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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 (00:01.671)
Hello and welcome to the Beyond the College Brochure 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 Linwood University. And my co -host today is Gary Stocker, who is the founder of College Viability. Gary, welcome to the podcast.
Gary (00:18.178)
Mary, I understand I caught this. You're now no longer a rising senior. You're actually a senior at Lyndon Wood University. My congratulations.
Mary McGrath (00:26.845)
Thank you. Yeah, it's definitely an adjustment taking out that word rising and putting in current. It's kind of scary, but you know, it's OK. Yeah, so to start us off, obviously when some colleges find themselves in financial troubles and things like that, different articles or social media postings can come out about that school. And obviously a lot of people have a lot of opinions about it. So I was just wondering if.
Gary (00:34.678)
What kind of questions do you have for me this week?
Mary McGrath (00:54.151)
The financial instability of a certain college could have a negative effect on its reputation, either through social media or anything.
Gary (01:00.852)
Well, the easy answer is yes, but it's really a qualified yes, Mary, because the negative impact is usually after the fact. know, after the news stories that you talked about or after college lays off or does cutbacks or says, you know, there's accreditation agency and accreditation concerns, things like that. But it's really after the fact that folks look back and say, you know what, if my child is considering, you know, Mary McGrath University,
I'm not going to because I I had some bad news in the media sometimes. So really it's after the fact. And again, that goes to what you and I've talked about many times in the podcast. There's now a tool and it's called the College Viability App. And there's one for students and their families that lets you look, whether it's a public college or private college, lets you look at the financial health and even the viability of colleges to see if you want to put that college on your initial list.
Don't make it the last thing on your list as my guidance to students and their families. Make it the first thing on your list.
Mary McGrath (02:00.761)
And to follow up with that, do you think it could have an effect on any recent alumni who have a degree from that university when they're out looking for a job?
Gary (02:09.954)
Yeah, probably not so much. There is, from what I've talked to others, some mental anguish because old state U is no longer in business, but you still earn the diploma, whether it's a bachelor's degree, a master's degree, or something else. And that's still your ticket to those conversations for jobs and career opportunities. So when folks say your college closes, that you've lost your academic abilities, well, that's stupid.
because you bring those skills, that intellect, that knowledge with you. So if your college closes, it's sad for the college, it's sad for the alumni, but it doesn't really impact anybody's career aspects, career prospects, or even their compensation, I don't think.
Mary McGrath (02:53.007)
And we've talked quite a bit on here about college tuition and different financial aid options for students and families and how often that might, or reasons why that might increase or decrease depending on the situation. So how often would you say that these colleges revise their tuition and financial aid offerings?
Gary (03:10.478)
I've experienced that firsthand, and it's annually. I've sat in on college tuition pricing meetings with college leaders and with their boards. And it's not fair to say it's a dart board exercise when they throw a dart against the dart board, whatever comes up, that's the charge. They do look at the finances, but it's say a college wants to increase their tuition 3 % a year. right, 3%, 5%, something like that.
They do, and they'll announce that we're announcing 3 % increase for whatever reasons. But with the intense pressure on college tuition pricing, many times they give most, if not all of that or more back in tuition discounting. So they may raise tuition from $10 ,000 a year up 3%, $10 ,300. But they may discount the tuition an additional 5%, so it goes down to $9 ,800 with the actuarial net. So yeah, they raise the price.
but they can't actually keep it there. And again, list price is what a college says it is. know, Linwood is something like 21 ,000, but that's not what Linwood collects for any students, hardly any students at all because of tuition discounting. And let's not forget the FAFSA debacle, because when you ask also about financial aid, when you or other students submit their application and their FAFSA document to a college,
There's an whole army of consultants out there who've developed pretty fancy, pretty sophisticated algorithms that calculate for any given college the lowest, the smallest discount they can offer based on the FAFSA numbers for your family and the other families that they can get by with that shows that that student and the academic history, college or high school, sports, even backgrounds are likely to accept. So if they can get Mary McGrath to attend statistically,
at a 20 % discount, that's what they're gonna offer. If it takes a 40 % discount based on your, all those factors I talked about, that's what they're gonna offer. But they try and find the lowest discount possible to get students to enroll.
Mary McGrath (05:18.711)
And in the event of a sudden college closure, kind of in the situation where there's given no warning either to faculty or students, are there any specific support systems in place specifically for faculty and staff in the event of this?
Gary (05:33.198)
No, not really. Many states, I think it's a state level, have 60 or 90 day notice requirements where if you're going to lay off employees with a college or manufacturing facility or retail outlet, fast food, whatever, you have to give the state or federal government, I can't remember which, 60 or 90 days notice. That's in effect. here's, I think, you know, I've talked about this before, but there have been colleges closed this year.
that give a weekends notice or after the fact. was one college that closed up by you. I can't remember the name of it, that announced its closure on Monday, but had locked the doors on Friday, the Friday before. So there's a lot of short notice closures. And with the FASTA debacle that took place earlier this year and really continues now, I think we're going to see a lot more of those. And at some point, Mary, the college market, the students and their families, even faculty and staff are going to realize that there are colleges that aren't going to make it.
and you and I are some of the data entrepreneurs out there trying to give folks a tool to say, hey, this college is financially healthy and this one not so much.
Mary McGrath (06:40.935)
And you kind of just touched on this in your answer, but is there a specific amount of time that these schools are required to give specifically students before officially closing and also their families?
Gary (06:51.406)
Yeah, there's that 60 or 90 day notice. And you'll see those news stories regularly with businesses that close. A manufacturing facility is going to close. And they give, I think it's a state level now that I think about it. And they notify the state of Missouri here where you and I are right now, that they're going to be closing their store, their location in 60 days. That's the only requirement. I don't know what happens when businesses don't do that. I don't recall seeing any stories on that, but I know it's happened in colleges already this year.
