Subscribe
Share
Share
Embed
Mary McGrath, a rising college senior, asks the tough questions about colleges to Dr. Gary Stocker. Dr. Stocker has researched the financial health and viability of every public and private college in the U.S. His College Viability app is used by students and families across the country to compare the financial health and viability of colleges.
If you want more guidance on whether your college is financially strong, we will post this podcast every Wednesday. Mary will have developed questions from the perspective of students and parents to ask Dr. Stocker.
Send your questions to marym@collegeviability.com
Mary McGrath (00:03)
Hello and welcome to the Beyond the Brochure podcast, Guidance on College Decisions. My name is Mary McGrath and I'm a rising senior at Lyndenwood University. And my co -host today will be Dr. Gary Stocker, who is also the founder of College Viability. I will host our weekly podcast as Dr. Stocker and I discuss and debate the challenges both students and families face in making decisions about colleges, careers, and much more. Dr. Stocker, welcome to the podcast.
Gary (00:28)
Mary, always good to see you. How many fireworks did you shoot off last week?
Mary McGrath (00:32)
Unfortunately, none. I did see a lot being fired off though. Some quite close to some houses. So I was getting a little nervous for them,
Gary (00:38)
Well, you know, I think in Missouri, most of the municipalities have said you can't do that. saw Maryland Heights, which is close to where I live, a thousand dollar fine if you're caught shooting off fireworks. So I'm not doing that ever. So I always get to chat. What kind of questions do you have for me today?
Mary McGrath (00:48)
Yeah.
Yeah, so to start it off, just right off the bat, obviously we know when students are looking while they're in high school at different colleges, there's many different factors that could affect their decision. So some of these factors could include the ranking of the school, whether that be academically or anything else, and also just the personal fit the student may feel in the school. So how important do you think that ranking is versus that fit when deciding on a college?
Gary (01:19)
Well, I guess there's two ways to look at it. And culturally, those rankings are so important. Many, if not most, families go to those rankings to decide if whatever university is ranked highly. Now, the folks that rank these stuff have gone to so many regions. It's the best college with tall trees in Missouri. They made them so finite that every college can claim some claim to fame on those rankings. But on the other hand, from a pure...
utilization perspective, there's not much value. And I'll tell you why. They are, even though the folks like US News and World Report and Princeton and anybody else who owns a website and wants to do a college ranking can, they're so subjective. They don't really take into account the objective factors. And they really focus more, Mary, on the inputs. You know, how many faculty they have, what's their endowment look like, how many students they have per faculty member. It's all inputs.
as opposed to outputs. Now you're going to college and you've got good faculty, I'm sure, and bad faculty at Lindenwood, but it's the output that really matters to you and your family. You wanna know when you walk out that door and you shake John Porter's hand here in a couple years, that you're gonna have an opportunity to make a decent income. That's an outcome. And what these rankings rarely do, and really don't do it much at all, is provide valuable output rankings. So to say college A,
Their students after 10 years make 75 ,000 a year and college B their students make 45 ,000. I'm making up the numbers. They don't really do that. So towards that end, it's very subjective. And I can make the case, Mary, any family could drive to a college now and draw the same subjective judgments, go to their website and draw the same subjective judgments as these ranking services do. There's a pushback. Many, many.
Higher education experts, however you want to define that, are suggesting that families stay away from the ranking services because they are so biased, so prejudiced, and they're so subjective.
Mary McGrath (03:22)
So as we know, college is not exactly cheap, and it's only getting more expensive as time goes on. So how do certain colleges support students, whether that be in managing their finances or budget?
Gary (03:35)
You know, to my knowledge, there's very little, if any, I'd even say they don't as a general statement. There might be some that do. And I would even turn that question a little bit, Mary, and say
They tend, look at a financial aid package. So a student will apply to a college, will be accepted, and the college will send out a financial aid package that includes grants and scholarships and discounts and all that kind of stuff. But they also push loans. They'll push both subsidized and unsubsidized loans, I can talk about that another day, on those students, but not just loans for the students, they'll push loans out to the families. It's called a parent plus loan. And if the tuition,
is not covered by the grants, scholarships, merit aid, discounts, and student loans, colleges will say, parents borrow 10 ,000 a year and your child can go to this college. And they'll even say in the financial aid packages, Mary, that that is part of your financial aid. Well, that's not financial aid. Not only are you borrowing money, you're paying interest on that money. So really colleges in general don't do a good job of saying, know, Ms. McGrath,
you're borrowing $40 ,000 to go to this college for four years. When you're done, that 40 ,000 is gonna have accumulated interest and you're gonna be making, I'm gonna make up the number, Mary. You're gonna be spending $400 a month to repay that principal and interest. And if any of us follow the news, there are millions, think 30 some odd million students in the United States who went to some college but didn't graduate.
