Beyond the (College) Brochure for November 13, 2024

What is Beyond the (College) Brochure: Guidance on College Decisions?

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 [e-mail]

Mary McGrath (00:01.608)
Hello and welcome to the Beyond the College Browser podcast where we provide you information and guidance about college financials and decisions. My name is Mary McGrath and I'm a current senior at London University and my co-host is Dr. Gary Stocker who is also the founder of College Viability. Gary, welcome back to the podcast.

Gary (00:19.778)
Mary, I think we had to miss a week because of our schedules. It's always good to chat with you.

Mary McGrath (00:23.824)
Yes, excuse me, in the middle of basketball season has been kind of busy, so thank you for being flexible. But yeah.

Gary (00:29.975)
I can only imagine. I can only imagine. So what kind of questions do you have for me today, Mary?

Mary McGrath (00:35.548)
Yes, so to start us off, how would you say the availability of resources differs between colleges of different levels if they differ at

Gary (00:44.616)
I always like to draw analogies on this kind of stuff. And I guess an easy analogy for something like this is here in St. Louis, or even in St. Charles, where Lindenwood University is located. There are wealthier neighborhoods and there are less than wealthier neighborhoods, right? Anywhere in the country. And so just like colleges, yes, there is monstrous difference between the resources and the wealthier subdivisions, for lack of a better word, and the wealthier subdivisions, they have more cars, bigger lots.

more bushes, more trees, more computers, more TVs, all those kinds of things, because they can afford it. And the same way with colleges, the computers at a financially secure college, and there some, they're three or four years old. And a college that's not financially secure, and there are way too many of those, they may be eight or 10 or worse years old and not provide the students with the kind of technology, either hardware or software, that will prepare them for the future. So absolutely.

And again, you and I have talked about this before. Look at the finances first. If you're a college, a high school student or the parent of a high school student, I strongly encourage you to look at the financial health of the colleges you're considering. And of course, our 2024 College Viability App for students and their families is a good resource to use for that,

Mary McGrath (02:07.282)
And when we look at college closures, a lot of the times you're talking about the current students or current staff of that university or school. But would you say that college closures can have a negative effect on a recent alumni from that school, whether it be in their job search or anything else like that?

Gary (02:24.118)
I don't know that there would be a materially significant impact on their job search. They've still got the diploma that says I got my bachelor's degree or graduate degree or PhD, from that college. There may be some damage to their self-esteem. They may have some concerns that the college that has that, that their diploma comes from no longer exists. But I don't know if there's any substantial impact on their job search because every one of us takes our college education, whether we took it seriously or not.

and leverage it to whatever interests us, is available to us, and meets our financial and geographic needs and those kind of things.

Mary McGrath (03:00.636)
And how often would you say that a college might revise its tuition or financial aid offerings for students?

Gary (03:07.182)
Yeah, that's a really good question. I hadn't thought of both of those in the same context. The tuition probably just annually and probably during the summer months, maybe late spring months, the college leadership will look and say, hey, we need to raise tuition by 3%, 3.5%, whatever. But keep in mind, if they raise that tuition by 3.5%, they can't count on all 3.5 % of that money.

coming to the college because they're still going to have to discount their tuition. So if the tuition today is 10,000 and they three and half percent to that, that's $10,350, they're only going to get a fraction of that $350. Maybe not as much as 200 of it. The financial aid offerings, that could be changed almost daily. And here's why. Colleges are looking to have a class, to build a class. Enrollment folks, build a class.

and they need a certain number of students paying a certain actual net amount of tuition to be able to make salary for the, make payroll for the faculty, keep the lights on, mow the grass, all those kinds of things. And if that group of freshmen is looking good, they may lower the discount. If they can't get anybody in the doors, they may raise that discount regularly in both cases because they have to meet that budget number.

Otherwise, they have to borrow, they have to spend down their endowment, they have to lay off people, they have to cut programs, those kind of things. So the tuition itself, probably annually, the financial aid offerings a lot more frequently depending on how a class builds up. Really from right now is when classes are starting to form for next fall through, you know, I don't know, mid-August, late August sometimes.

Mary McGrath (04:58.374)
And in that tuition price, would you say there are any hidden or additional fees that students and families should know about?

Gary (05:06.946)
Well, almost all colleges will make their financial aid letters confusing. They will try and say that a loan is free money and it's not. But in all honesty, in my experience, they don't they're not dishonest with listing the fees. They may be slightly less than upfront about grants versus loans. But here's where you want to be careful. I'm going to call this an increase the overall cost if they say here's a thousand dollars in grants.

and $10,000 in loans, the $10,000 is not free. That's a cost because you're not only paying the 10,000 in principal, you're paying the 5 % 6 % interest on that principal for whatever time period that loan is in effect. So upfront on the tuition, room and board, probably. Upfront on how they package financial aid, not nearly as much as they should be. And it's damaging to just not only to students,

with student loans, but even more so, and you and I have talked about this. If you're a parent, you want to look at a college where you as the parent do not have to take out what's called a parent plus loan. And I probably talked about that in the context of we all love our children. And if they want to go to a certain college, we're going to break whatever rule we have to to get them there. Don't. The product you get from a college is that diploma that says, I've got 120 credits. It don't matter. I did bad grammar on purpose. It don't matter.

where it came from. You want to find the most affordable one for your child that's acceptable, maybe not ideal, but acceptable for degrees offered and for financial aid as well.

