‘Real Financial Trouble’: One-Third of Colleges & Universities Going Broke
- Posted on July 24, 2012 at 7:44pm by
Becket Adams
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Almost one-third of colleges and universities in the U.S. are in “real financial trouble,” according to a new study from Bain & Company.
“Institutions have more liabilities, higher debt service and increasing expense without the revenue or the cash reserves to back them up,” the report states.
Simply put, several colleges and universities are facing “liquidity crises” because they spend far more than they bring in, according to the study’s authors
Jeff Denneen, a partner at Bain, and
Tom Dretler, an executive with Sterling Partners.
“The reason for the crisis, they say, is due to the equity ratio being down, the expense ratio rising and the lack of endowments for schools,” CBS Atlanta reports. “The economic crisis didn’t help matters for higher education as many families have been unable to afford to send their kids to college. Student loan debt has also topped $1 trillion in the U.S.”
“Regardless of whether or not families are willing to pay, they are no longer able to foot the ever-increasing bill, and state and federal sources can no longer make up the difference,” the Bain & Company report notes.
What needs to happen if these colleges want to be on financially stable footing again?
“Universities simply cannot afford to increase costs in nonstrategic areas and take on more debt, if they want to survive. It is imperative that universities become much more focused on creating value from their core,” the report states.
Translation: Run your business like a business.
“That will require having a clear strategy, streamlined operations, a strong financial foundation, trust and accountability, and a willingness to invest only in innovations that truly create value for the institution,” the report adds.
Read the full Bain & Company report here.
Front page photo source: The Associated Press.
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Comments (67)
Individualism
Posted on July 24, 2012 at 9:46pmWell they do spend allot of money on allot of fun but non needed stuff like ice rinks and gym even if there in a tourist town. Degrees that get you jobs are STEM, Science Technology Engineering and Math. When banks start lending out money or if you got connections to get loans than you can start a business otherwise keep it on the computer. If someone if not paying for your college than don’t go. They should spend money on the best people to be professors but they spend so much on fun stuff that serious people don’t have much time to do.
Report Post »piper60
Posted on July 24, 2012 at 9:56pmThis means the untenured junior faculty are going to take it in the teeth to bsailout the suits’ mismanagement, as usual. Colleges trasde upon loyalties they only honor during fund raising drives. They show none themselves, either to faculty or students. They have the ethics of a neighborhood bookie joint and a basic goal of getting away with whatever seems useful, regardless of professional norms or law.
Report Post »Gold Coin & Economic News
Posted on July 24, 2012 at 10:23pmBoy, why can’t these guys figure out basic economics? Don’t spend more money than you take in. It’s so simple someone brain dead could figure that out. Here a basic economics lesson for those that don’t get it:
Report Post »http://www.youtube.com/watch?v=sOKcdOI25ig
13th Imam
Posted on July 25, 2012 at 7:56amUsed to be, before Barry KILLED the job Market, even art degree majors could find work. Now these STEM (so-called majors) have few evil corporations left to hire them. DEMOCRAT over regulation, and DEMOCRAT confiscatory TAX policy’s and DEMOCRAT class warfare have squeezed the evil rich job creators out of the incentive to create jobs. If we the voters don’t dump this communist DEMOCRAT president and his comrades this fall, America is doomed.
Report Post »Detroit paperboy
Posted on July 25, 2012 at 10:30amObama will bail them out with some fresh monopoly money………no prob.
Report Post »rickc34
Posted on July 25, 2012 at 11:10amWas Obama giving a speech, I mean look at the picture, 1 guy is asleep, another yawning and the rest bored out of their minds. Maybe we need less Colleges at this time. College grads are unable to find employment , unable to pay for their college. Lets get more trade schools and open up factories here in the States again. Plus get rid of all those left wing prof. teaching our kids the wrong things about God.
Report Post »nighttrainno9
Posted on July 24, 2012 at 9:27pmYeah, right, the Uof T just turned their cash into several billion in gold.
Report Post »They all cry a big river but I don’t know of a single university or college
that isn’t growing and building like crazy. Another bullcrap article.