And I worry that's going to happen again in coming months and coming year. And the other thing to think about is just the warning piece. And again, I'm going talk about something you and I have shared before. Use the College Viability app to do this, the one for students and family cost you $29. Look to see what the enrollment trends are. If a college's enrollment has gone down significantly over the last eight years that we show on the app, if their four -year graduation rate is below 50%, if their tuition and fee revenue has decreased over the last eight years,
And if they have an endowment below 50 million, five zero million, be careful. Be careful. Those are the colleges at greatest risk. And even add, I would add to that, if you're looking at a private college, it's a rural private college and it has an enrollment of less than a thousand students, give or take. They are particularly susceptible to the market pressures that all colleges are facing right now.
Mary McGrath (08:14.515)
And I know on this podcast, we've talked a little bit more about private institutions rather than public just because in some cases, those ones are a little bit more likely to close rather than public ones. So what would you say would be the biggest pro and also on the flip side, the biggest con to attending a private institution rather than a public one?
Gary (08:23.426)
Right, right.
Gary (08:34.316)
Yeah, I still think I had others ask me this in different media interviews. I still think it's a function of personal choice. At the end of the day, you're going to get yours here in May. You're going to get that piece of paper that says Mary McGrath has done all the work required during her Bachelor of Arts, Bachelor of Arts in marketing and finance and the double major. I don't know that it matters that it was from a private college or public college. There are arguments made that some private and public colleges have an alumni base.
that might help the Mary McGraths of the world find that first job or find subsequent jobs. There's probably some logic to that, but that's probably more related to the size of the college. If it has a million former graduates out there, you're more likely to find one that can help you than if it has 100 ,000 graduates out there. So that's something to think about in terms of size, but in terms of general private versus public. And if you're like big time college sports, a lot more publics have it than privates, that's something to think about.
Mary McGrath (09:31.247)
And would you say that faculty and staff tend to be more informed about a college's financial situation more so than the students and families involved?
Gary (09:40.718)
Yeah, not even close. No, no, sadly not at all. And think about this, as a student, and that's the perspective you bring, and you're asking questions on behalf of students and their families, you're not 18 anymore. But when you were 18, you had no idea what the colleges you were considering, what their financial health was. And that's still the case with almost everybody else. But faculty are living that.
They see that their budget for conferences, example, faculty love to travel to conferences, to being cut. They see that their budget for new textbooks or their cost of living or their contribution to health insurance or life insurance, premiums, those are increasing. They see the signs and yet very time after time after time when a college announces either cutbacks or layoffs or even closings almost without exception.
The first voice of protest is from Bakley and they effectively say, hey, nobody told us it was that bad.
For students and families, can understand. That's just not part of the culture. But if you live something day after day, week after week, month after month, and you don't know it's financial health, I'm going to suggest there's some culpability on the part of faculty for just not making the effort to know. And one other minor point to that, college professors are good at whatever content they teach. And as a profession,
They have long argued that the business part of a college is not their concern. That's also silly, Mary. If the college doesn't have enough money to meet payroll or to keep the lights on, that's certainly something they should be concerned about, especially now. If a college lays off faculty, whether it's tenure or tenure track or just instructors, it's really, really difficult to find another college teaching job anywhere.
Gary (11:37.772)
these days. if faculty members are listening to this, you know, there's a faculty and staff version of the College Viability app. Go to collegeviability .com and click on College Viability apps and grab either the public or private college version. It's a little bit more expensive than the student version, but know where your college rates. Remember the app compares so you can look at your college and five of its competitors, whatever you want to look at. It's sad that so many faculty, they may have a gut feeling that things are not going well.
but they don't really look at the data hardly ever at
Mary McGrath (12:13.645)
And also on this podcast, we've talked a lot about different levels of institution, whether it be through academics or financial situations or anything like that. So what would you say are some of the primary characteristics that may distinguish, I say this in quotes, a higher level institution compared to a lower level one?
Gary (12:28.876)
Yeah, right, right, right. Yes. Yes. And this is audio only. You'll miss the fact that Mary just did air quotes for higher level. You know, a couple of things, endowment, you know, those, those colleges with a billion or more, close to a billion or more in endowments, they can be higher level. I'm doing air quotes now. The perception, you know, the market perceives some colleges better than others. Perception is the eye of the beholder. So some are true, some are true that they are
Mary McGrath (12:34.003)
Yeah.
Gary (12:58.606)
a higher level institution and the rankings. You know, we're all familiar with US News and World Report and Princeton and Forbes and others do rankings. Those certainly have an impact on creating perception of higher level or not. But there's really most higher ed experts and I will jump in that pool. think there's about 30 to 50 top higher level colleges. You know, it's the Ivy League colleges, it's Ohio States, University of Illinois, Michigan, Texas at Austin, USC, those kinds of places.
But remember something else we talked about, there's this concept of colleges that buy students and colleges that sell. And really those top 30, 50 are the only ones that sell. Here's my product, Harvard University, here's my price, pay it or not. Every other college to different levels has to buy students. And they buy students sometimes with amenities, but almost always it's with price. And it's in the form of tuition discounts.
Sometimes it's in funded scholarships, but not very often. And it's just, it's a perception, just like the computer that you have in front of you, the phone that's used every day. You got those items because you perceive them to be a better value. Same thing for colleges.
Mary McGrath (14:14.297)
And with that, it'll be a wrap for myself and for Dr. Gary Stocker. Thank you for joining us today on the Beyond the College of Bursar 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. We hope to see you next time.