Foolish Reponses to Financial Distress
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...
Gaming the System in Higher Education
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...
Avoiding Major Budget Mistakes
Colleges at the Edge of Financial Distress
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,...
Too Many Colleges and Universities Chasing too Few Students
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...
Will There Ever Be a Return to Normalcy?
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....
Colleges in Distress Need Breathing Room
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...
Financial Distress
What Are the Smallest Number of Administrators and Staff Needed
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...
Presidential Power in a Time of Financial Crisis
Why Do College President’s Forfeit Their Power?
Over the next decade, the failure rate of private colleges will accelerate as financial reserves are depleted by these conditions: demographic cliff, rising operational costs, falling preference for...
Surviving the Demographic Cliff
It’s Not an Easy Task for a College in Deep Financial Distress!
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...
The Planner’s Conceit
Many have experienced a cell phone upgrade or a promise that a new IT system could work seamlessly with your existing operational procedures; only to discover to your chagrin that the changes...
Do Ever Larger Tuition Discounts Work at All Colleges?
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...
Must Read #2
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...
Must Read #1
Wall Street Journal Story on St. Michael’s College
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...
Normalizing Operational Deviance
When Cutting Corners Becomes the Norm Airlines, aircraft safety analysts, and organizational effectiveness managers use ‘normalizing operational deviance’ to describe when someone consistently...
Slender Thread 4
Where are Total Net Assets Headed for Private Colleges
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...
Slender Thread 3
Effect of Change in Enrollment on Unrestricted Net Assets
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...
Managing the Impact of Budget Decisions and Financial Issues on the Bottom Line
Here are several considerations when making large changes to budgets and financial strategies. Have you run a realistic three-year forecast that includes a careful test of the effect of demographic...
Why Are Many Private Colleges Ignoring the Looming Threat of the Demographic Cliff?
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...
Slender Thread 2
Are Larger Tuition Discounts Increasing Enrollment?
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...
Slender Thread 5
Coping Suggestions for the Coming Demographic Crisis
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...
Slender Thread 1
FTE Enrollment Trend from 2018 to 2024
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...
Higher Education in 2035
Will We Recognize It?
It is difficult to imagine the structure of a college in ten years. A decade could bring even greater change than the technological change taking place in the past few years. In particular, there is...
The Slim Thread of Survival
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...
Why Colleges Are Inefficient
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...
Alternative Model of Higher Education Accreditation
Processes vs Outcome Accreditors tend to be descriptive, prescriptive, and proscriptive, but to really get at these two basic issues: Do graduates have the skills to find and hold a job Does the...
Philosophical &Theological Threads of Marx’s Theory
Source: To Overthrow the World; Sean McMeekin; 2024[1] Purpose of Paper: Describe: the foundation of Marxism, Marx’s theory and Marxism’s impact on history. Karl Marx claimed that history had been...
The Simple Budget Model That Confounds Fiscal Strategy for Private Colleges and Universities
This simple budget equation captures the major factors that drive the on-going financial condition at most private colleges and universities. The conundrum for the president, chief financial...
A New Career Path for Someone Aspiring to Become a College President
by Michael Townsley & James Gaddy As small colleges across the country face mounting challenges—declining enrollment, financial instability, and increased operational complexity—many are...
Surviving and Budgeting in Modern Higher Ed: A Three-Front War Amid Enrollment Uncertainty
by Michael Townsley and Jack Corby College’s chief financial officers may be facing the greatest budget uncertainty in their lives: shrinking student markets due to the looming demographic cliff,...
Performance Analyst
By Michael Townsley and Jack Corby In higher education today, boards of trustees and presidents must know if their college is doing what it claims to be doing in its mission statement and its...
Market Strategies
Below are marketing strategies that private colleges and universities are currently using or could consider. Marketing directors need a wide range of options to effectively attract students. The...
WSJ – AI Is Already Wrecking the College Grad Market
A headline of the Wall Street Journal article of July 28th says: “AI is wrecking an already Fragile Job Market for College Graduates”.[1] The gist of the article is that many companies are...
