Enrollment numbers

[crusadermoe]

Thank you for your knowledgeable posts, VU22.  We can only hope that some demographics will rise and get legal entry. It does seem likely that the Chinese student counts in the U.S. won't rebound soon due to some of the national security concerns.

On a huge point related to enrollment and loan revenue to the school, the X factor in Valpo's financial health is not simply enrollment head count. The net revenue from the class of kids is the real issue.  Competition for the best and brightest like the Logansport graduate, has led the non-elite universities and colleges to deeply discount the costs they charge families. The discounts are called such because they aren't actually funded with cash.  We will never know the net revenue stat.   

[valpo95]

 I had a friend and fellow student who came to VU as a freshman in the fall of 1990 (perhaps 1991?) from Beirut, Lebanon. He had grown up during the Lebanese Civil War (1975-1990) and recalled hiding in shelters during the worst of the fighting. Yet and his family were worried about coming to Valparaiso, because the movie "The Untouchables" had been released a few years before. The violence in that movie made it seem like anyone "close" to Chicago was at risk, and that all problems were solved at gunpoint. Of course, after a few months at Valpo, it was clear that the Hollywood vision and the reality of life on campus were very different, and he laughed about it himself. Yet it always stuck with me that media perceptions matter more than we might expect; here was a guy who grew up with gunfire and artillery shells hitting his neighborhood, yet was legitimately worried about living in Valparaiso!

The other perception that has changed is that it is now easier to see and parse the rankings. Back in my day, the College of Engineering had a modest pipeline of students coming to VU from Malaysia. They got a good education, yet the government of Malaysia decided to focus their efforts on sending students to bigger name schools, so that partnership faded. 

[vu84v2]

Valpo22: Great and well-articulated insights. I would not recommend having a pillar of Valpo's business plan rely on a percentage of international students, but agree with your conclusion that there may well be certain strategic populations for certain fields. I would also add that, from my knowledge, Asian and Latin/South American countries still (and for some time) will not have the depth of very good universities like the U.S. (relative to their population). American universities were rarely getting international students who gained acceptance (solely based on testing) into the top universities in China, South Korea, Singapore, etc. However, they were getting the next tier of students since the next tier of universities in these countries is far inferior to U.S. universities. Those countries will not be able to rapidly increase the quality or reputation of those next tier universities because they will not be able to get the necessary level of professors/instructors (that takes a long time). Thus, the potential demand will be there for U.S. universities. I agree that U.S. universities need to overcome the bad publicity about the U.S., but I think this is possible since an argument can be built about how unlikely it is for international students to be affected by the problems you list.

[crusader05]

The benefit of increased graduate students is that it will relieve some of the pressure on the undergrad sign to shoulder the full increase in enrollments. The goal is not put all your eggs into the basket of one country or area because that can be a risky proposition's. But increasing international students through pulling from more countries and also investing in programs that pull in Domestic citizens or even local community members, plus on-line programs can be a robust strategy.  You can also use graduate programs to help in regards to increasing staffing through Graduate Assistantships. There are plenty of offices on small campuses that have one or two people doing the work of five that could benefit from extra staff and provide a stellar professional development experience.

[David81]

Additional challenges for recruiting international students include perceptions of the U.S. being an unwelcoming place for foreigners (beyond the much less likely possibility of being shot), immigration policy snafus & twists, and lingering concerns about travel if a new COVID variant or another pathogen rears its ugly head.

There's also the market aspect: Countless universities struggling with their undergraduate enrollments are looking to (1) international students; and (2) newfangled masters degree programs (esp. online) as potential revenue enhancers. It's a brutally competitive environment.

Soooo....it brings me back to how VU can better reach and market itself to prospective undergraduates for whom it would be a good place. I still think that market has not been exhausted.

[valpofb16]

62k list price. Oh wow. Kids really should attend P5 or state Universities if that's the case.

Wow.

[vu84v2]

62k list price. Oh wow. Kids really should attend P5 or state Universities if that's the case.

Wow.

The difference is not as great as I think you are assuming (though there is a price difference). On average, a student at Valpo is probably getting scholarships that reduce tuition by 30-40%. State universities give very little in the way of academic scholarships, except for a small number of free rides for very exceptional prospective students or special deals to attract students from certain areas (e.g., Alabama and Arkansas target high school students in Illinois)

[VULB#62]

That's true.  If you Google "Valpo cost" you'll see that the average cost after aid is $25,802.  That's still a big pill to swallow. The VU web site has a highlighted caveat that tells prospective students that the actual cost of enrolling is much less than the sticker price.

[David81]

The key figure is average indebtedness at graduation.

