College Tipsheet

Gary (00:02.93)
Uh-oh college, working to become the best source of college financial health and viability information and much more for students and families, college faculty and more. Uh-oh college is for college students and their families. We use the podcast to provide a balanced source of college related information and instead of the usual one way hype colleges use to get students to enroll.

We challenge their messages to you in a way that will provide listeners like you with an enhanced perspective. You'll learn what is good about college, and sadly you'll learn what is garbage about college. So the first story today is something called Tuition Resets. And if you follow the postings that I do across social media, you'll know that Iowa has been a hotbed.

But tuition resets are when a college looking to enroll more students looks at its high list price tuition, let's say it's $40,000, and says, you know what, we could get more students interested if we told them it was $20,000, if we actually lowered our tuition price to $20,000. Nothing wrong with that. Colleges are welcome to do that.

but they're not being completely upfront because in the times that I've seen this, not just in Iowa, but in other colleges across the country, many times the new tuition is almost the same as the higher tuition with something called tuition discounts. And I'll talk about that in a minute. But anyway, let's go to Graceland University in Limone, Iowa, and their headline reads, Transforming Tuition to Transform Lives.

And here's a comment from the blog post from Graceland University President, Patricia Draves. And I'm going to start with something from Draves that is close to being accurate. She announces that the tuition from Graceland-Limone is going from $32,500 to $19,950. She adds it's a price that is closer to what students actually pay. And yes, I'll give her that one.

Gary (02:12.802)
However, let's take a look at the math. So the lower tuition price is $19,500. But typically colleges to be competitive these days discount tuition more than 50%. So let's do the math. The list price at Limone is 32,500. Somebody grabbed their iPhone or opened up Excel and take off 50% of 32,500. I did that already.

50% of $32,500 is $16,250. Here's a really difficult math. Which is greater? The old higher priced $32,500 less 50%, $16,250, or $19,950, the new, lower, this price?

Gary (03:09.55)
Clearly.

the price is better with a high list price large discount model. I don't, is there anyone on the board of trustees at Graceland and Moni that can do math and point out the fallacy in this proposed tuition price change?

Who are President Draves and the leadership of Graceland and Limone trying to fool? A higher list price with a larger discount is a better deal for students than the newer, lower list price. And President Draves concludes with this. In quotes, for many years we have been saying that the world needs more Graceland graduates. Well, Gary Stocker concludes with this based on the graduation rates and I'm going to share them with you in a second.

Based on the graduation rates, it would be better, it would be a better statement if Graceland actually graduated more of the students it already had and lost. And so to the data that we always go, Graceland University in Lamoni, Iowa, their enrollment, that's something called full-time equivalent or FTE enrollment is down 700 students from 2014 through 2021. And this is data the colleges themselves submit to the National Center for Education Statistics.

and it's iPad's database, it's the data we use in our college viability app. It was interesting that President Draves, also in this story, and I'll make sure to include the link in the show notes, indicated that Graceland-Lamonia is having a record enrollment. I have no idea, I can only guess at how they are spinning the fact that they've actually had a decrease enrollment of about 700 students from the last seven reported years. I'm sure it's mathematically logical.

Gary (05:01.194)
But is it upfront? Is it transparent? I, man, I got to question that. And here's what I mentioned a minute ago. And this is the weak spot for way, way too many colleges. And it's that four and six year undergraduate graduation rates at Limone for the last eight reported years. IPEDS data in four years only 39% of the students who start at Limone graduate within four years.

after six years, not even 50%. The number averages about 47% graduate after four years. And we've coined the term and we've used this over and over again. It's Lemony, Graceland-Lemony is not even a coin toss college. You can toss a coin and get a better odds of graduating than going to Graceland-Lemony. And tuition and fees.

A big part of the revenue that keeps the lights on, pays the bills, helps meet payroll is down 4 million plus. The 2021 endowment is 43 million and 43 million is below our minimum threshold of 50 million. And keep in mind this is not $43 million for which the college can write checks against. $43 million is an endowment that is always used, almost always used to maintain a college into perpetuity.

And here are the two kickers. There are data points, and this is kind of inside baseball, we'll call it inside college. There's something called unfunded institutional grants. It's essentially the discounts that a college has to give to get students in the door.

Graceland and the Mone is up from $2 million in discounts in 2014 to $13 million in 2021. Do the math on that. It's up 560%. And Graceland and the Mone is not the only one giving away the store to get students in. It is common. It is rarely talked about. But as listeners to Uh-Oh! College podcast, you'll want to know.

Gary (07:09.174)
that while the discounts are certainly good for the students, certainly good for the families, it puts a college in a very difficult position of not being able to provide the resources needed to provide a solid, high quality college education. And then finally for Lamoni, Graceland Lamoni, there's something called funded institutional grants. This is somewhere, someone who's written a check to fund a nursing scholarship or a technology scholarship or whatever. It's down $10 million, down 82%.

Now I look at a lot of college financial and operational data, enrollment data, and I rarely see funded grants decrease. I guess it would be interesting for some enterprising reporter person to ask how that happened. I'm not hopeful anyone will, first of all, and I'm not sure we'd get a straight answer even if they did. Hey, if you have questions, send them to me. Questions, comments, concerns. To Gary.

at college viability, that's one word, garyatcollegeviability.com. And then the last story today is just, this is kind of a student and parent warning. This is again, an inside college, inside baseball kind of heads up. There's a ratings organization called Fitch. They do evaluations of the financial health, for lack of a better word, of...

for-profit and non-for-profit organizations across the country. And this article was written by Fitch reporter Josh Moody, and that was on Wednesday of this week, the last day of summer here in St. Louis. And in the report, Fitch predicted that more colleges will close or merge or significantly restructure operations, read, cut faculty, cut staff, cut programs, cut majors, cut classes, cut courses, due to enrollment declines and other market pressures.

The report goes on to say that colleges are already struggling and will likely continue to do so. And it's a little technical on us, but the higher education landscape Josh Moody shares with us remains bifurcated, two parts. Institutions with strong brands that are located in markets with the deepest, steepest drop in college age population read Midwest to Northeast.

Gary (09:26.099)
are the most vulnerable to enrollment declines. We see that all the time. These markets typically also have a multitude of other public and private colleges competing and competing vigorously in many cases with tuition discounts for a shrinking pool of students. Be aware, there will continue to be colleges that close.

use the information that I share with you. I'll give you access to the college viability app in the show notes. You can use that to actually compare colleges you're considering. But we're in a time period where colleges and the college process and the higher education industry will have significant changes. Sticking with the old model of looking just at majors and the campus and amenities, faculty is not enough.

any longer, especially if a college is small, maybe less than a thousand students. And in particular, if it's in a rural area. There are challenges that many of these colleges will not be able to survive. Oh, college, my name is Gary Stocker. We'll see you on the next episode.