Crazy-Horse
Posted on July 24, 2012 at 10:06pmLike any of these liberals are going to believe a report from Romney’s old company Bain.
Report Post »historyguy48
Posted on July 24, 2012 at 9:23pmComrades this is easy to fix! Charge more, then charge more again. If that doesn’t work then charge even more.
Report Post »Actually re-elect Dear Leader. In less than four years he will fix the problem because nobody will be able to go to school, heck it will take everything you’ve got to put food on the table so who cares about college?
Baddoggy
Posted on July 24, 2012 at 9:31pmI know you are right, but I am still uneasy with you calling me Comrade…even though we are all Commies now. I really don’t feel like goosestepping either. I don’t think this Commie thing is going to work for me.
Report Post »HorseCrazy
Posted on July 24, 2012 at 9:12pmwa state is now going to have 20,000 a year in state tuition. they also are building a brand new stadium for football yet whine and cry about how broke they are. these colleges are big bloated money pits. they need to be stripped down to the nuts and bolts of what is necessary and be done with the grandstanding show off garbage. enough already sell off half of your campus itself and most of these places would still have plenty of room for the students. too bad we still have to listen to them whine locally and nationally about how poor they are.
Report Post »hinds91834
Posted on July 24, 2012 at 9:23pmFootball pays for itself with most large schools so building a bigger stadium does make sense to me. in fact football also funds a lot of the other sports.
Report Post »Tired of Code Names
Posted on July 24, 2012 at 9:38pmColleges and Universities are a love hate relationship with their local communities. The communities love the idea of their university/college. They hate that those institutions are tax exempt and all the property the colleges/universities have don’t pay taxes. Go ahead and keep voting for the democrats. It’s welfare for the rich.
Report Post »Melika
Posted on July 24, 2012 at 9:52pmWell, that would be the problem, wouldn’t it? The football programs pay for the football programs, and NOTHING goes into the school itself. What is the point of having a football team with the college name if the college itself doesn’t benefit somewhat from it? Every other program in these colleges must bring money via research grants etc. into the school, I don’t understand why the football programs are treated differently. These colleges should just shut down every other program except for the football and sports sections and concentrate on making money.
TheBurningTruth
Posted on July 24, 2012 at 9:08pmSure sounds like these institutions are taking advice from their own business schools. Spend without regard to income or consequences. Hire tons of administrators and raise teacher and administrator salaries.
Report Post »piper60
Posted on July 24, 2012 at 10:04pmMany colleges, like many other”mot-for-profits”are run for the benefit of their administrators, surplus income transforms into suit salary, office gear and secretaries like magic.
Report Post »StandingOnMyHead
Posted on July 24, 2012 at 9:03pmI am sick and tired of being sick and tired! As a parent that is forced to pay 100% of tuition based on the Obamer finance laws and tuition rates raising to all time highs every semester, how is it possible that these morons can say they are broke. We can not carry these idiots on our backs as well. They receive immediate payment, even from those that receive loans. When will anyone be willing to make self sacrifice because they are in their profession for the right reasons? I no longer see any common sense in this country and any pay off for working hard.
Report Post »ScoobyCheese
Posted on July 24, 2012 at 8:57pmThis is easy. They just need to charge the richer students more money since “they can afford it.” They also need to invest in infrastructure by building better and more sidewalks and offering free meal plans for students with the lowest grades. Honor roll students need to each give a point off of their own grades in each one of their classes to people who are failing so that the school can keep more students. Also, they need to give scholarships and free tutoring to the students with the lowest grade point averages because they have obviously been held down by the oppressive system that awards people who already have the advantage of natural intelligence, have supportive parents, and better study habits.
Report Post »If they would just “level the playing field” a bit more (or just level the results), everybody would be pacified enough not to notice they were going bankrupt. And if nobody believes it (because it’s not happening immediately to them), then it’s not really happening.
Oh, and the presidents of the schools need to hold more fundraisers (for their own salaries) and play more golf.
piper60
Posted on July 24, 2012 at 9:59pmFootball doesn’t “pay for”anything but football. Minor sports have to scratch for every ace bandage and bag of white chalk.
