Future of Division III

[Ryan Scott (Hoops Fan)]

At what point does an institution simply drop athletics? I'm not seeing where this change is a benefit on any level.

It costs less.  There's less required administration/paperwork.  No real restrictions on recruiting or scholarships, etc.  A lot of NAIA schools moved to the NCAA largely because it appeared more prestigious to prospective students, but if they're not recruiting athletes specifically very often anyway, does it matter?

A bit of disrespect for athletics as an entity, but was there a ton of respect to begin with?

[Ralph Turner]

At what point does an institution simply drop athletics? I'm not seeing where this change is a benefit on any level.

I think that they are close. Intramurals might suffice for the student population.

[Kuiper]

Court grants motion to dismiss antitrust lawsuit against the Ivy League for rule prohibiting athletic scholarships

The rationale was that the plaintiffs had defined the relevant market as athletically and academically high achieving students, but failed to demonstrate the rule had a negative effect on that market because there were many schools (e.g., Stanford, Duke etc) that also serve students in that market and do provide athletic scholarships.

The significance for D3 is that it probably also provides antitrust cover for D3's prohibition on athletic scholarships.  Even if you could convince a court to restrict D3's main market to small liberal arts schools (which isn't entirely accurate) there are small liberal arts colleges that serve students in this market and provide scholarships (e.g., Colgate, Davidson in the high academics/athletics arena, but plenty of others if you just are talking about smaller schools).

[Ralph Turner]

Moody's bond ratings.

Clarkson to negative; Brandeis is also mentioned

https://www.moodys.com/reports?sector=Private_Colleges_and_Universities

[Kuiper]

More on Brandeis' problems. 

Amid Declining Enrollment, Brandeis is in an intensifying Budget Crunch

"Its finances are just stretched very thin compared to its mission," said Larry Ladd, a higher education finance and governance expert with the Association of Governing Boards of Universities and Colleges.

Graduate student enrollment has nose-dived, the university's national ranking, which helps it attract international students who pay full tuition, has dropped precipitously, and, as of this semester, undergraduate enrollment has slipped.

The financial pressure led to a mass layoff in the summer, hiring freezes and spending cuts, a halt in plans for a new science facility, an usually large drawdown from the endowment to subsidize operations, and, for the first time in a decade, a budget deficit and a cash loss at the end of the past academic year.

Morale among students and faculty has taken a hit. "Brandeis, we are so embarrassed" was the headline of an editorial in the student newspaper last month about the financial struggles. Then, on Sept. 25, following a faculty no-confidence vote that cited, among other complaints, the school's financial woes, president Ronald Liebowitz resigned effective Nov. 1.

[Ron Boerger]

Brandeis has been losing money since the pandemic:  $20.6M, $59.7M, $28.6M, and $37.6M, respectively, for the tax years 2020-2023.  Despite that, net assets have actually increased from $1.2B to $1.39B in that same period, thanks in large part to a roughly $250M increase in the value of "other securities" in the 2020 tax year.  The school reported endowment investments of $1.1B in the most recent audit, for the year ending June 30, 2022. 

The board did approve a $67M drawdown from the endowment to support operations in the 2023-24 school year, a 6.02% rate which is higher than average (around 5.0% according to a February report from Forbes). The student editorial states that percentage increased to 7% for the upcoming school year, which if true would certainly be a factor in revising the school's financial outlook downward.

The article Kuiper cites states that this year's class "[...] came in about 100 students short of the annual target of 900."  The class that entered in Fall 2022 numbered 986 (per NCES), so that would represent a nearly 20% drop in a three-year period in addition to what looks like a 30% drop in graduate enrollment.  It also appear that the administration is using the larger class sizes from previous years to deny that this year's smaller class is indicative of larger issues - but once that large entering class graduates in a couple of years, the problem will be magnified if they don't get their enrollment numbers back up.

[Ron Boerger]

The Chronicle of Higher Education (free account required) today reported that despite overall undergraduate enrollment increasing this fall, the number of freshmen "fell sharply":

Freshman enrollment declined 5 percent this fall, the first drop since the start of the pandemic in 2020, according to preliminary enrollment data from the National Student Clearinghouse Research Center.