On that measure, VU is competitive, with this site reporting loans averaging $7,986/year, against a national average of $6,768/year. Higher than desirable, but not dramatically out of step. Here's the link:
https://www.niche.com/colleges/valparaiso-university/student-loans/

And this site grades VU an A- on overall value, based on "average net price, earnings potential, student and alumni reviews, and additional factors."

[historyman]

Another one bites the dust: https://www.insidehighered.com/news/business/financial-health/2023/06/26/cabrini-university-will-close

https://cabriniuniversitylegacy.com/cabrini-2/info-updates/

Cabrini University is closing at the end of this year

That isn't the only thing falling short in Philadelphia, the Phillies are over 10 games back of the Braves. But OTOH the I-95 has been temporarily repaired ahead of schedule.


Closing of Cabrini University sends shockwaves through community - CBS Philadelphia (cbsnews.com)

[vu72]

Another one bites the dust: https://www.insidehighered.com/news/business/financial-health/2023/06/26/cabrini-university-will-close

https://cabriniuniversitylegacy.com/cabrini-2/info-updates/

Cabrini University is closing at the end of this year

Their endowment stood at $34 million in 2022.

[crusader05]

Pal may be able to confirm this but what I've heard is that Enrollment is stable from last year in regards to undergrads and way up(like close to double) in regards to graduate students (unclear how much of that is international).

I'd like to see an increase in enrollment but stabilization is better than continued dropping and if we can figure out how to launch successful and wanted graduate programs it can definitely help in buying time while undergraduate works to steady the ship.

A couple other things I've heard: increase in nursing programs has created more competition in that area and they are seeing that elite schools, flagship state schools, and many city based schools are continuing success/bouncing back faster.
I've heard that Indiana State is having significant issues in regards to enrollment as well as Evansville but that Butler has been doing very well.

[David81]

Another one bites the dust: https://www.insidehighered.com/news/business/financial-health/2023/06/26/cabrini-university-will-close

https://cabriniuniversitylegacy.com/cabrini-2/info-updates/

Cabrini University is closing at the end of this year

Their endowment stood at $34 million in 2022.

The Cabrini University endowment figure cited by vu72 is key.

Many of the private colleges and universities that are closing right now do not have a lot of cash backing them. They are going to be the main casualties that we see in an ongoing shakeout of less competitive private schools.

Of course, it doesn't mean that VU should be complacent. These closings are unsettling news. VU will have to act prudently and -- equally important -- avoid doing risky stupid stuff. But unless there's some awful big secret being kept from us (which I very much doubt is the case), it does mean that it is not at dire risk of closing its doors in the near future.

[valpopal]

Pal may be able to confirm this but what I've heard is that Enrollment is stable from last year in regards to undergrads and way up(like close to double) in regards to graduate students (unclear how much of that is international).

[wh]

Without knowing what their total student enrollment is, $34M is just a number. Whatever the amount (large or small, relatively), when a university is teetering on the edge of disaster, its endowment is not going to save it from financial ruin. It might provide limited temporary relief; however, if declining tuition and housing revenues fail to cover expenses for a long enough period, the university is doomed to failure. Insolvency results from expenses exceeding revenues over time, during which the university depletes available assets, can no longer borrow, and literally runs out of money to operate. I've attached a link to a Forbes article that explains why university endowments by design cannot save a university from insolvency.

Why Not Use Those Large Endowments To Save Colleges?

https://www.forbes.com/sites/davidrosowsky/2020/06/01/why-not-use-those-large-endowments-to-save-colleges/?sh=685fd933f0a9

[crusader05]

I  agree that large endowments will not save a university if disaster is there but what it does is elongate the road between "bumpy" to "Thelma and Louise".

This allows for less desperate decision making and strategic planning. No fuse is so long a bomb won't eventually go off if the flame is not extinguished but you still prefer a longer fuse to a shorter one.

I think the other piece is that not all universities are created equal. Some are going to always be shoe string operations that can only be kept afloat by a higher pool of potential students and so are going to be more apt to go under when conditions start to get stormy.

Thought about adding another metaphor but felt like 3 was enough..

[crusadermoe]

I agree per ususal with WH.   Net operating profit/loss is crucial. 

Yes, the very marginal universities will keep failing and at a faster pace.  And borrowing against your endowment is like a 2nd mortgage. You may get a reprieve briefly.  But your hit to your bond rating raises your borrowing costs and you will spiral sooner than later.

We all love going in big in basketball and bet the house.  it's a gutsy move. The enrollment needle may not move quickly but you could excite some donors (sports, but also others) with the Powell move.