And that doesn't even include the students that did graduate who are still paying back loans in their 30s, 40s, 50s, and maybe even in their 60s because they have taken on so much debt. So here's a piece of guidance. You didn't ask for it, but you're going to get it anyway. If you're choosing college, first of all, colleges want you more than you want them. Negotiate the tuition. If it's $20 ,000 a year and they say they'll give you package of 12,
negotiate that down from 12 to something else. And I'll talk about how to do that here in a minute. And the second part of that is when looking at loans, and I'm not the only one to say this, parents should really, really, really, really, no matter how much they love their children, should really never take out parent plus loans to send their child to college. There are hundreds, thousands of good colleges.
negotiate tuition, find a college that is affordable. If Mary McGrath says she wants to go to Harvard and she's capable and even if she gets accepted and you can't foot the bill, don't go there. Harvard's diploma is like everybody else's. I understand the name is different, but it's still a piece of paper, Mary, that says, I earned 120 credits, in your case, business and marketing. That's what students should be looking for, is that piece of paper that says, I graduated.
Mary McGrath (06:40)
And I know you mentioned financial aid in there. would you, obviously some people aren't very exactly happy with the financial aid they do receive from certain colleges, whether they be they expected to be more or a different kind of package. So is there any way for them to appeal these decisions to the school? And if so, what would that process
Gary (06:59)
absolutely. Probably every college in the country has an appeal process. And you can certainly do that. There's a couple of factors to think about. The people who negotiate financial aid for colleges are really good at their job in almost all cases. They know how to say, I can't give you any more discounts.
I can't give you any more scholarships. The $12 ,000 we have on the table is the best we can do. I heard one college say, we've used up all of our tuition, financial aid dollars for the year. That's garbage, but that's the lines that they're trained to use. And so keep in mind, if you wanna negotiate, there's a process. Our colleges really, in my mind, do a good job of putting that out there for students and their families to consider. But you can't just go back to them, and this is mostly for the parents, and say, I need a better price.
because again, skilled college financial aid folks are going to have a good pushback. And you want to use a tool. And the one I'm going to recommend is one called TuitionFit. TuitionFit, one word, dot org. And TuitionFit was the first process, first website on the market to let you compare offers. I'm going to go a little bit of inside baseball, but the essence behind that is you're looking at two comparable private colleges. All college one, college two.
And they will look at your academic record because you'll have supplied that and your FAFSA data, your family's financial status, and say, hey, college one provided a student very similar to yours a $40 ,000 discount and college two provided them a $36 ,000 discount. Now you have information to go back to those financial aid folks and say, hey, I've got an offer for $4 ,000 less from college one. Can you match that? Because again, I can't say this enough.
Colleges want you more than you want or need them. Colleges need you more than you need or want them. And leverage that every opportunity that you get, and not just for tuition. Look at the same thing for room and board for dorm fees. Ask for a discount.
Mary McGrath (09:05)
Yeah, so obviously when discussing college financials and expenses and things like that, I would say, I think it's safe to say the first thing that comes to mind for most people is just tuition, just the flat out rate of having how much it costs to attend that school. And that's probably is one of the biggest numbers, but what are also some of the hidden costs beyond the tuition and fees that students and families should
Gary (09:27)
Yeah, and pretty straightforward question. Usually fees include room and board. Not always, but you want to make sure room and board is considered. Colleges make money on the room and board. And that's one of the ways they drive net revenue is by charging fees above and beyond their costs, which is fine. Keep in mind books.
that's historically been an issue. think that might be modifying itself a little bit with access to e -books and those kinds of things. But books can be an knowledgeable expense as well. And travel. You drive back and forth to your home, which is a couple hours drive. I'm guessing you put gas in your car to get there, right? So there's costs associated with getting back and forth to college. But here's something that we really don't think about. And I know college viability is my business. We've got the college viability app. One of the missing costs
for college students, whether they leave a college of their own volition for whatever reason or a college closes, and I know we talk about that on occasion, is I've done some estimates that if a student leaves a college, they have an additional total cost, I'm gonna explain that, of about $50 ,000. Here's where that number comes from. I'm guesstimating that if a student goes from college A to college B, the prob
probably have an additional 10 ,000 in retaking courses, right? And retaking courses. That's an educated guess. Where the real loss comes from is in lost earnings. All right, you're gonna graduate in four years, you're gonna go out and you're gonna get a nice high paying job and you're gonna make some money. If you had to go to your university for an additional year, say that income is $50 ,000, it's $40 ,000. You're gonna make $40 ,000 in your first year, but you have to stay in college for another year.
because you didn't get all the credits, all the courses that you need, because you transferred, because your college closed, there's 50 ,000, easily 50 ,000 in additional costs and lost income associated with
Mary McGrath (11:30)
Yeah. So kind of flipping the subject here to more so private institutions versus public institutions. What would you say is the biggest pro and also the biggest con to attending a private institution rather than
Gary (11:44)
Mary, gotta quit asking me such hard questions. Now on the surface, this one seems quite obvious. And I'm probably gonna shock you and the listeners a little bit. I'm gonna make the case there's no difference. Now, let me qualify that a little bit. Private colleges typically are higher priced, but the net is very often similar to what an equivalent public college will cost.
