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Some Christian Colleges on Financially Unsustainable Path

July 26, 2012|9:17 am

Correction Appended

About one-third of the colleges and universities in the United States are on a financially unsustainable path, according to a study conducted by Bain & Company and Sterling Partners. The Christian Post found 10 Christian colleges and universities deemed financially unsustainable along with a number of others considered at risk of becoming financially unsustainable.

"The financially sustainable university," written by Jeff Denneen and Tom Dretler, looked at financial stability along two dimensions: expense ratio and equity ratio. Those with a high increase in expense ratio (expenses as a percentage of revenue) and a high decrease in equity ratio (total net assets, or assets minus liabilities, divided by total assets) are considered financially unsustainable.

"The translation: Institutions have more liabilities, higher debt service and increasing expense without the revenue or the cash reserves to back them up," Denneen and Dretler wrote.

The study places schools into three separate categories: financially unsustainable, at risk of slipping into a financially unsustainable situation, and financially sound.

The Christian colleges and universities on the financially unsustainable list include:

  • Azusa Pacific University, Azusa, Calif.
  • Baylor University, Waco, Texas
  • Calvin College, Grand Rapids, Mich.
  • Catholic University of America, Washington, D.C.
  • Georgetown University, Washington, D.C.
  • University of Notre Dame, Notre Dame, Ind.
  • Palm Beach Atlantic University, West Palm Beach, Fla.
  • Regent University, Virginia Beach, Va.
  • Texas Christian University, Fort Worth, Texas
  • Westmont College, Santa Barbara, Calif.

Christian colleges and universities considered "at risk" include:

  • Colorado Christian University, Lakewood, Colo.
  • Covenant College, Lookout Mountain, Ga.
  • Houghton College, Houghton, N.Y.
  • Indiana Wesleyan University, Marion, Ind.
  • Oklahoma Baptist University, Shawnee, Okla.
  • Pepperdine University, Malibu, Calif.
  • Southern Methodist University, Dallas, Texas
  • Wheaton College, Wheaton, Ill.

Christian colleges and universities considered financially sound include:

  • Biola University, La Mirada, Calif.
  • California Baptist University, Riverside, Calif.
  • College of the Ozarks, Point Lookout, Mo.
  • George Fox University, Newberg, Ore.
  • Liberty University, Lynchburg, Va.
  • Oral Roberts University, Tulsa, Okla.
  • Union University, Jackson, Tenn.

In the past, Denneen and Dretler note, colleges and universities would simply increase tuition or get additional funding from governmental or private sources whenever they ran into financial difficulties. Now, though, those resources have dried up. The recession has made college less affordable for many families and government funding has not increased enough to cover shortfalls.

Colleges and universities that are considered top-ranked institutions and have large endowments are less at risk, according to the report. For instance, University of Notre Dame was among those deemed financially unsustainable because it has a high increase in expense ratio (21 percentage points) and a high decrease in equity ratio (six percentage points), but it also has a national reputation and an endowment of almost half a million dollars ($466,966) per full time student.

The authors warn that a college or university could also be at risk if it has had to take drastic measures, such as consistently increasing tuition, lowering admission standards, reducing financial aid or reducing the number of faculty.

There is an interactive website associated with the report, www.thesustainableuniversity.com, where you can find how a college or university is ranked by entering its name in a search engine. You can also browse the colleges and universities in each category.

Correction:  July 26, 2012:

An article on Thursday, July 26, 2012, about Christian colleges and their financial sustainability incorrectly listed George Fox University under the financially "at risk" colleges list.  George Fox University should be listed under financially sound.  

Contact: napp.nazworth@christianpost.com, @NappNazworth (Twitter)
Source URL : http://www.christianpost.com/news/some-christian-colleges-on-financially-unsustainable-path-78882/