Colleges in Dire Financial Straits

[Aster]

Vista College, a for-profit in Texas, goes belly up:

https://www.kbtx.com/2021/08/10/vista-college-suspends-in-person-enrollment-furloughs-employees-across-texas/.

I'm surprised that a for-profit business entity attempted to operate in College Station.

[picard]

This Detroit Free Press special investigation article highlights the financial difficulties affecting Albion College, a Michigan-based LAC, as it struggles to navigate declining enrollment, worsening finances, and Covid-related campus closure:
https://www.freep.com/in-depth/news/education/2021/02/11/michigan-liberal-arts-college-tuition-discount/6310395002/

It's very sad to read the current conditions at Albion, since  a quarter century ago when I was attending another Midwest-based LAC that is part of the ACM/GLCA colleges association. Regarding Albion, we always heard about its stellar academic reputation and excellence pre-professional training in the sciences and in law. Guess it wasn't immune from the multiple challenges facing other LAC in the region over the past twenty years.

The article also includes this interesting data which compares and contrast the finances of other Michigan-based LAC, particularly centering on the "discount rate" each of them are getting to each new student which agreed to enroll in these institutions. It is obtained after you substract the gross/expected tuition value from cumulative number of new students enrolling minus the "discount" (scholarship, grants, loans, and other FA) given to these students.

What is intriguing is that Albion is not the only reputable LAC in Michigan with high amount of discount rate (more than 50 percent). The 2018 discount rate data from the article is attached below. The takeaway for me is that quite a few of these institutions - many are reputable LAC that used to be listed in rankings created by past LAC gurus like Edward Fiske and Loren Pope - are now in serious trouble absent of major turnaround in their enrollment within the next few years. Am I reading this correctly or is there more to these statistics. Perhaps Spork and other regular forum contributors that are more financially literate would've enlightened us on these data?

College name 2018 Gross Tuition 2018 Tuition Discount 2018 Net Tuition 2018 Discount Rate Adrian College $56,950,013 $34,035,492 $22,914,521 59.8% Albion College $66,927,532 $46,445,933 $20,481,599 69.4% Alma College $52,837,680 $31,700,947 $21,136,733 60.0% Aquinas College $44,845,178 $25,432,300 $19,412,878 56.7% Calvin University $120,104,000 $53,973,000 $66,131,000 44.9% Cornerstone University $39,357,530 $15,227,739 $24,129,791 38.7% Finlandia University $7,875,090 $2,330,592 $5,544,498 29.6% Hope College $97,112,000 $35,146,000 $61,996,000 36.2% Kalamazoo College $66,135,805 $41,061,720 $25,074,085 62.1% Madonna University $44,444,302 $9,291,784 $34,301,688 21.0% Olivet College $26,953,936 $14,954,797 $12,899,139 55.5% Rochester University $17,378,010 $5,725,523 $11,652,487 33.0% Sienna Heights University $41,449,482 $19,801,303 $21,648,179 47.8% Spring Arbor University $55,223,631 $18,345,016 $36,878,615 33.2% TOTAL $737,594,189 $353,472,146 $384,201,213 47.9%

[dismalist]

Yeah, OK. Let not the average discount blind one to the distribution of tuition charges.

Everybody pays different tuition, for everyone is willing to pay different tuition charges. To get the most cash, 'twould be best for a firm university to charge the most what each individual is willing to pay.

There's a posted price, of course. That's paid by admittees who are not academically gifted, but who are financially gifted. Down the list we go: If the college needs cash, the degree of dumbness matters less for price while the degree of financial health matters more for price. If management is happy with the incoming cash, it can put more weight on quality and less on financial health.

Do not lament discounts. They are at the heart of education finance

This is called price discrimination, and is ubiquitous when competition is not intense. Take your kids and your parents to the movies, and look at the price differences!

[marshwiggle]

As a non-american, I find this stuff about "discount rate" truly foreign. (Maybe it's not a specifically US thing, but I don't know.) It seems to me that heavily discounted tuition may make sense if an institution is thereby able to get really top-notch students academically. If not, then it's just desperation.

Which is to say, seeing discount rate and graduation rate together would be useful. If both are high, the place may be alright, but if the discount rate is high and the graduation rate is low, they're probably circling the drain. (Maybe a ratio of DR/GR would be worth looking at? Call it the "desperation index".)

[dismalist]

 

It seems to me that heavily discounted tuition may make sense if an institution is thereby able to get really top-notch students academically. If not, then it's just desperation.

Yes and no. The things are called "merit based aid" and "need based aid". The merit aid indeed goes to those with merit. But there is nothing wrong with discounting the price for those unwilling because unable to pay. Discounting allows more to attend college, especially the non-wealthy. That's good for the posters on this board, too.

[Whether more of attending college, wealthy or non-wealthy, is a good thing or not is a different question.]

[marshwiggle]

It seems to me that heavily discounted tuition may make sense if an institution is thereby able to get really top-notch students academically. If not, then it's just desperation.

Yes and no. The things are called "merit based aid" and "need based aid". The merit aid indeed goes to those with merit. But there is nothing wrong with discounting the price for those unwilling because unable to pay. Discounting allows more to attend college, especially the non-wealthy. That's good for the posters on this board, too.

I would agree, provided that the poor students are still academically able to succeed. Even reduced tuition, for a poor family, is money down the drain that they can't afford to lose if the student can't finish the degree.

[dismalist]

It seems to me that heavily discounted tuition may make sense if an institution is thereby able to get really top-notch students academically. If not, then it's just desperation.

