those with enrollments below 1,125, have overcapacity of 28% and growing rapidly.

There is no way to manage a private college with 20 or 30% empty seats and zero tuition.

[dr_codex]

"the only way we're going to succeed is by putting other colleges out of business, because you have to take market share."

Disturbing.

With a declining market, this statement is the obvious conclusion from doing a little algebra. The person who said it was frustrated that his college's board didn't get it, that they were expecting secular growth.

Here are the stats from the article:

Public colleges have 6.4% excess capacity, growing at about half a percentage point a year.
Private colleges have 12.4% excess capacity, growing at about triple the rate of public colleges
The smaller half of private not-for-profit colleges, those with enrollments below 1,125, have overcapacity of 28% and growing rapidly.

There is no way to manage a private college with 20 or 30% empty seats and zero tuition.

I read the article.

How on earth did you arrive at that last sentence? While I'll grant you that "zero tuition" would pose an existential threat to almost any institution (Cooper Union says that it will go back to no tuition in 2028), that was a pretty quick leap from actual data to fudge to hyperbole. That's not helping.

I'd suggest having a good long look at that quantity, "capacity".

[polly_mer]

There is no way to manage a private college with 20 or 30% empty seats and zero tuition.

I read the article.

How on earth did you arrive at that last sentence? While I'll grant you that "zero tuition" would pose an existential threat to almost any institution (Cooper Union says that it will go back to no tuition in 2028), that was a pretty quick leap from actual data to fudge to hyperbole. That's not helping.

I'd suggest having a good long look at that quantity, "capacity".

My bet is the last sentence ought to be "There is no way to manage a private college with 20 or 30% empty seats and zero net tuition revenue".

From the article:

Most Cs and Ds, a total of 675 private colleges, are so-called tuition-dependent schools—meaning they squeak by year-after-year, often losing money or eating into their dwindling endowments.Though colleges and the government provide little transparency into the financial health of schools, a significant number among our lower ranks are nearly insolvent.

Take the University of Bridgeport, a long-troubled school once controlled by Reverend Sun Myung Moon's Unification Church located on the shore of the Long Island Sound in Connecticut. The money-losing university has a full suite of academic offerings but specializes in preprofessional studies like nursing, dental hygiene, criminal justice and chiropractic studies.

The school's new president, Laura Skandera Trombley, worked wonders at Pitzer College in California from 2003 to 2015, but she may have met her match with Bridgeport. Nearly every financial ratio we track looks abysmal. University of Bridgeport ranks 895th on our list and is near the bottom of our class of D colleges. Its primary reserve ratio, for example, which measures how well a college's "expendable" assets could cover expenses without straining operations, was 0.28 according to the most recently released financial data. That translates to less than four months of liquidity, compared with say three years for Lehigh University, six years for Maine's Bowdoin College and 12 for Princeton.

Yeah, "capacity" is the key, but reducing capacity usually means firing faculty and closing buildings.  Administration and support staff don't scale as well with students.  Large institutions probably have deanlets who can be reduced with no observable effects, but that's not true at the lower end.  For example, for 600 students, Super Dinky had 3 full-time people in the registrar's office.  One retired and was not replaced as enrollment dropped to closer to 500 students.  After about a year, we had complete turnover in the registrar's office because 2 people with a couple student workers was not sufficient to carry the load and people were tired of working 80-hour weeks for the pay offered.  Three people working the financial aid office was about the minimum for even 500 students.  If you cut the admissions and fund-raising departments (places where "extra" capacity might exist in that those areas have the most people), then you've just undermined your ability to stay open through growth and donations.

Even firing faculty often has limits.  Having mostly one-to-three-person departments is not all that appealing for students who are taking their education seriously and want a variety of classes for a liberal arts model of education.  Nor does having tiny departments help for recruiting and retaining majors unless all the people in the department are very charismatic. 

The "capacity" problem is closely related to being able to teach a lot of classes that are the same as every other institution for no competitive advantage.  So, yeah, the seats exist in terms of what full-time faculty could be teaching, but students are voting with their feet for something else.

Popular pre-professional programs like nursing are hard to run on a shoestring because the break-even point for revenue is usually within a couple students of the max capacity.  Hiring more faculty to expand capacity is hard because they have many good options.  Usually, the battle is to keep enough faculty to be able to offer all the required classes to keep accreditation. 

Nursing is expensive to run; engineering is even more expensive to run and will have worse problems with attracting and retaining faculty to rural, isolated areas.  Many first-year students declare an engineering major and then end up completing in something else.  However, not having an engineering program at all means many of these small colleges will not be considered at all.  Likewise, a lack of computer science (very hard to get sufficient faculty in the rural areas) means missing out on students who are sure they want to major in CS or minor in CS along with something else that is job-focused. 

A good many prospective students are turned off by the liberal arts mantra, especially when it's clear that the institution is offering almost exclusively humanities classes along with psychology instead of the full range of human knowledge.  The students who are excited about the liberal arts have many good options and will not choose the school that simply hasn't closed yet.