Another Big Shoe Drops <br> Duke University Cuts More than 600 Positions
Over the weekend, Duke University reported than they had cut more than 660 positions due to changes in Federal Funding. They were not clear if this was due to federal grants or federal grants plus...
Will Trumps B3 Force Private Colleges to Terminate Programs
Trump’s ‘Big Beautiful Bill’ includes a provision that the federal government will not provide federal aid for bachelor degree programs that fail to produce incomes for graduates that do not exceed...
Financial Strategy and Performance Report Template
Every college needs a financial strategy and performance report format that clearly describes how the college moved from the end of the previous fiscal year to the end of the current fiscal year and...
In Times of Accelerating Financial Distress Presidents Must Cut Expenses to Survive
During a period of deep financial distress, a president has many options to reduce the gap between revenue and expenses, while increasing cash reserves. The problem is that revenue options take too...
Fitch’s Rating Service Says Operating Margins at Private Colleges Are Lowest in a Decade
According to the Higher Ed Dive report of July 17, 2025, Fitch, one of the leading bond rating agencies, sees major operating margin declines in three of its A bond ratings for fifty-six of their...
Trade-off of Labor for Capital
This paper deals with the trade-off between labor and capital. For the purposes of this paper, labor is defined as compensation (pay and benefits) and capital is defined as plant, equipment, and...
Should Private Colleges Join Together as a University?
Michael TownslePurpose of the Paper: Describe a model of a university which incorporates formerly independent colleges so that the new unitary institution has the financial resources to provide...
WHAT TO DO WHEN EVERY PART OF THE COLLEGE IS BROKEN!
Issue: Operational failures happen when untrained employees and unreliable policies and processes lead to egregious errors, raise the cost of operations, and negate leadership, Small List of...
Why Ambiguity Causes College Leadership to Fail in Times of Crisis
Concept of Ambiguity and College Leadership Michael Cohen and James March were the first to introduce the concept of ambiguity as a factor that confounds decision making in higher education....
Will 2026-27 Congressional Budget Push Your College into Financial Distress
As Congress negotiates the 2025 federal budget, the implications for higher education are far-reaching. From student aid cuts to research slowdowns and shifting priorities around workforce...
Warning to Private Colleges: Clark University to Lay Off 30% of Faculty!!
Clark Universities announced on June 3 that they were cutting 30% of their faculty because of a ‘financial challenges and a dramatically reduced incoming [first year] class.” This is a startling...
Budgeting Under Enrollment Uncertainty
Colleges chief financial officers may be facing the greatest budget uncertainty in their lives. Here is a partial list of these uncertainties are: Demographic Cliff – student markets will start to...
Sources of Cash in a Financial Crisis
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...
Avoiding Financial Failure
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...
Signs That the End Is Near
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...
Trade-off of Labor for Capital
This paper deals with the trade-off between labor and capital. For the purposes of this paper, labor is defined as compensation (pay and benefits) and capital is defined as plant, equipment, and...
When to Revise the Mission and Corporate By-Laws
Whenever there is a major change in the mission, governance, or operations of a college, the mission statement and by-laws need to be revised and the state regulators and the Internal Revenue...
Will 2026-27 Congressional Budget Push Your College into Financial Distress
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,...
Has Tuition Discounting Run Its Course
For Private Colleges with Less than 2,000 FTE
Has Tuition Discounting Run Its Course For Private Colleges with Less than 2,000 FTE The following chart[1] shows that private colleges are no longer getting a positive return on tuition discounts...
Push and Pull-on Authority between President and Board of Trustees in a Financial Crisis
Push and Pull-on Authority between President and Board of Trustees in a Financial Crisis Presidents and boards of trustees often respond to a financial crisis with a destructive contest in which a...
Don’t Be Surprised!!!!
David Reisman, a renowned commentator on higher education, noted fifty years ago that colleges set revenue to the level of their revenue. A corollary is that colleges add fixed costs to the level of...
Why Does College Cost So Much?
Here are four reasons why colleges cost so much and why it is difficult to lower tuition prices. You might recall David Reisman’s fifty-year old rule that colleges usually increase revenue to the...
What Are Accreditors Doing About Federal Demand to End DEI?