Report Post »drphil69
Posted on July 24, 2012 at 8:50pmThe price of college has increased faster than medical care, at about triple the rate of inflation.
Where is all this money going??
Report Post »Hickory
Posted on July 24, 2012 at 9:10pmHave you checked the salaries of tenured professors lately? Also, those professors have special projects going on that have nothing to do with teaching but to put in their books. The schools get zip from the sales of those books. And by the way, those professors require the students to buy their books. Some of these very schools have spent millions on building expansive, and expensive, facilities for students and staff. They are spending money like crazy……………. just like all liberals do. Show me a liberal and I will show you an idiot with a maxed out credit card. He will have several in that condition if he is a PhD. I know a couple, both PhDs that both are maxed out and in the ditch. But they have tenure and make big bucks.
Report Post »KangarooJack
Posted on July 24, 2012 at 8:50pmI’m sick of this. College has been made out to be “golden” and it really is NOT the truth. {FYI- I graduated with a B.S. degree and attended Master’s Degree Courses…} None. NONE NONE NONE NONE-with respects to ‘Folk Dancing 301’ have had ANY impact in my REAL WORLD life.
Report Post »AnimalsAsLeaders
Posted on July 24, 2012 at 9:34pmThat’s not a problem with college as a concept, that’s a problem with you not being able to pick a major that will translate into real world skills. I use what I learned in nearly every class I took in college, from calculus to biology, physics to computer science, on a near daily basis. That‘s because I went to college to acquire the knowledge I’d need in the “real world”. Don’t blame everyone and everything else for your poor choices.
Report Post »Melika
Posted on July 24, 2012 at 10:13pm@Animalsasleaders: That’s not necessarily true. There are many occupations that have, for various reasons, fallen into the trap of believing a college degree means a quality employee. I am amazed at the jobs today that require some degree or another, when only 10-15 years ago these were on-the-job entry level training types of occupations. While there are some truly stupid choices for a major being made, some people make them because of the perceived career options, only to discover upon graduation that what they learned isn’t really applicable.
Report Post »Even if you are going to blame the poster for his choices, that is a little unfair. The vast majority of these college students are young, inexperienced high-schoolers when making these decisions, coming from public schools, taught and counseled by public employees. The typical HS counselor first asks what they LOVE to do and then they try to find a program in which a student will “follow his bliss”. There is very little counseling on the realities of life, costs of living, employment prospects, family needs, actual costs of debt, or anything else an adult considers. The counselors have one job – get as many prospects filling out the FAFSA as possible. The colleges also have no impetus to change. Students are NOT consumers, they are inductees granted an audience with no recourse. The college gets it‘s gov’mt money whether the student passes or fails, gains employment or not: they have no impetus to safeguard students’ intere
AnimalsAsLeaders
Posted on July 25, 2012 at 1:00am@MELIKA
“There is very little counseling on the realities of life, costs of living, employment prospects, family needs, actual costs of debt, or anything else an adult considers.”
You’re right, these things should come from the parents of the child. It’s not up to school administrators to raise our children. It’s time to take responsibility – it‘s not the school counselors’ fault, it‘s the parents and the children’s fault.
Report Post »I certainly know what’s better for my kids than a school counselor, that’s why I teach my kids about the costs of living, the perils of debt, employment prospects for given degrees, and other things “adults consider”.
CaptainAhab
Posted on July 24, 2012 at 8:49pmWell maybe the football coaches could scrape by on 100 grand a year for starters. Higher education is a rip off these days, we want our kids to get job oriented education to support themselves.
Report Post »KangarooJack
Posted on July 24, 2012 at 8:47pmNaw! Say it aint so!
I’m positive that Universities will raise their: parking lot fees/student medical fees/registration fees/course fees/breathing fees/athletic fees/exhaling fees/etc.
Report Post »wisehiney
Posted on July 24, 2012 at 8:33pmHorror of horrors! The lame stream media and “education” establishment are closing down! How will they brainwash the masses without the masses money? What happened to the free education, free mortgage, free food, free cars? Why did we fire the people who told us there is no free lunch? Now this “noble savage” is standing over me with a bloody knife, why did’nt I buy a firearm instead of this
Report Post »diepad?