[vu72]

Without knowing what their total student enrollment is, $34M is just a number. Whatever the amount (large or small, relatively), when a university is teetering on the edge of disaster, its endowment is not going to save it from financial ruin. It might provide limited temporary relief; however, if declining tuition and housing revenues fail to cover expenses for a long enough period, the university is doomed to failure. Insolvency results from expenses exceeding revenues over time, during which the university depletes available assets, can no longer borrow, and literally runs out of money to operate. I've attached a link to a Forbes article that explains why university endowments by design cannot save a university from insolvency.

Why Not Use Those Large Endowments To Save Colleges?

https://www.forbes.com/sites/davidrosowsky/2020/06/01/why-not-use-those-large-endowments-to-save-colleges/?sh=685fd933f0a9

I think the key number used by colleges is endowment per student.  The sited enrollment for Cabrini is 1500 so an endowment per student of $22,667.  Valpo's 2022 endowment is listed at $365 million with stated enrollment of 2,939 in 2022 for an endowment per student of $124,192 or almost 5.5X bigger than Cabrini.

It certainly isn't a "everything is coming up roses" number but on the other hand it is an indication of the overall financial stability of an institution.

Of the colleges and universities that I've seen who have closed their doors, none had endowments anywhere close to Valpo's.

[vu84v2]

Another way to look at endowment is how much it funds annual operations. If Valpo's endowment is $365M, we can assume that maybe $250M is in Valpo's hands and generates annual distributions (endowments usually include completed and committed donations, plus some portion of the endowment may be earmarked for capital spending). Universities usually draw 5% of that portion of the endowment annually (based on the safe expected long-term ROI). Thus, my guess is that the endowment is contributing about $12.5M to each annual budget. The endowment is not the savior (nor should it be considered to be a savior), but it does provide a solid foundation. For these universities with really small endowments, they must fund their operations solely with tuition, room and board - which leaves far fewer options.

[wh]

My daughter recently hired a young guy to fill a newly created artificial intelligence specialist position for her business service company. She asked me to stop in so he could demonstrate the positive impact of incorporating AI features into every day employee activities. Even at this early stage, the elevation in quality and productivity outcomes is eye popping, to the degree that we are revisiting our business growth strategy timeline.

As impressive as it was to witness firsthand, I am now acutely aware of the utter explosive power of AI to change everything we call "normal."  Business analysts have been warning that in time AI is going to significantly impact white collar workload across the board and virtually eliminate the need for project managers, business analysts, copywriters, graphic designers, etc. Fewer white collar job opportunities will undoubtedly have a negative impact on college enrollment across the nation. So, now we can add AI to our list of concerns.

[crusadermoe]

With AI emerging so fast, I am concerned for the investment advisors in my family whose expertise is in consuming and interpreting market data for their clients. While my family pros are fee-based their value could be questioned, and I am guessing that commission advantages to the advisor would get smoked out immediately.  Index funds already play that role but not at the A.I. level.

Even if human intuition and insight can add value and surpass A.I. customers would have a full basis to sue the advisor if he went against A.I.and lost.  It's a lot like being a baseball manager who follows analytics or like doctors who are forced into defensive prognoses and over testing.

[wh]

No one can control where an innovation of this magnitude is going to take us. The best thing any of us can do is embrace it and learn how to make it our friend. Obviously, that means different things to different people, but do whatever it takes to get ahead of the curve. That goes for individuals, businesses, universities, everything. IMHO.

[valpo tundra]

What happens with an endowment when a school closes? Presumably, much of the money would be earmarked for something other than expenses related to closing.

[wh]

What happens with an endowment when a school closes? Presumably, much of the money would be earmarked for something other than expenses related to closing.

Nonprofit College Endowments after the School Closes

Here's to "closing Valpo" questions never becoming the reality at Valpo. 

As an aside, notice the correlation with the art sale issue.

"In most cases of nonprofit dissolution, executives and board members learn that the state attorney general is the nonprofit's ultimate arbiter and trustee. The AG must sign off on asset distribution and has standing to challenge any distribution that, in the AG's opinion, harms the state's citizens or denies them appropriate access to assets intended for a public purpose."

https://nonprofitquarterly.org/nonprofit-college-endowments-school-closes/

[David81]

True, endowments do not, in and of themselves, save a school from going under. However, in addition to serving as a cash buffer during challenging times, they are decent proxies for whether a school has sufficient gravitas and reputation to make it through such times.

If you doubt this, every time you seen an announcement of a university closing, do a quick search to find out its endowment. You will see, for example, that the overwhelming share of schools that have closed during this difficult period have had endowments of considerably under $100m.

This hardly means that VU can go on cruise control. While I think the main casualties of this continuing shakeout in higher ed will indeed be the severely undercapitalized private universities, a few of the more well-funded schools -- regional private universities that made bad decisions -- may well join that list.