How to check on a school's financial stability?

Parents Forum
1

<p>I have heard of some places being bought out by others or at least one closing down. What if your student lands a big scholarship to somewhere and 2 years into this the school declares they are in financial ruin. With many places depending on donations coming in, I know it is such a challenging economy.</p>

<p>Is there some way to check on that or a tactful way to phrase that question during an admissions interview? Does anybody else worry about that when helping a child find a college? Some might be on thin ice already but haven't declared it publicly. I would hate to sign up for something that is already a sinking ship while passing up a chance to go to a more financially sound college.</p>

2

<p>You can use Hoovers. Here’s an example: [Boston</a> College](<a href=“http://www.hoovers.com/company/Trustees_Of_Boston_College/rfjfrti-1.html]Boston”>http://www.hoovers.com/company/Trustees_Of_Boston_College/rfjfrti-1.html)</p>

3

<p>I doubt any big publics would shut down or not honor a scholarship no matter how bad the state’s economy got. A smaller satellite public might be shut down, but I doubt any flagships or similar would shut down.</p>

<p>Public schools tend to be more exposed to “sunshine-like” laws where they have to reveal their financial status on a regular basis. </p>

<p>As for privates, it may be harder to get such info. Do they have to regularly disclose their financial situation to the public? How about if they receive federal grants?</p>

4

<p>Endowments are published; however, they most likely have changed in the past couple years. I think some of the guidebooks include this information. Would endowment information be helpful?</p>

5

<p>The answer is going to be different for various types and tiers of colleges.</p>

<p>Top tier colleges will usually publish their annual financial statements on their websites.</p>

<p>The most recent endowment numbers are available here. Divide by total enrollment to compare institutions:</p>

<p><a href=“http://www.nacubo.org/Documents/research/2009_NCSE_Public_Tables_Endowment_Market_Values.pdf[/url]”>http://www.nacubo.org/Documents/research/2009_NCSE_Public_Tables_Endowment_Market_Values.pdf&lt;/a&gt;&lt;/p&gt;

<p>You can get the most recent bond rating by going to Moody’s and searching for the college name (e.g. “Swarthmore College”):</p>

<p><a href=“http://www.moodys.com%5B/url%5D”>www.moodys.com</a></p>

<p>You can check the most recent bond offering by goign to this site and searching for the municipal bond offering name entered in the MUNI SEARCH box (e.g. “Swarthmore College”):</p>

<p>[Municipal</a> Securities Rulemaking Board::EMMA](<a href=“http://emma.msrb.org/Search/Search.aspx]Municipal”>Municipal Securities Rulemaking Board::EMMA)</p>

<p>Click the most recent bond offering and you’ll probably see a large PDF with the bond prospectus. That will have the most recent fianancial statements as well as a management discussion of financial situation.</p>

<p>Search the college website for letters from the president or whomever discussing the response to the economy. Might be under the President’s office. Maybe the VP Finance. Most schools have published plans to reduce spending, some of which are quite informative.</p>

<p>Find the school’s Institutional Research Department link and explore the data provided there. There is often financial information, current and historic.</p>

<p>Find the student newspaper and search for articles related to budgets, endowments, cuts, etc.</p>

<p>You are really wise to consider this issue. Forget the extreme possibilities. No school in the country will be offering everything next year that they offered last year. That’s just a fact; there is no college that isn’t cutting its budget. So finding out what the place will look like next year and the year after may be very important.</p>

6

<p>When doing college tours, while my child is checking out the students and the dorms, I am always looking around for deferred maintenance, such as broken concrete, walls needing paint, elevators in disrepair, etc. You get the idea.</p>

<p>Not quite as technical as reading a Hoover’s report, but it give me a good idea of what they are not spending their money on. I do ask about such things during info sessions, meetings, etc.</p>

7

<p>You can also look on [GuideStar</a> nonprofit reports and Forms 990 for donors, grantmakers and businesses](<a href=“http://www.guidestar.org%5DGuideStar”>http://www.guidestar.org) and check an institution’s 990 form.</p>

8

<p>When doing college tours, while my child is checking out the students and the dorms, I am always looking around for deferred maintenance, such as broken concrete, walls needing paint, elevators in disrepair, etc. You get the idea.</p>

<p>It may not be scientific, but it does give you an idea of what the situation is.</p>

<p>Also…when I see new buildings going up, or remodeling being done, that’s a good sign, too.</p>

9

<p>Caution–endowment numbers are relevant but also potentially misleading. For example, Harvard has, by far, the largest endowment but that does not mean it is more insulated from the financial downturn. To the contrary, Harvard’s budget was also much more heavily dependent upon endowment income as a percentage of revenue, so it’s endowment losses last year actually had a greater impact on programs then many other schools with far smaller endowments. </p>

<p>What’s important is to ascertain where any particular institution’s revenue comes from and how the downturn has affected that particular institution. For example, some institutions that rely on government research funding more than on endowment income have weathered the storm nicely since the stimulus plan sometimes provided increased funding to those institutions. Conversely, institutions that relied heavily on current philanthropy are being forced to cut back significantly.</p>