[apl68]

I went to a school that is in the next size tier above polly's "Super Dinky College," and faces many of the same challenges.  My alma mater is at a C+, according to the Forbes rating system.  Could be much worse, needs to be better.  They still have more or less as many students as they did in my day in the late 1980s, but are now sitting on a much more built-up and expensive campus.  The debt they accumulated in building all those shiny buildings and swanky dorms surely isn't helping.  At least it doesn't appear to be crushing them. 

My mother, who still lives nearby after retiring from teaching there several years ago, has noted signs of retrenchment in things like more economical alumni and retiree events.  They haven't all but eliminated their traditional liberal arts like many have--their modern language department is actually still larger than it was back then--but they're sure pared them back.  A student would not be able to get the same liberal arts education there now that I got.

They're in a small town, in what most urbanites would consider an "isolated" region, though it's not as small and isolated as some.  Then again, there isn't a whole lot of competition in the region.  They also still have a viable "brand" in their association with a religious denomination that hasn't yet suffered a serious demographic decline.  They're almost certainly becoming far less selective.  During her last years there Mom noticed a significant decline in the quality of incoming students, though much of that was probably due to the general decline in college readiness in American students.  Judging from their current course offerings, they still offer some things you can't get just anywhere, and haven't been quite as bad to chase fads as some schools have been.

So I guess at this point Alma Mater could go either way.  It's not obviously doomed like so many little schools now seem to be, but it's going to have a real struggle to adapt.  What it adapts into is likely to be something very different from what it once was, and maybe not in a good way.

[apl68]

Question:  How did Vermont come to have so many colleges in the first place?  They're remarkably thick on the ground for such a small state with no major cities.

[mythbuster]

The Forbes article is fascinating. Just today Jacksonville University (FL) announced they will no longer field a football team. They are at the absolute bottom of the Forbes metric with a low D. I somehow doubt those two facts are a coincidence.

[apl68]

The Forbes article is fascinating. Just today Jacksonville University (FL) announced they will no longer field a football team. They are at the absolute bottom of the Forbes metric with a low D. I somehow doubt those two facts are a coincidence.

If I'm reading the news right, they've only had a football team since 1998.  That suggests that they haven't been at it long enough to have much alumni emotional investment in the football program.  I wonder whether desperate colleges shutting down their football programs will become something of a trend? 

[secundem_artem]

The Evergreen State College lost 40% of its enrollment over the last decade:

https://www.theolympian.com/news/local/education/article237591209.html.

No loss there.  This is what happens when a school believes its primary purpose is to serve as a device to bring about social justice, instead of focusing on teaching and scholarship.

Maybe they can take Oberlin with them on their way down the drain. 

[mamselle]

...when a school believes its primary purpose is to serve as a device to bring about social justice, instead of focusing on teaching and scholarship.....

Does that have to be a polarized either/or situation?

Wouldn't a good place do both?

M. (puzzled)

[Puget]

The Evergreen State College lost 40% of its enrollment over the last decade:

https://www.theolympian.com/news/local/education/article237591209.html.

No loss there.  This is what happens when a school believes its primary purpose is to serve as a device to bring about social justice, instead of focusing on teaching and scholarship.

Maybe they can take Oberlin with them on their way down the drain.

This is just uncalled for. I'm guessing you know very little about either of these institutions other than what is parodied in the right wing press.

Oberlin has had a social justice mission since it's founding in 1833, when it was the first to admit black students (and served as a stop on the underground railroad), and shortly thereafter, the first to be fully co-ed. Maybe you disapprove of that mission, but it is no less appropriate as part of the mission for a college then the religious missions I'm guessing you approve of at many colleges. It provides a very rigorous academic environment-- there is no trade-off here. And Oberlin grads do just fine, thank you very much. You will find many among your faculty colleagues in fact.

Evergreen is very alternative, and not personally my cup of tea, but it serves the needs of students who would not thrive in a traditional college environment-- not just the students you are no doubt picturing, but also e.g., lots of veterans, nontraditional age students, etc.

[secundem_artem]

The Evergreen State College lost 40% of its enrollment over the last decade:

https://www.theolympian.com/news/local/education/article237591209.html.

No loss there.  This is what happens when a school believes its primary purpose is to serve as a device to bring about social justice, instead of focusing on teaching and scholarship.

Maybe they can take Oberlin with them on their way down the drain.

This is just uncalled for. I'm guessing you know very little about either of these institutions other than what is parodied in the right wing press.

Oberlin has had a social justice mission since it's founding in 1833, when it was the first to admit black students (and served as a stop on the underground railroad), and shortly thereafter, the first to be fully co-ed. Maybe you disapprove of that mission, but it is no less appropriate as part of the mission for a college then the religious missions I'm guessing you approve of at many colleges. It provides a very rigorous academic environment-- there is no trade-off here. And Oberlin grads do just fine, thank you very much. You will find many among your faculty colleagues in fact.

Evergreen is very alternative, and not personally my cup of tea, but it serves the needs of students who would not thrive in a traditional college environment-- not just the students you are no doubt picturing, but also e.g., lots of veterans, nontraditional age students, etc.

Tell me about that right wing press thing again.  Did you mean this?

https://www.nytimes.com/2019/06/10/us/oberlin-bakery-lawsuit.html?action=click&module=Latest&pgtype=Homepage