Colleges and universities are in a high state of anxiety and confusion about the Federal government’s announcement that DEI violates civil rights laws. Their greatest concern is what to do with...
Financial Risk Analysis of Private Colleges that closed in 2024
A recent article in Deep Thoughts on Higher Education listed thirty colleges and universities that closed in 2024. We applied our Vulnerability Gauge Model to the list to assess their financial...
Six Tells of an Impending Financial Crisis
Colleges sometimes miss the ‘tells’ that indicate an increasing risk of a major financial crisis. Our experience has found that they are six critical ‘tells’ that a college should carefully monitor....
Do the Bells Toll for Thee?
WICHE’s[1] forecast for high school graduates after 2024 does not bode well for higher education. The year 2024 is the high point for the number of high school graduates. After that year, the number...
Predicting College Failure
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...
TIPS on Leadership in Higher Education
Observations, Tools, and Tactics Edits and forward by: Jack Corby Support by: John A Stevens of Stevens Strategy, LLC Contact for Further Information or Questions: mtownsley@stevensstrategy.com or...
Taking Control of a Financial Crisis
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...
Strategies and Practices that Erode Financial Stability
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...
Push and Pull-on Authority between President and Board of Trustees in a Financial Crisis
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...
Legal Documents that Constrain Strategic Actions in a Financial Crisis
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...
How Private Colleges Suddenly Collapse!
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...
Measuring Financial Risk
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...
Economic / Financial Equilibrium
Economic equilibrium for a college or university is a state of long-term financial sustainability. Richard Cyert, late President of Carnegie Mellon University and a noted economist, originally...
Vulnerability Gauge Measures Risk of Financial Failure for Private Colleges
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...
Financial Stress at Private Colleges and Universities
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...
Why Boards Are Reluctant to Take Action
Michael Townsley and Robert DeColfmacker By May of 2024, twenty private colleges have closed or announced that they are closing. If this pace continues, sixty private colleges could close by the end...
Pricing Power and Private Colleges and Universities
Pricing Power and Private Colleges and Universities As of the first week of May 2024, Chart 1 shows that twenty private colleges have closed with a simple factorial estimating that sixty will close....
Zombie Colleges
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...
Death Knell for Colleges Facing Risk of Financial Failure
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...
Private Colleges: Deficits and Closings
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...
For Whom the Bell Tolls?
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...
For Struggling Tuition-Dependent Private Colleges: It’s Basic Economics
First Published on Stevens Strategy Blog Michael K. Townsley, Ph.D., Senior Associate Stevens Strategy Prefatory Remarks Notices of private colleges closing or merging have become regular...
Be Prepared for the
Paradigm Shift in Higher Education
The Wall Street Journal, Chronicle of Higher Education, and the New York Times are trumpeting what they see as major changes in demographics, finances, technology, and regulations for higher...
Is Your Institution Structurally Inefficient?
By Michael K Townsley & Robert DeColfmacker Executive Summary Efficiency in higher education is an amusing topic that is best left to economists. The reality is that all constituents of a...
Special Series: Technology >> Part 1: Strategy/Mission/Vision From 2005
Strategy, Mission and Vision Without task force input ...the president will be the author of an uncoordinated technical strategy that will fall short of institutional goals. If colleges and...
Modest Proposal For An Alternative to the Classic Four-Year Degree
Most non-professional bachelor degrees are typically structured around a strong liberal art component and include a modest collection of courses aimed at developing a basis for skills that might be...
MEMO TO THE BOARD AND MANAGEMENT TEAM: “The Times They Are a Changing”
By Mike Townsley & Bob DeColfmacker, Last year was the 50th anniversary of the Woodstock Music Festival and an appropriate time to reference Bob Dylan’s 1964 hit “They Times They Are a...
Managing the Metrics
U.S. Department of Education (DOE), credit rating agencies, banks, regional accrediting commissions, and boards of trustees want assurance of financial viability from colleges and universities....
Tectonic Shift Coming in Course Pricing
Tectonic Shift Coming in Course Pricing On May 4th, Richard DeMillo’s[1] article, “So You’ve Got Technology; So What?” in the Digital Campus published by Chronicle of Higher Education boldly claimed...
