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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 (00:00)
Hello, welcome to the premier podcast of Beyond the Brochure, Guidance on College Decisions. My name is Mary McGrath and I'm currently a rising college senior. My cohost today will be Dr. Gary Stocker, who is the founder of College Viability. I will host our weekly podcast with Dr. Stocker as we debate and discuss the challenges both students and families face in making decisions about college careers and much more. Dr. Stocker, welcome to the podcast.
Gary (00:27)
Mary, always nice to talk to you. What kind of questions do you have for me today?
Mary McGrath (00:31)
Well, today we have questions about a myriad of topics. Just to start things off, I'm sure you've seen things about the new FAFSA debacle that have been going on in the news. So what do you think colleges are doing in reaction to this?
Gary (00:48)
Yeah, great. Great first question, Maria. And I actually, my official name for it is the FAFSA debacle. And I use that in all the media that I do and all the writings that I do, because it is, it's a debacle, whether you got your FAFSA completed or not. And your question, what are colleges reaction to this? And I'll be honest, in general, it's not much of a reaction. The general approach appears to be hope that students will fight their way through the FAFSA mess and get their financial.
financial aid put in place and go to college. It's not gonna happen. Already I'm hearing college leaders from across the country say that their deposits, which is freshmen saying I'm gonna come to your college, deposits are down somewhere in the vicinity of 10 % compared to the same time last year. And that's not good. I think we talked the last time we did the podcast and there are a lot of layoffs and cutbacks taking place. I think those colleges that are on top of things,
will probably right away, like this week, next week, start to announce those kind of layoffs and cutbacks in anticipation of much lower revenue, at least for the fall and probably for the spring of 2025.
Mary McGrath (02:03)
So based on your predictions, how many colleges do you think will close this fall or even next spring in 2025?
Gary (02:10)
Yeah, yeah, you already, the standard line, and it's pretty accurate, is in 2024, about one private nonprofit college per week has closed. Last week it was University of Arts, and that's all stories in Philadelphia. That's a story in and of itself. It's just a mess. Just yesterday it was Union Institute and University based out of Ohio. They had a couple of different locations. So it's one a week and there will be another one next week. And if not, there'll be two the following week.
And your question is how many will close this fall?
It's tough to give you a number, Mary. Here's my scenario is colleges, when they have their loans through FAFSA and many other processes, they get a check from the United States Department of Education. It is typically for millions of dollars, depending on the size of the college. And the college uses that as revenue to keep the lights on and make payroll and those kinds of things. And my educated speculation is that when they get those checks, usually it's in September or sometime over a year, and then again in January.
when they get those checks in September, they're going to see that that number is way too small for them to reasonably expect to be able to have the cash on hand to meet payroll and keep the lights on and all sorts of other things through December. I think we will see that one per week right now. I think it's going to inch up in the best case scenario, Mary, and jump up to, it won't be one a day, I don't think, but a couple of weeks.
in a worst case scenario, it's not gonna be pretty. And if you're a student, if you're a parent right now, and you've already chosen your college, it's probably too late to change that. But keep an eye on the finances. Listen to this podcast of Beyond the Brochure. Listen to my podcast, This Week in College Viability every Monday. You can do a search on that. And I'll let you know which ones are in trouble. And then there are many. And Mary, as you and I have talked offline and online, it's gonna get ugly.
Mary McGrath (04:13)
So with that rate of, like you said, one private college closing per week, does this also have an effect on public colleges? Like, is it about the same rate? Is it more? Is it less? What does that?
Gary (04:24)
Yeah, again, another good question is, yes, we focus on private colleges because they don't get the same kind of tax subsidy that public colleges get. And so to answer your question, there will be very, very few public colleges that close. The highest risk states for that are Wisconsin, which calls Oshkosh campus last week. I can't remember the name of it. Pennsylvania is a high risk for closing some publics. And New York state is at risk for closing some publics. But here's what does happen at publics and at privates.
all through this year, even a little bit last year, I read announcements because I have a bunch of Google alerts that search for college closure on college topics, college finance topics. Already, Publix, Mary, are cutting back programs. They're cutting majors. They're laying off faculty. They scream and holler about that. They're laying off staff. They're not going to close. No, I live in Missouri. You live in Illinois. I find it hard to see that any Publix close in Illinois or Missouri.
anytime soon. It's possible, Mary, but it's not likely anytime soon.
Mary McGrath (05:27)
So do these colleges that are closing, do they have any similar characteristics or is there like a certain type of college that is most at risk for these closures?
Gary (05:36)
absolutely. And again, we'll focus on the private colleges again. And I think I might have shared with you before, I've got my own private list of colleges I think will close. I'm not sharing that with you. I'm not sharing that with anybody because I don't want the screaming and hollering that would come with it. But it's about 230 strong. And here's the specs. They have less than a thousand students. Their four year graduation rate is less than 50%. And it's just a tragedy in this country how many colleges don't have.
don't graduate at least half their students in four years. Their endowment is less than 50 million and something called their admission yield, which is a percentage of students that once accepted actually show up and go to college. So those are the high risk specs. And it's not just the less than a thousand students. It's really the rural or the non -urban privates with less than a thousand students that are higher risk than the urban colleges. Now here's a reason why. The small urban...