I've had college presidents tell me that their parents in particular prefer a high price, high discount model. Let's define discounts for a second. Discounts are effectively unfunded transfer, unfunded discounts. So let me give an example. So tuition at a college is $50 ,000 and they give you the presidential scholarship for $30 ,000. So 50 ,000 minus 30 ,000, get my fingers and toes out.
That's $20 ,000 coming out of your pocket. But the 30 ,000 presidential scholarship is unfunded. So that college is walking away from $30 ,000 in revenue, their choice, to your benefit for sure, in order to get you to enroll. Now that's good for the student. It's not necessarily good for the college because most faculty still insist on being paid.
Most buildings still need to keep the heat on in the winter and the lights on and the electricity or the air conditioning on in the summer. And you've got to have tuition and free revenue, Mary, to be able to do that. And outside of that, outside of the top 30, maybe 50 top colleges in the country, most of them are private, some are public. The Harvards, the Yales, the Browns, the Ohio States, the University of Michigan, University of Illinois, Texas Austin, USC.
There's thousands, 3 ,000 more colleges who are not that level of prestige. And there's a guy by the name of Jeff Selingo. He's got a great book on who gets in and why. It's great for parents if you want to get that book, Who Gets In and Why by Jeff Selingo, S -E -L -I -N -G -O. And he makes a case that most colleges, Mary, are buyers of students.
The only colleges that are sellers are those top 30 or 50. Students will go there and pay a list price because they want to go to Brown, to Yale, to Harvard, to Dartmouth, to Princeton, to Ohio State, all those that are named. Every other college to varying degrees has to buy your business and they buy that business with discounts. Now they call it merit aid, they call it presidential scholarships, but it's still unfunded discounts.
The paradox for families and students is, well, it's good for them because it's lower price, but do you want to go to a college who is discounting tuition so much that it can't afford to pay faculty a competitive wage, can't afford to keep the lights on, can't afford to do maintenance? There was an article posted last week about a faculty member at a college inn. Let me think about it. Can't think of a college. was Iowa Wesleyan.
up in Iowa last year they closed and she was reporting bugs, bats and birds in her building, in her office. Well, all right, you know, I've seen the occasional bug in buildings, I'm sure, but in my mind it's reflection of that college, IOS in, not having the funds to seal the windows to keep out the birds, bugs and bats. And that's one of the factors, one of the challenging factors.
that families have to look at is the tuition discounts are great. But boy, you gotta be careful that's not gonna be a factor that leaves that college to close because they can't pay the faculty and they can't keep the lights on.
Mary McGrath (15:36)
So I know you're talking about Iowa Wesleyan being an example of a college closure, excuse me. So in the event of a college closure, do these schools take any steps to ensure that their students can complete their degrees within a certain amount of time or is it kind of like a you're on your own attitude?
Gary (15:54)
Well, it's not really, it wouldn't be fair to say it's an on your own attitude. By accreditation requirement, there's six or seven accrediting agencies across the country. If you're going to close for whatever reason, you have to have what's called a teach out. You have to make arrangements with other colleges. They tend to be regional, but that's not always the case to teach out your program. So if you're getting that Bachelor of Science in Marketing and you need three marketing courses and your college closes,
they've got to teach out, you should be able to get those three courses from another college. That general system is in place. It doesn't always work well because some colleges may or not take your junior level marketing class or your senior level finance class because they think theirs is different. It's not, but they think that it is. And the other part of that is the closure process itself. Yes, colleges provide teach outs. have to.
Now, some are providing it the day after they close. That's not good. And in many cases, and I've done postings on this and you might want to grab those sometime on colleges and teach out. Bon Bon here in St. Louis announced their closure earlier this year. They'll close sometime in 2025. And I think of the seven colleges they had lined up as teach outs, I went and did some research and five of them were financially unhealthy themselves. And so you don't want to...
your college to close and you'd be transferred to another college that closes. So that's just one of the other nuances that you want to think about. And then finally, I'm going to add a component to this question,
And we might have talked about this before. In the last couple of months, there have been too many short notice closures. University of the Arts in Philadelphia announced on May 30th or 31st, they were closing and locked the doors on June 7th. Wells College in New York a little bit earlier that year, same kind of process. There was one last, this week in Chicago on Monday, and the name of it escapes me. It was in a Chicago suburb somewhere, I might have up by you, that announced their closure on Monday, but they actually locked the doors on Saturday.
