7 reasons that a private college's financial viability is important to you.

7 reasons that a private college's
financial viability is important to you.

• Lost credits:  There is an almost certain risk of losing credits if you need to choose a new college.
  
• Cost of lost credits:  Take the cost of each credit hour and multiply it by the number of credits that need to be re-taken. This is a good estimate of the additional costs you may incur if a college closes and you must transfer to another college.
  
• Time lost re-taking lost credits:  Not only are there lost credits, you will need more time  to complete your degree requirements.  There is also the time lost that you could be making a higher income that a degree would normally afford you.
  
• Infrastructure & deferred maintenance:  Research shows that a financially struggling college will most typically hold off on spending money on its facilities.  Safety and comfort can be concerns for you and your family.
  
• Public uncertainty:  History suggests that financially struggling private colleges create a public perception that the college may not survive.  This becomes a self-fulfilling prophecy as more potential students have concerns about viability. This uncertainty could negatively impact your college experience.
  
• Faculty turnover: As with increasing public uncertainty about a college's viability, there is an increased risk that faculty will choose to move to other, potentially more secure teaching jobs.  The expectation of your favorite professor staying with a financially struggling college may not prove to always be likely.
  
• Smaller enrollment as viability concerns develop:  There tends to be a negative impact when new and current college students have reason to believe a private college may not be viable.  Smaller enrollment can lead to a college experience that is less diverse and energetic than you might have expected.

Five Great Questions to Ask About a Private College’s Financial Viability

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10. Five Great Questions to Ask About
    a Private College’s Financial Viability 
    
    
    
    
    
    
    Note: There is no harm if your college representative is unable to answer these questions. Many private colleges are financially strong and can demonstrate that directly or indirectly. These questions provide you with a basis with which to make a more informed decision
    about the financial viability of a college.
    
    
    
    
    Questions are offered in the top section.  Discussion on each question is in the bottom section
    
    
    Questions To Ask
    
    
    Question 1:  We are aware that private colleges are facing financial challenges.  On a scale of 1 to 10, (with 10 being a really high risk - and 0 being no risk), how likely is it that your college will be financially viable for a student starting in 2019 and finishing 4 years later? 
     
    Question 2: Was your tuition discount rate above 50% for the last class you admitted? 
      
     
    Question 3: How do you communicate financial concerns to your students, faculty, staff, community, and others? 
    
     
    Question 4: For the last two years, has your revenue been greater than your expenses? 
    
     
    Question 5: How long has your chief financial officer been at the college? 
    Question 6:  What is your college’s long-term debt?  How does your leadership plan on paying that down?
    
    
    
    
    Discussion of Questions
    Question 1:  We are aware that private colleges are facing financial challenges.  On a scale of 1 to 10, (with 10 being a really high risk - and 0 being no risk), how likely is it that your college will be financially viable for a student starting in 2019 and finishing 4 years later? 
    
    
    Discussion:  This is an easy way to let a college representative know that you are interested in their finances – just like they are interested in your finances.
     
    
    
    Question 2: Was your tuition discount rate above 50% for the last class you admitted? 
    
    Discussion:  Generally-accepted higher education standards acknowledge that any tuition discount above 50% substantially can negatively impacts a college’s financial viability.  It is important to balance the benefit of the discount (known as an unfunded scholarship) offered to your student against the impact of similar discounts to other students.  These tuition discounts make it more difficult for a college to generate the revenue needed to remain viable.
    
     
    Question 3: How do you communicate financial concerns to your students, faculty, staff, community, and others? 
    Discussion:  It is a difficult scenario for private colleges leaders to convey serious financial challenges to their students, faculty, and staff.  Such bad information can perpetuate itself to more quickly lead to the financial downfall of a college.
    
     
    Question 4: For the last two years, has your revenue been greater than your expenses? 
    Discussion:  A simple question.  It may require your college representative to follow up with you.  Access to this financial information is available through CollegeViability.com
    
     
    Question 5: How long has your chief financial officer been at the college? 
     Discussion:  A warning sign of financial challenges can be turnover of a chief financial officer.  They can be the single resource in a private college that recognizes that an institution may not be financially viable.
    
    
    
    
    Question 6:  What is your college’s long-term debt?  How does your leadership plan on paying that down?
    Discussion:  A simple question.  It may require your college representative to follow up with you.  Access to this financial information is available through CollegeViability.com
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