Four-year public and private nonprofit colleges saw the largest declines in first-year students (-8.5 percent and -6.5 percent, respectively) compared with the same time last fall. Meanwhile, freshman enrollment fell by 0.4 percent at community colleges.

[...]

Despite the substantial decline in freshmen, the center's new report reveals that undergraduate enrollment is up 3 percent over all — the second straight year that higher education saw an increase (last year's was up 2.1 percent). This fall's uptick, Shapiro said, was driven by gains in non-freshman undergraduates and high-school students participating in dual-enrollment programs (who are counted as undergraduates but not as freshmen).

Both bachelor's- and associate-degree programs saw enrollment growth (1.9 percent and 4.3 percent, respectively) this fall. There was a 2.1-percent uptick in enrollment in graduate programs. And more students are seeking shorter-term credentials: Enrollment in undergraduate certificate programs increased by 7.3 percent over last year.

There is much more detail available via the article linked above.  According to the article, "[t]he new report, which reflects enrollments as of September 26, are based on 8.7 million undergraduate and graduate students at slightly more than half of the colleges (52 percent) the center expects to receive data from."

[Ralph Turner]

One explanation for the "good" enrollment numbers for community colleges may be that many "trade schools" require an Associates degree as part of the curriculum.

[Ron Boerger]

Drew is selling its 51-acre forest (which will be preserved) and will be selling more of its property to be developed.

[Ryan Scott (Hoops Fan)]

One explanation for the "good" enrollment numbers for community colleges may be that many "trade schools" require an Associates degree as part of the curriculum.

Plus all the states offering two year degrees for free to a large portion of their HS graduates.

[Ron Boerger]

A rare bit of good news:  Fitch raises outlook for New Jersey City University

• Fitch Ratings raised its outlook for New Jersey City University from negative to stable, citing "significant progress toward achieving fiscal balance despite continued pressure on student enrollment."
• Since the public institution's trustees declared a financial emergency in 2022, it addressed immediate liquidity concerns through major cost-cutting initiatives and with support from the state, Fitch analysts said Wednesday in an emailed note. That includes a total of $17 million in stabilization aid split between fiscal years 2024 and 2025.
• The ratings agency also noted that the university is poised to log a balanced budget for fiscal 2025, having raised enough liquidity to rebuild its balance sheet and provide "much-needed" funding for capital spending.

"But challenges remain for the university, including a 2024 fall headcount that dropped about 6.9% year over year to 5,430 students. [nb - Fall 2022 enrollment was 6,539, a two-year decrease of 17.0%] Fitch attributed the decline to the state's 'challenging demographic environment and low retention rates among NJCU's vulnerable student base.' They added that the university is investing funds toward growth and retention following its large program cuts."

[Little Giant 89]

Not D-III, but an in-depth look at how "non-revenue" sports are impacted by the changing financial landscape of collegiate athletics.

https://frontofficesports.com/santa-clara-womens-soccer/

[Ron Boerger]

A story from Bloomberg (via Financial Advisor) detailing how some struggling colleges will "slash" tuition rates to make them more appealing to prospective students.  This general topic was touched on in the soccer boards recently; what schools are doing is to basically lock in the 50-60% average discount rates they have been offering via these cuts.  This isn't a risk-free strategy, as you lose those students who pay full rides, but according to the article less than a sixth "of students enrolled in private, nonprofit institutions paid the sticker price" and that was in 2019; today's rate is no doubt even lower (I today received something from my alma mater which stated 99% of students receive some sort of financial aid).  Student-athletes are among those willing to pay more than average, which is one reason so many schools reach out to them. 

Among D3 colleges mentioned are Bethel (MN), Wartburg (IA), Millikin (IL), and Bridgewater (VA), most of whom report success in attracting more students as a result of these reductions.  As the article notes, "[t]he jury is still out on whether tuition resets are winning tactics for less elite colleges in the longer term", but it seems to be a successful tactic for now.

[jknezek]

It failed miserably for B-SC but there was probably more ties up in that than just the tuition reset.

[Ron Boerger]

I think B-SC was too far gone and had way too much debt due to outright financial mismanagement by the time they tried this.  The article mentions another defunct college, Mills College (CA), lowered tuition in 2018 only to close three years later.