That's what you want to be concerned about. If these closures happen so quickly, your teach -out may or may not be in place, but it goes back to that cost we talked about a minute ago. If that college closes on you, take off 50 ,000 from your lifetime earnings, that's going to be the loss right off the bat. So that really, really, really is why when parents and students are looking at colleges, mostly private, they really want to take a look at that 2024.
private college viability app for families and students, because that's going to let you compare colleges. We don't recommend colleges, we don't say don't go to this college, but as you've seen in the app, we'll show you which ones are doing well and which ones are not.
Mary McGrath (18:45)
So just as kind of a follow -up question, just to clarify what you were saying, I know you mentioned that, unfortunately, some students, the Teach Out program takes them to another school that is more likely to close, probably just as likely as the school they just came from. So just to me, just, personally, that sounds totally unfair. So is there like, does that college face any consequences for doing that? Or is it just kind of laid bare?
Gary (19:07)
Yeah, they do not. Yeah. Great question. Great question. They do not. They might face some public ridicule. They certainly face some grief in the media. But there are no consequences for that. again, I'm one of the, if there's a list of 10 people in the country who know about college closures, I got to be on that list somewhere. And from all the reading and research that I do, there are too many cases where college leaders, presidents, board of trustees don't have the
business acumen, the vision to properly prepare their college to either continue on and be profitable or to close successfully. And again, that goes back. That's why you and I doing this, Mary. We're in the middle of and headed toward even a worse scenario with the FAFSA debacle this year, where many colleges, in my mind, many colleges, many more colleges will start closing this fall when they realize the revenue coming in from the government. And that's, again, a story for another day. It's not what they need to keep the lights on.
well into the year. yeah, are no consequences.
Mary McGrath (20:09)
And you may have already answered this a bit in your other answer, but do these closures like affect the difficulty of the students ability to transfer these credits?
Gary (20:21)
Yeah, it can for sure. Mostly that happens, Mary, on the Gen Ed side. Most colleges will take English 101 or Math 101 or Biology 101. There is a hesitant on the part of many colleges. I hope this changes. again, if you're taking Biology 4000, which is upper level biology or accounting 4000 or finance 4000, whatever it is, there's a pattern where colleges say, well, my finance 4000 is not the same as the other colleges that close finance 4000. We can't transfer that credit.
Well, OK, they can make that decision. You're going to push back and say, well, I'm going to find a college that will accept that finance 4000. And that's where I'm going to go. So again, I'm going say one more time and I should probably say this many more times. The student has leverage. Colleges need and want you more than you need and want.
Mary McGrath (21:15)
So what does that line of communication look like between the college and then students and families about the financial challenges or even the potential of closure?
Gary (21:25)
Yeah, there is none. And here's why.
If a college leader and the board shares with the world in some form or fashion, some communication that, we're having trouble, we're having to lay off folks, we're having to cut back programs, then the whole world starts to say, is this college going to make it or not? And it becomes a self -fulfilling prophecy. So colleges all the time announce layoffs and cutbacks. And so you have to watch those closely.
But when, but colleges have no incentive to say, hey, we're about to close. And so they don't. That's why we're seeing these short notice closures. These colleges have no requirements to give students, families, faculty, staff, communities a heads up that they're about to close because if they do, and there's some logic in this, sadly, there's some logic in this. If they announce they're about to close, well, there are very few students that are going to go there as freshmen or even continue to go there. Funding will be cut off. Donations will be cut off.
So it's kind of a catch -22. And my postings and writings and other podcasts and media that I do is I encourage college leaders to be upfront because it's inevitable. I can tell you which colleges right now aren't going to make it. I'm not going to. It's my own private list. And I don't care for the grief I would receive by sharing that list. But the College Viability app, and especially the one for students and their families,
there's lots of videos I have out there show you how to use it. We'll show you which colleges have decreasing enrollment, which colleges have decreasing tuition and fee revenue, which colleges can't even graduate, marry half their students in four years. The market is moving in that direction and I think it could happen in the next six to 12 months where more and more families, especially on the private side, not quite so much on the public side, start to look at the financial health of colleges they are considering.
Mary McGrath (23:23)
Well, on that note, it'll be a wrap for myself and for Dr. Gary Stocker. Thank you for joining us on the Beyond the Versaer podcast, where we provide guidance on college decisions, financials, and much more. See you next