Non -profit private colleges, they're sitting on typically sitting on some pretty valuable real estate, you know, in the middle of St. Louis, in the middle of St. Charles, that's valuable real estate. But if you're in the middle of a rural area and you're a small college, your buildings, your science building, your art buildings, they have value when there's a college there, but they have much less value when that college ceases to exist. And that's where the highest risk are. And that's where we see most.
of the private college closures and I'll bet you that's where we continue to see more closures than in urban areas.
Mary McGrath (07:11)
So historically, it's kind of known that students and families haven't really been concerned with the financial health and survival of colleges, especially the students. Obviously, when they're looking at colleges, I'm sure that's not the number one thing that's on their mind. So what would you say would happen if you were wrong about your predictions about some of these college closures?
Gary (07:24)
Yeah.
I could be wrong. I don't think I am. I followed this now for five years. If there's a list of five top college viability experts in the country, I've got to be on the list somewhere. And so I have as good a feel as anybody, I think, in terms of college financial health. And I'm watching my, I guess it's the word predictions. I find increasingly folks using stuff that I post.
either from my social media content or from podcasts like the one you and I are doing and others, kind of reiterating the stuff that I've said for the last two or three years. So in some ways, the world is catching up with my beliefs that it's not, I don't think, I believe there will continue to be more college closures. But if I'm wrong, I don't know that it matters that much because the message is still viable.
And if you're thinking about going to Gary Stocker University, and my university is financially challenged, Mary, maybe I don't close, but if I'm watching every dollar, how much of a high quality education can I give you as a rising senior if I can't invest in faculty, if I can't invest in technology, if I can't keep the building safe? And so if I'm wrong, I'll go away in a couple of years.
But I'm not wrong. And right now I am someone who's saying, guys, please be careful. And if you're listening to this podcast and you're sitting down at the kitchen table with your high school senior or even your college freshman, sophomore, junior, and thinking about colleges, please, please, please, please take a look at their financial health. And of course, the best tool to do that is the college viability app. Yes, I created that. Yes, I'm tooting my own horn.
But better to compare college finances now than sometime in November of this year. Get an email or a phone call from your child crying saying, mommy, daddy, my college just announces closing next week or next month.
Mary McGrath (09:45)
So is there a certain area of the country that these colleges are most likely to close or is there like a pattern with that would you say?
Gary (09:55)
Well, there is a pattern. Now there are, again, private colleges is the focus here, closing across the country. But the highest concentration now is in the Northeast. There's quite a bit of closure activity in the Northern States, Minnesota, Wisconsin, Michigan in the past and coming soon. Missouri hasn't really seen that. Fontbonne closed, announced their closure earlier this year. They'll close next year sometime. But the focal points are Midwest and Northeast. And here's why. That's where the highest concentration per capita.
of private colleges is, are. And so that's where we're gonna see the most activity. Again, I'm not gonna re -solicit I have, but I can tell you, I can't tell you, I know which colleges are not gonna make it. And if they are gonna make it, they're not gonna be a high quality college because you're gonna be so pressured on finances. They can't invest resources in the kind of college experience I know you're having, for example, at your university.
Mary McGrath (10:54)
So for all the students and families listening in today, what would you tell them that they can do to limit their risks of choosing college that might close?
Gary (11:06)
I'm guessing that most parents that listen to this, and maybe not the students, there's a car comparison tool called the Kelly Blue Book. It's been around for forever and it compares and tells you this is a good car, this is not a good car. So the folks at Kelly Blue Book go and kick the tires, literally, on cars and say, you know, they do publications that say this car is good, this one is not as good. They have a rating system, I think, of some sort. And that's what I have tried to do with the college viability app. I don't kick tires.
But I kick the college finances, I kick college graduation rates, I kick college endowments, I kick college enrollment rates, all those kind of things. You have to, in this day and age, in this day and age, you have to be prepared to kick the tires on college as you're considering. Not necessarily if they're public. And we can talk about that another time, what to look for in public.
And so the answer is do the homework. Don't just look at the college campus. Don't just look at the tuition rates. Don't look at the majors. You've got to look at a college finances.
Mary McGrath (12:16)
So what would you say these colleges can do to avoid being closed down due to financial reasons, or what can they do to save themselves from this?
Gary (12:24)
Well, for many, I make the case that DIA is already cast. It's going to be difficult. And the reason why you talked, you and I talked about this in the previous podcast, it's basic economics. There are too many college seats and not enough college students willing to pay for those seats. And with that, many colleges...
There's not much they can do. There's not programmatic changes. They can't add majors. They can't add programs. They can't engage in fancy marketing. It's tough. I think the dye is cast for so many.
Mary McGrath (13:01)
Yeah, well, thank you so much, Dr. Sacher, for coming on today. We really appreciate it. And let's conclude the second episode of Beyond the Brochure, Guidance on College Decisions, where we talked about the financial health and viability of different private and public colleges. Thank you.