Yes and no. The things are called "merit based aid" and "need based aid". The merit aid indeed goes to those with merit. But there is nothing wrong with discounting the price for those unwilling because unable to pay. Discounting allows more to attend college, especially the non-wealthy. That's good for the posters on this board, too.

I would agree, provided that the poor students are still academically able to succeed. Even reduced tuition, for a poor family, is money down the drain that they can't afford to lose if the student can't finish the degree.

Absolutely.

[spork]

This Detroit Free Press special investigation article highlights the financial difficulties affecting Albion College, a Michigan-based LAC, as it struggles to navigate declining enrollment, worsening finances, and Covid-related campus closure:
https://www.freep.com/in-depth/news/education/2021/02/11/michigan-liberal-arts-college-tuition-discount/6310395002/

[. . .]

The article's subhead is all one needs to know: "A drive to increase enrollment at Albion College was successful in bringing more students to campus. It didn't solve Albion's problems."

Albion College has run a deficit every year since the 2008 recession except for FY 2011. For some of those years the deficit has been as high as 10% of total expenses.

Albion can't compete on price. And it can't compete on reputation. Eventually it will burn through its endowment and become insolvent.

[Hibush]

A counterpoint!

From a small college in the Northeast, just the kind that seems most endangered:

We have financially responsible trustees and a president who have been excellent stewards of our institutional resources, and who are thinking creatively about guiding us successfully through the post-pandemic years

In a CHE article by an English professor at Assumption University in Worcester, MA regarding their ability to provide an attractive early-retirement package.

[polly_mer]

A counterpoint!

From a small college in the Northeast, just the kind that seems most endangered:

We have financially responsible trustees and a president who have been excellent stewards of our institutional resources, and who are thinking creatively about guiding us successfully through the post-pandemic years

In a CHE article by an English professor at Assumption University in Worcester, MA regarding their ability to provide an attractive early-retirement package.

This is not a positive article.  This article indicates short-sighted individual thinking that will very likely be tragic in a few years.

The institution might be benefiting by having people happily go non-tenure track temporarily who would otherwise be retrenched.  However, this is not a good decision for someone who is only early fifties in a field where getting another comparable job is very unlikely.  This wasn't enough money to truly retire for the next forty years; this was enough money to take a couple year sabbatical, but without a guaranteed job to which to return.

This offer looks a lot like preying on people with poor mathematical critical thinking skills.

[Wahoo Redux]

Polly's back!

I knew it was you when I saw the "poor mathematical and critical thinking skills!"

We've had some buyouts, and some surprising takers given exactly what you opined above (although one took the cash, we think, because hu saw the tenure vote coming next year and could read the writing on the wall).

Good to see you, Polly. 

[Hibush]

A counterpoint!

This offer looks a lot like preying on people with poor mathematical critical thinking skills.

Welcome back Polly, we missed you!

[mamselle]

Mills may rise again, as a subsidiary.  IHE reports.

Through our proposed alliance, we will sustain the granting of degrees on the Mills campus under the name Mills College at Northeastern University. We will also establish together the Mills Institute, a hub for research and advocacy that will advance women's leadership, equity, inclusion, and social justice."

The press release doesn't make clear why this is a good move for Northeastern. Does anyone have insight?

They did not explicitly say that Mills would resume admitting new students, a factor that is rather important to future vitality.

It might be attractive to offer students in Evanston the opportunity to do winter quarter at the Mills Institute. Especially if you can live in the dorms and not pay Bay Area rent.

You are confusing Northeastern with Northwestern. Northeastern is in Boston (well, the original main campus is), not Evanston. Northeastern already has multiple specialist campuses around the country and world, so my guess is they just saw an opportunity to add to their portfolio.

More on the NEU acquisition of an outrigger in Portland:

   https://boston.cbslocal.com/2021/08/31/bm-baked-beans-factory-new-institute-affiliated-with-northeastern-university/

(One wonders if they'll be able to get the taste of B&M Baked Beans right after the move, though....)

M.

[Hibush]

More on the NEU acquisition of an outrigger in Portland:

   https://boston.cbslocal.com/2021/08/31/bm-baked-beans-factory-new-institute-affiliated-with-northeastern-university/

(One wonders if they'll be able to get the taste of B&M Baked Beans right after the move, though....)

M.

If they put the Roux Institute in the bean factory, you know they'll cook up something good.

[TreadingLife]

Mills may rise again, as a subsidiary.  IHE reports.

Through our proposed alliance, we will sustain the granting of degrees on the Mills campus under the name Mills College at Northeastern University. We will also establish together the Mills Institute, a hub for research and advocacy that will advance women's leadership, equity, inclusion, and social justice."

The press release doesn't make clear why this is a good move for Northeastern. Does anyone have insight?

They did not explicitly say that Mills would resume admitting new students, a factor that is rather important to future vitality.

It might be attractive to offer students in Evanston the opportunity to do winter quarter at the Mills Institute. Especially if you can live in the dorms and not pay Bay Area rent.

You are confusing Northeastern with Northwestern. Northeastern is in Boston (well, the original main campus is), not Evanston. Northeastern already has multiple specialist campuses around the country and world, so my guess is they just saw an opportunity to add to their portfolio.

More on the NEU acquisition of an outrigger in Portland:

   https://boston.cbslocal.com/2021/08/31/bm-baked-beans-factory-new-institute-affiliated-with-northeastern-university/

(One wonders if they'll be able to get the taste of B&M Baked Beans right after the move, though....)

M.

Well, Northeastern won the Beanpot in 2020, so it seems like the stars have aligned on this merger.