Tuesday, August 17, 2010

Financial Stability of Colleges

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Mom and Dad are usually not worried about the college their child attends going out of business. It is rare but it does happen. When I toured Ohio Wesleyan last year, I met several students who had formerly attended Antioch college which closed a few years ago. It was sad for those students to leave the bonds they had made and start over again.

The Department of Education just released their list of colleges that fell below their criteria for financial stability. This is a top 100 list that colleges DON'T want to be on. Unfortunately, the list really doesn't reveal the methodology which makes the results hard to evaluate. Honestly, I think that the government should have given colleges a break this year and not released the list since many college endowments were hit hard by the stock market slump last year. What is worth paying attention to are the colleges that have been identified over multiple years.

As a consultant, I don't want to suggest any colleges to my students that are not financially viable. So, I pay attention to things like the size of the endowment, staff layoffs, and the status of the buildings and grounds. If the campus looks run down overall, I am concerned because it may be a sign of financial instability. It really surprised me that Guilford College was on the list this year since I visited recently and found the campus well maintained with many updated facilities. Because Guilford has some special qualities such as a laid back southern atmosphere with Quaker values and strong support of LD students, I will continue to recommend it to the students that fit and hope that the poor rating is just a blip in their history. Unfortunately, the physical plant and the stated endowment do not tell the whole story so it is important to pay attention to college finances in the news.

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