The risky strategy of many private colleges exposes them

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It has become standard practice in the industry. The financial solvency of many private colleges is now based on a probability lattice. But many of the strategies colleges used to attract admitted students, such as campus tours, are now gone. If the probabilistic models break down, revenue losses at some colleges could be much more severe than Edmit hypothesizes, and the number of private colleges in acute financial distress could be even greater.

Private colleges continue to oppose the release of public information that might show them in a negative light. The National Association of Independent Colleges and Universities (NAICU), an industry trade group, has called on the Department of Education to suspend publication of “financial responsibility scores,” which are different from Edmit’s estimates and aimed at identifying colleges at risk of bankruptcy.

Barbara Mistick, president of the NAICU and former president of Wilson College in Pennsylvania, says many private colleges serve large numbers of low-income students. “We don’t want to harm institutions unnecessarily,” she said, noting that public colleges and universities are not penalized by the Department of Education for the fact that state government funding is on the line. the at the edge of a vast entrenchment. In addition to the CARES Act funding, the NAICU has called for a large increase in funding for the federal Pell Grant program, to give students and the colleges they attend more resources.

Of course, many colleges will find a way through the current crisis, and universities like La Salle could rely on the administrative know-how and deep roots of alumni and community support. Modeling tools aren’t perfect, and a worrying trajectory doesn’t mean a college will stay on that trajectory.

Historically, colleges have been among the most adaptable and enduring institutions. A list of nongovernmental organizations that survived the 1918 pandemic and are still operating today would include a disproportionate number of private colleges.

Patricia McGuire is president of Trinity Washington University, a women’s university founded by the Sisters of Notre Dame de Namur in Washington, D.C. Trinity is not on Edmit’s list of endangered universities. The college has kept expenses and tuition low, Ms McGuire says, by avoiding unnecessary debt and focusing on academics rather than amenities. “Frugality, she notes, “is a habit we inherited from nuns.”

But other private colleges have used borrowed money and statistical leverage to bet on a strategy of spending more to compete for a shrinking pool of wealthy students. For some of these colleges — if middle schoolers are dropping out or delaying higher education in large numbers this fall — that may prove to be a fatal mistake.


Kevin Carey directs New America’s education policy program. You can follow him on Twitter at @kevincarey1.

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