FREEDOMoverFEAR
Posted on July 24, 2012 at 8:29pmKollege es good kollege make mi smart. I Heart Fresno State. LOL
Report Post »wisehiney
Posted on July 24, 2012 at 8:25pmSounds like y’all smart folks better borry and spend some mo.
Report Post »Baddoggy
Posted on July 24, 2012 at 8:14pmLiberals need to put their money where their mouth is. SPREAD THE WEALTH!! Make those Ivy Leauge schools that habe toms in the bank give their millions to some small Community Colleges!
Report Post »qpwillie
Posted on July 24, 2012 at 8:14pmOh no!! If the institutions of indoctrination go down, how will the brainwash young minds for the communist cause?
Report Post »AnimalsAsLeaders
Posted on July 24, 2012 at 9:38pmI‘m going to take a wild guess and say you’ve never been to college.
Report Post »jp54
Posted on July 24, 2012 at 8:10pmWhen your out-go exceeds your income your upkeep will be your downfall. (sorry about “out-go, it fits)
Report Post »TheEDGE
Posted on July 24, 2012 at 8:08pmLove the picture. They look like some real movers and shakers there.
Report Post »Melika
Posted on July 24, 2012 at 10:16pmActually, the guy who is sound asleep at his own graduation is probably the best student there – anyone who slumps into that kind of position is either ill or so exhausted from work that he just can’t stay awake. Or maybe he’s still sobering up.
Report Post »Darmok and Jalad at Tanagra
Posted on July 24, 2012 at 8:06pmThey can’t understand, they use Keynseian Economics, they spend Govt. money and their money and the money they borrow, and they only let people in that can’t afford college, so they don’t pay their loans. Why doesn’t this model work? Country after country has tried it, Zimbabwe, USSR, Greece, Spain….what are we doing wrong? I know, spend more money…yah, that’s the ticket.
Report Post »Darmok and Jalad at Tanagra
Posted on July 24, 2012 at 8:23pmOne more note, I wonder if I can get a PhD for 1/2 price?
Report Post »wisehiney
Posted on July 24, 2012 at 8:35pmI’m thinking you are already more qualified than existing faculty.
Report Post »TheEDGE
Posted on July 24, 2012 at 8:05pmI get the feeling that they are leaving two thirds of the story out.
Report Post »chips1
Posted on July 24, 2012 at 9:02pmObama!! Obama!!! Obama!! There. I’ve given you three. You can fill in as many stories as you need. Don’t be bashful. There are millions of them.
Report Post »mrmikejohnson
Posted on July 24, 2012 at 8:00pmThis can’t be true. Tuitions are at an all-time high and colleges are getting fat government guaranteed loans. I read in National Review that Harvard has enough endowment to pay all teachers salaries and all student tuitions for like 80 years or something crazy like that.
It makes that Texas college look pretty smart for investing in a ton of gold a year or two ago if this is true.
Report Post »Apple Bite
Posted on July 24, 2012 at 8:17pmUniversity of Texas. despite being in Austin (a quite Liberal town…) is conservative underneath the flesh…
Report Post »kpeters59
Posted on July 24, 2012 at 7:56pmFigures.
Who needs Restoring Love tickets? We‘ve got extras that we’ll donate to someone worthy.
-KP
Report Post »timmone
Posted on July 24, 2012 at 7:55pmSpend more money than you take in…….sounds familiar….stupid is stupid does.
Report Post »Dde13
Posted on July 24, 2012 at 8:02pmLiberal Economics 101
Report Post »SCREW-WINDOWS
Posted on July 24, 2012 at 7:53pmUnion logic give the professors a raise.
Report Post »chips1
Posted on July 24, 2012 at 7:52pmTheir biggest problem is the fact that not a single graduate can figure out how to run a college. Home school your college kids and save a fortune.
Report Post »Dde13
Posted on July 24, 2012 at 7:57pm@chips
Report Post »Amen!