Guilford: Quaker College On The Endangered List?

At Guilford College in Greensboro NC, the hullabaloo over graduation has died down. And now, a grim summer has begun.

Specifically, the passing out of diplomas was followed by the passing out of pink slips, to 52 staff and faculty. That’s thirteen percent of Guilford’s 400 employees, almost one in seven.

The cuts were forced by an unexpected $2 million operating deficit. They followed an earlier round of sixteen layoffs in 2012. And Guilford’s new president, Jane Fernandes, told reporters in late March there could be another sizable deficit to grapple with next year.

A big slump in enrollment — down to 2100 from a high of 2800 — is blamed as the prime cause of the crunch.

Guilford employees who survived the cuts were doubtless relieved, but could hardly be blamed for glancing nervously to the north as they absorbed this news.

For there, just over the horizon in Virginia, is — or rather, was — Sweet Briar College, another small private liberal arts college, which is shutting down completely this summer. Sweet Briar’s board abruptly announced its closing just two weeks before Guilford staff got their bad news.

Many news articles followed what Inside Higher Ed called  Sweet Briar’s “shocking Decision.” Not a few of them had a kicker in their headline: “Who’s Next”?

Yeah: “Who’s next?” But provocative as this tag line question was, none of the articles I hunted down actually answered it by naming any names.

Even so, beyond the headlines some heavy hitters in the business world — and higher education is, unmistakably, a very big business — had already weighed in. And their “big picture” news was not good either.

Take the financial gurus of Moody’s Investors Services. In early 2013, they issued a report, ponderously but ominously titled, “2013 outlook for entire US Higher Education sector changed to negative.”

What? Is higher education now an “investment opportunity”? Can I buy shares in Harvard, or my alma mater Colorado State?

Well, no. But think of it this way: if I send a child to college, at, say, $30,000 per year, that’s certainly an “investment” in her or him, and a major bite from my bank balance.

Or if I go to college myself, and have to take on $50,000 in student loan debt for my B. A. — that’s definitely a big “investment” of my future earnings (if any) to pay off the loan (and the interest).

And that’s not to mention the general economic impact: the mountains of goods and services colleges buy, the millions of jobs they support.

So: like Big Oil & Big Pharma, “Big Ed” is big business. And Moody’s, whose job is to tell us how these Bigs are doing, is not bullish on the sector. Outlook: negative.

But that was 2013; ages ago in business time.

Except that Moody’s repeated itself last December: “Slow tuition growth supports continued negative outlook for US higher education in 2015.”

If you’ve read anything about the field in the last several years, you can guess what’s in the report: the crash. A sharp drop in government support. Hard-pressed middle-class families going downmarket; increasing resistance to crushing loads of student debt for skyrocketing tuition. What else is new?

Furthermore, Moody’s latest outlook report was even more ominous for small, non-wealthy schools:

“We expect the divide between market-leading, diversified private universities and tuition-dependent colleges with weak market positions to continue to expand. Elite, wealthy national private colleges and universities will outperform the rest of the higher education sector over the next 12-18 months because their business models are most closely linked to investment returns and philanthropy, which have been robust in recent years . . . .

Alternatively, heavily tuition-dependent private colleges and universities with weaker market positions and regional draws will be increasingly challenged. Lack of clear market niche and demonstrated return on investment could be the downfall for many small heavily tuition-dependent private colleges that have limited pricing power. These lower-rated privates will face increased competition from cheaper public higher education as well as distance learning options. . . .”

Or in sum: the rich will get richer, and the poor . . . .

There were other voices trumpeting even more dire forecasts of gloom and doom. One, in Inside Higher Ed, is by Jason Jones, who is completing a dissertation at the University of Virginia’s Center for the Study of Higher Education.

Jones’s piece was geeky but the title was blunt: “The Endangered Liberal Arts College.” In it  he noted that a major survey in 1994 identified 212 schools “that qualified as true liberal arts colleges.”

When the survey was redone in 2012, the total was down to 137; and when Jones did his own update last year, he found “found that only 103 qualified. After Sweet Briar’s closing, 102 will remain.”

His conclusion: “While some liberal arts colleges with sizable endowments . . . will be able to weather storms better than others, I expect this trend will continue in the foreseeable future. Colleges will either close, transform into professional schools, or become small comprehensive universities.”

Another scary scenario came from closer to home, from Guilford’s former president Kent Chabotar, who retired just last year.

Chabotar, described as an expert in college finance issues, told the Chronicle of Higher Education that he doubted Sweet Briar would be the only school to close in the near future. In fact, while “‘It won’t be in one fell swoop,’ he said, but there are about 250 vulnerable institutions across the country. ‘I am not saying there is going to be a wholesale slaughter tomorrow. I am saying that they will be increasingly more feeble.’”

Increasingly more feeble?

How close to such “feebleness” is Guilford? Is it a sign that president Fernandes also had to calm a restive staff, among which resentment was already rife because there have been no pay raises in several years?

