The briefing papers for the Private Colleges & Universities in Crisis consider causes of a financial crisis and approaches to dealing with such a crisis.
Many presidents of private colleges and universities recognize that the demographic cliff, changes in student preferences for degree programs, shrinking donations, and closer auditing by the government could severely damage their institution. However, it seems that a...
There are two different aspects to: gaming the system and incentives, one involves straight out playing gives with rules and goals and the other is to dissemble. As a sidenote, usually, a harsher word like lying is use instead of describing the behavior as...
Private colleges setting on the brink of deep financial distress need to be very careful when the build their budgets. The traditional way of budgeting will not work under those circumstances, especially when faced by the demographic cliff. Rather, the college needs...
Inside Higher Ed recently offered a webcast on mergers, acquisitions, and partnerships because private colleges can no longer afford to wait until they are in deep financial trouble to look for solutions. Emily Wadhwani, the senior director for higher education at...
The simple answer for private colleges and universities is No! At least not for the next ten to fifteen years[1] as the slide down the demographic cliff continues, normalcy will not be evident. Besides the impending drop over the cliff, technology will take a sizeable...
What is breathing room? It is simply the amount of cash needed to survive for one year, in particular enough cash to make it through the summer months. How does breathing room disappear here are the baker’s dozen ways: Borrowing to the point that all the property and...
When a college is entering deep financial distress, there is one question that the president needs to answer – how many administrators and staff are needed to run the college. This administrative model has guided colleges for generations – a chief administrator is...
Pulling a college back from the brink of financial distress requires an extraordinary effort by all segments of the college - the board, president, administration, faculty, staff, alumni, and everyone who has a stake in its survival. This blog outlines several common...
In an April 2025 blog, I raised the question of whether or not tuition discounting (institutional grants) has run its course for college with enrollment less than 2,000 full-time-equivalent students. The blog used data up to 2023. Now, I have added IPEDS data from...
The Hechinger Report just published a study contending that “More Than 25% of Private Colleges Are at Risk of Closing.” This is a must read for every private college president and board member. Are you on the Hechinger List? Here is the citation: As one Vermont...
The Wall Street Journal’s story about the struggles of St. Michael’s College is a must read for anyone who wants to understand the problems faced by colleges today and over the next decade. Ten years ago, no one would have believed that St. Michael’s would face...
When Cutting Corners Becomes the Norm Airlines, aircraft safety analysts, and organizational effectiveness managers use ‘normalizing operational deviance’ to describe when someone consistently violates policies and procedures until it becomes a standard method of...
Slender Thread 4 deals with the outcome of the net revenue flows from enrollment to unrestricted net assets and finally to total net assets. The difference between unrestricted net assets and total net assets is that the first holds assets that can be converted to...
The Slender Thread blogs consider whether private colleges are producing sufficient financial resources to survive the demographic cliff that is fast approaching.[1] Slender Thread – 3 looks at the relationship between enrollment and unrestricted net assets at 944...
The Slender Thread Blogs 1to 4 and articles from Higher Ed Dive, Inside Higher Ed, and The Chronicle of Higher Education make it clear that demographic cliff, when the high school applicant pool massively shrinks is looming ahead in the year. Nevertheless, Inside...
The Slender Thread blogs look at the capacity of current financial resources to survive the oncoming demographic crash. This blog, Slender Thread – 2, looks at the relationship between changes in tuition and these charts also look...
Presidential Perception of the Well-Being of Their College Inside Higher Ed[1] reported that 87% of college president “expressed strong financial confidence” that their institution would be financially stable over the next five years with 83% saying the same over the...
Slender Thread – 1 FTE Enrollment Trend from 2018 to 2024 The Slender Thread refers to the sources of financial resources needed by private colleges and universities to survive the upcoming demographic cliff. There will be five Slender Threads in this series. The...
Private colleges in deep financial distress must be extremely adroit to survive. Specifically, presidents of these colleges will be forced to devise financial strategies that do not violate the law but will teeter on the edge of credible and acceptable actions by...
This paper addresses the factors that constrain a college president from constructing an efficient and effective system to achieve its mission. This paper aims to help presidents understand the factors that stymie operational strategies and plans, and how to mitigate...
From: TIPS on Higher Education Leadership[1] When a college sinks into a deep financial crisis, the president and CFO must find cash quickly, just to make payroll. Next, they must locate larger sums of cash to pay utilities to keep basic operations running and to make...
From: TIPS on Higher Education Leadership[1] Here are steps boards and presidents can take to stem a downward slide into a major financial crisis due to a depletion of cash reserves: Identify why cash reserves are being depleted; Are banks threatening to call loans...
From: TIPS on Higher Education Leadership[1] These signs point to major problems that, if not addressed immediately, could lead to the collapse of the college. Deficits are growing at double-digit rates; Expendable Net Assets to Debt ratio is increasing faster than...
If I is negative and between the range of 0 and - 5, then the college will be in a state of financial distress. If C and E are negative then change sign of I to negative, regardless of the I score, the college will be in a state of deep financial distress.
Take Action Sooner Not Later Inside Higher Education in a December article reported on sixteen nonprofit colleges that had closed in 2024. We were interested in what our financial risk model had predicted for these colleges. We have data for the time frame 2017 to...
What is a Financial Crisis Essentially, all financial crises are cash based. Simply put, if there is no cash, there is no college. In most cases, the crisis is cumulative, and the cause or causes have depleted cash over several years until a point is reached where...
Overview: Private college leaders, especially presidents of small colleges, are tasked with maintaining the financial viability of their institution and avoiding strategic and management errors that threaten the continued financial viability of their institution....
Presidents and boards of trustees often respond to a financial crisis with a destructive contest in which a board resists the presidents for greater authority. President’s takes the lead because they believe that an effective response cannot take place unless they...
Preface Strategic planners need to pay attention to corporate and legal documents that can delimit decisions needed to support strategic change. Corporate documents refer to the charter, bylaws, and mission statement of the college, while legal documents may comprise...
Failure Has Many Causes Why are some colleges seemingly collapsing overnight? There are many causes for some private colleges surviving at the brink, but it takes a particular set of circumstances for a sudden collapse. What follows are factors that could drive a...
Introduction For the past decade, our colleagues and columnists have remorsefully muttered about friends in terminally ill colleges. Now, we know “for whom the bell tolls.” As more old colleges are thrown on the death cart, other small colleges only wait and wonder if...
Michael Townsley, Ph.D. Senior Associate Stevens Strategy Private colleges and universities are encountering unprecedented levels of financial stress that may even exceed the financial problems caused by the Great Depression in the 1930s. According to the Hechinger...
Zombie Colleges are the walking dead of private colleges. They have: no cash, cannot make payroll, pay bills or debt services, violated their debt covenants, and only a few faculty who work for nothing. [1] The Sisyphean hill for these colleges is very high and...
Michael Townsley, Ph.D. March 31, 2024 Introduction For the past decade, our colleagues and columnists have remorsefully muttered about friends in terminally ill colleges. Now, we know “for whom the bell tolls.” As more old colleges are thrown on the death cart, other...
The higher education market is shedding colleges at a record pace. Despite the large influx of federal funds in 2022 to offset the effect of the pandemic (see Chart 1), fourteen private colleges closed or disappeared in mergers during the first three months of 2024....
First Published on Stevens Strategy Blog Nearly every week news flashes a report of another private college either closing or in deep financial trouble. Here is a short but not exhaustive list of colleges that have closed this year: Alderson Broadus, Cardinal...