Mary McGrath (06:49.198)
And in your opinion, which report would you say on the college viability app, of course, is the best indicator of financial distress in a college or in a school?

Gary (07:00.098)
Mary, you are on a roll with good questions today. And I'm going to cheat on this one. I'm going to say, you said one, I'm going to give you two. I'm going to say the tuition and fee revenue. Because in almost all non-selective college, and Lindenwood and thousands of others are non-selective, they have to take almost everybody that meets very modest requirements. If that tuition and fee revenue has trended downward, and in the college viability app we track it over the last eight reported years,

If it's gone down over that time period, that's not good because that means there are issues with, again, meaning payroll, keeping the lights on, those kind of things. The cheating one I'm going to give, the second part, is something called unfunded institutional grants. It's an inside baseball or inside higher education term, but it's really the merit aid and most scholarships that colleges offer are unfunded. And again, Mary, you and I have talked about this.

If a student goes to a college and they say, we're to give you $5,000 merit aid or a $10,000 presidential scholarship, well, go ahead and brag about that to friends, family, and relatives. But in both cases, in almost all scenarios, it's unfunded. There are no funds transferring from one account to another that moves $10,000 for that presidential scholarship from a college account to a student account or a merit aid for thousand or whatever I said from a

from a college account to a student account. It's just plain and simple, a discount, just like you get on food and clothes and computers and everything else.

Mary McGrath (08:38.67)
And would you say it's common for colleges to bounce back for lack of a better term after having financial troubles or would you say closure is kind of inevitable in those cases?

Gary (08:49.198)
Well, I've been working on that this afternoon a little bit. All colleges like to look forward and say, hey, here's what's gonna be what they really want to hide. And what I try and expose is looking at the past eight years or more and say, don't, the past eight years say your finances are awful. Your graduation rates are terrible. Your tuition and free revenue is downward. Your endowment is too small. And yet colleges want to look ahead and say, well, we're doing better.

just wait a minute, just wait a couple years. But it can't happen. And here's the main reason why bounce backs are few and far between. They happen, but not very often. And we're in the midst of many colleges saying we're going to bounce back and they won't. They're not going to bounce back because of the competition. And again, if we have Mary McGrath University and Gary Stocker College each recruiting the same student, we're going to do everything in the power of both of our colleges to get that student in the door.

And you know what that means for the most part, both students being English major and we both had that. We're gonna discount the out of our tuition to get that student in the door and that leaves both of our colleges with less revenue again to meet payroll and to keep the lights on.

Mary McGrath (10:04.878)
And is there a specific amount of time that these schools that close, that they're required to give students and faculty before officially closing their doors?

Gary (10:14.862)
For a few years, there's been a labor department requirement and it's either a 60 day notice or a 90 day notice. I didn't make the time to find out that any business, college or other has to say, we're going to be laying off 50 employees.

And so I think it's reporting to a state agency, but I'm not positive on that. It's a national law, as I recall.

Gary (10:38.338)
Colleges don't. And again, I think we've talked about the University of Arts in Pennsylvania and Philadelphia. Last spring announced on Friday, we're closing and knock the doors next, the following Friday, something like that. And if I count, that's not 60 days. Mary and I can count together, that's seven or eight days. And you're not the only ones. Yeah, yeah, they're not the only ones doing that. And yes, do the state agencies holler? Yes. Do the faculty and staff holler? Yes. Do the students holler on behalf of the faculty and staff?

Mary McGrath (10:56.094)
doesn't work in there.

Gary (11:07.732)
Absolutely. But yet we see it happening in higher education. And I don't know, my bet, based on my experience, expertise, is it will continue to happen with colleges, but I don't have any specific information on that.

Mary McGrath (11:23.684)
And can you explain the importance of students and families doing their own research on different schools and things like that during the college decision process?

Gary (11:32.878)
Well, let me answer that in a different way. I'm going to have some fun with you, Mary, on this one. Don't. If you're a high school student or a high school parent, don't do any research on the financial health of your college. Trust it's going to be fine. But if you go that route, and for those listening, can see Mary the video on this as Mary and I talk and she's smiling as I say that, don't do any research at all. But if you don't do any research on the college, then also why bother doing any research on

your new phone or your new computer or your new car or your new spouse or boyfriend or girlfriend. Don't do any research on them. Don't do any research on the house you might want to buy or the neighborhood you want to buy. Just trust everything will be all right. There's a song by that. Well, Mary, of course, I'm being facetious. Absolutely. If you don't, you're taking risks that you don't have to take. And I probably shared this story with you. It probably happened last April. It'll happen next April.

As families sit around the kitchen table to decide what college they're gonna go to, too many of them, Mary, are gonna select a college that I can tell you is in dire financial straits. The child will go there with all the enthusiasm and energy that you went to Lindwood University with four years ago. And at some point during their tenure there, that college will close or cut their program or lay off their teachers or lay off their faculty. Please, please, please.

Right now it's 30 bucks to get the 2024 college viability app for students and families. 30 bucks is worth the investment to make sure that the colleges on your potential list are least going to keep their doors open. I have a stronger likelihood of keeping their doors open for the four or five years that your student may be there,

Mary McGrath (13:24.638)
And on that note, it'll be a wrap for myself and for Gary Stockard. Thank you for joining us today on the Beyond the College Brochure podcast where we provide you guidance on college decisions, financials, and much more. If you have any questions or concerns about the financial health of colleges, please send them to marym at collegeviability.com. Thank you again for making time to join us today and we hope to see you next time.