Predictably, she is doggedly upbeat in public. “We’re in strong financial shape,” Fernandes told a local reporter.  “Once we get to a balanced budget, we’ll be in very good shape to rebuild and move forward.”

But will they? Let’s step back a bit, and see if there is more data available, and what it suggests.

Besides Moody’s, other business groups have narrowed their focus and named names. Forbes magazine, for instance, produced a “College Financial Grades” report for 925 schools in 2013. Grades range from A+ or 4.500, to D at 1.0 or less.

Quaker-founded Swarthmore got an A+, and is rated higher even than Harvard.  Haverford, another Friends school, landed at #36 with its own A+.

Earlham came in at #59, with a 4.225, for a straight A.

And Guilford?

Not so much. To find it, scroll down.

Way down.

It’s listed at #651 of the 925 schools, deep in the lower third of the “C” grade range, at 1.910.

(Some other Quaker schools were even lower: William Penn University was at #657, a C and 1.897; George Fox University, ranked #786, with a C-minus, 1.574; and Malone University was #809, another C-minus, at 1.525.)

To be sure, this list is not infallible: after all, it listed Sweet Briar in its Top 100 (#88), with a 3.899 and an A grade; but hey — that was two long years ago; those were the days.

Another revealing college metric (I had to use that term for this post to be taken seriously) is endowment, especially considered on a per student basis. Here’s where the gap — or rather canyon– between rich and non-rich schools shows up in spades.

Take Swarthmore, for instance: with nearly $2 billion in endowment for 1500 students, that comes in at more than a million bucks per student.

Haverford has $412,000 per student; Earlham clocks in at $333,333.

Guilford has $76,000,000 endowment, for 2100 students. That comes to $36190 each.

(Could be worse: George Fox U. has $16.1 million for 2400 students; that $6700 apiece. And endowment isn’t everything: Sweet Briar had $85 million — $170,000 per student — when it closed.)

What about donations? Certainly, Guilford’s alumni and friends aren’t stingy. During Chabotar’s twelve years as president, Guilford reportedly raised $88 million in gifts. That’s the good news.

The bad news: it wasn’t enough to save the school from its present difficulty.

Then how about bringing in more students, and their tuition dollars?

Great Idea!

Um –Keep in mind that the same idea has already occurred to every college admissions officer in the entire United States. And it recurs every day. (Tho the rumor that it’s tattooed on their foreheads remains unconfirmed.)  Just sayin’.

Which indicates that college admissions are increasingly market-driven.

What does this mean for Guilford?

Here’s part of it: a bit more than half its students come from North Carolina. And when prospective NC students add up the total cost numbers, here’s what they’ll find:

UNC – Chapel Hill:      $24120
NC State U – Raleigh: $22,400
UNC – Greensboro:     $14130
UNC – Greensboro:     $29,000 (Out of state)
Guilford:                           $42600

All these are before financial aid. But you get the idea.

 

 

 

 

 

The “CollegeCalc” website summary is straightforward and brutal: “[Guilford] is 31% more expensive than the national average private non-profit four year college tuition . . . and 97% more expensive than the average North Carolina tuition . . .  for 4 year colleges. [Guilford’s] Tuition ranks 72nd in North Carolina [of 75] amongst 4 year colleges for affordability and is the 4th most expensive 4 year college in the state.”

In a word: Sticker shock. So signing up a battalion of additional in-state students will be, as the business gurus like to say, a challenge.

Outside Carolina, if Guilford can project itself as in the same Quaker “league” with Haverford ($60,000), Swarthmore ($59,000), and Earlham ($50,000), it can look like a bargain to solidly middle class out-of-state families who want the Quaker “cachet.”

Academically that’s a stretch, as the ratings indicate. And how does that work when this middle class, including its tiny Quaker cohort, feels increasingly squeezed? Wait — isn’t that how this whole subject came up?

So. Let’s do some numbers and read the tea leaves:

— Guilford’s ex-president Chabotar spoke about 250 colleges being at great risk. Other say it’s even more.
— Guilford is 274 above the lowest of the Forbes Financial Grades list. Does hovering 24 places above the bottom 250 mean it has a thin cushion? Or a frayed and disintegrating safety net?
— Guilford is, to repeat Moody’s, “tuition dependent,” and in many ways in a “weak market position,” with “limited pricing power.”
— If the school doesn’t find at least 200 more full-time students to increase tuition income, can it absorb another round (or two) of staff cuts without spinning into the “death spiral”? (The projection for enrollment next year? Flat.)
— Its plight is very similar to that of scores of other small liberal arts colleges, all of whom face “increased  competition from cheaper public higher education . . . .”

BTW I’m not a neutral observer here: I have strong personal reasons for wanting Guilford College to stay prosperous and thriving.

So anything could happen. But what I see is what you get. And if the data and the trends are worth anything, they make for strong suspicions that the future of Guilford College is hanging in the balance.

In fact, whenever I think about it, I find myself nervously glancing north, up toward the Virginia border, where “feebleness” just proved unexpectedly, shockingly fatal.