Is Your Institution Structurally Inefficient?
Executive Summary Efficiency in higher education is an amusing topic that is best left to economists. The reality is that all constituents of a college or university know that the institution in...
Managing the Metrics
U.S. Department of Education (DOE), credit rating agencies, banks, regional accrediting commissions, and boards of trustees want assurance of financial viability from colleges and universities....
Has Tuition Discounting Lost it’s Luster? Predictions from the Past that Came True
NACUBO just published its survey of tuition discounting and the results are disturbing. For the first time, a number of private colleges reported that new student enrollment declined despite increases in a tuition-discounting program…
Colleges in Crisis & How to Survive
Debra Townsley, author of articles on strategy and presidential leadership and Michael Townsley have a new book – Colleges in Crisis. The central theme of this book is that the massive decline...
Rules For Delegating
Presidents and chief administrative officers need to develop a fine hand at delegating authority. The blog on Scarce Resources speaks to the limited amount of time and energy that the top level administrators have.
Gauging Risk Using College Outcomes
The February 2, 2022 issue of Inside Higher Education carried the article “Using College Outcomes to Gauge Risk for Students” by Doug Lederman. [1] The article addressed how to protect veterans from choosing a college that might not survive.
Chief Financial Officer
Chief financial officers (CFO) are gatekeepers for the financial resources that fund the mission of the institution. CFOs are more than a necessary evil to keep the money straight. They have a...
Turn -Around Transition Principles
Before we talk about the Transition Principles, I want to sketch out a small scenario about interviewing and taking a presidency at a college in need of a turn-around. The characteristics of the institution I present is not built upon any single college and…
Student and Labor Markets Shortages: Conundrum for Private Colleges
Several years ago, higher education leaders expected to see a nice bump in the size of the student pool between 2021 and 2024. However, recent data indicates that enrollments are continuing…
Brinkmanship, Planning, Smoke, and Mirrors
Small independent colleges may require planning of a different kind. If you think about it, the literature of educational planning is in some ways bizarre. Much of the literature assumes that...
Why Colleges Struggle to Change in Times of Crisis
The quickly evolving financial crunch, which is due to a sharp decline in the student pool over the next decade, is not unexpected by boards of trustees and presidents. For example, Susan Resnick,...
Hiring a New College President
Hiring a college president is fraught with uncertainty about the capability of a president to lead an institution during a time of massive change in higher education…
Scarce Resources
Every college president faces the same challenge of figuring out what to do with the limited resources that they have available. Usually, scarce resources are defined in terms of money…
Chief Financial Officer – Private Institutions
Private commuter colleges are a rare breed in higher education. They operate like a community college but offer undergraduate and graduate degrees. These colleges typically operate with multiple...
Salient Institutional Relationships for the Chief Financial Officer
A CFO’s contribution to the mission of an institution – building and sustaining its financial viability - depends upon the relationships that she/he has with salient positions within the...
Financial Strategy Paradigm
It is not uncommon in higher education that an institution should establish a balanced annual budget as its main strategic financial goal. There are several significant reasons why the “single year net income goal” is both…
Economic Equilibrium
Economic equilibrium is a state that defines the long-term financial viability of an institution of higher education. Richard Cyert[1] defined the conditions needed to achieve economic equilibrium as…
Can Private Colleges Survive from 2014?
A slow, plodding revenue growth strategy may no longer provide private colleges with the financial reserve needed to survive. For decades, marginal increases in enrollment, tuition, and other revenue sources were good enough to…
Advertising in an Era of Fierce Price Competition
Typically, when market demand shrinks or supply greatly exceeds demand for a product or service, fierce price competition comes into play among competitors. The ongoing decline in student demand for enrollment is already showing considerable evidence…
Small Paper on Dashboards
The Voluntary Institutional Metrics Project has worked for two years designing a common dashboard for institutions of higher education. The purpose of the dashboard is to display the cost of a degree, the default rates for graduates, and the skills attained by graduates…
Deficit Prevention
In 1986, more than 900 independent colleges derived at least 75 percent of their revenue from students, according to a 1989 study by Minter and Associates. This figure has probably changed little in...