Small Colleges Are Struggling to Survive
“heightened financial risks”
The bubble is going to burst at some point and small schools will be the first to fall.
The Washington Post reports:
Small colleges fight to survive, amid warnings of shaky finances
About 40 percent of American colleges enroll 1,000 or fewer students. Another 40 percent enroll 1,000 to 5,000 students. These campuses, clustered mostly in the Northeast and upper Midwest, are employment and cultural anchors in their communities, where other industries have fallen on hard times in recent decades.
But now these schools are in trouble, too. Rarely does a week pass without one of the major bond-rating agencies issuing a warning about the finances of a small college. What’s significant about the guidance of these firms is that they tend to rate only schools with strong balance sheets to begin with.
Just this week, Moody’s Investors Service revised the outlook on Mount St. Mary’s University in Maryland to “negative” from “stable.” The rural Catholic college with 2,300 students near the Pennsylvania border made national news last year after its president compared struggling freshmen to bunnies that should be drowned or shot.
The president later quit, but the firestorm he created seems to have impacted the university’s ability to recruit students. Freshman enrollment fell 17 percent last fall, Moody’s said, and that means “heightened financial risks” for the tuition-dependent university on $38 million in rated debt. At the same time, Moody’s affirmed Mount St. Mary’s Ba2 rating, which still places the debt in junk territory, because the university has made “progress in stabilizing leadership and rebuilding its board.”
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Comments
Look at Sweetbriar – management was incompetent and if not for alumni timely stepping up, a viable school w/b dead. Schools and alumni need to be mindful – if not there is a good chance your school will not survive.