<p>So Interesteddad, a large endowmnent is not enough, is it?
Endowment per student isn't enough to judge a school's finances, is it?</p>
<p>More information is necessary, isn't it?</p>
<p>What's with the "attitude"?</p>
<p>I've always looked at several financial indicators. In fact, I believe I was the first to mention on this site that Moody's and NACUBO were raising the issue of cash call commitments as a potential problem for colleges.</p>
<p>Having said that, Amherst's very large per student endowment is apparently sufficient to warrant both S&P and Moody's continuing to offer the highest possible bond ratings to Amherst, one of only six LACs in the country to enjoy that rating.</p>
<p>I don't have an attitude...</p>
<p>I think looking at schools is more complex than endowment per student.</p>
<p>Amherst may have a large endowment but the school appears to have liquidity problems.</p>
<p>I'm sure it will be fine.</p>
<p>I'm not too impressed with bond ratings either. I know you're really not.</p>
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I don't have an attitude...
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<p>My bad. It kind of seemed like you were standing there jabbing your finger in the air and repeating, "Is it? Is it? Come on, is it?" over and over. Seemed like attitude.</p>
<p>I've never suggested that per student endowment is the only measure. I did, in response to a question, "This is all so confusing, isn't there one single number to look at?" answer that per student endowment is the closest thing to a single number (at least for private schools) and a good place to start.</p>
<p>I don't think anyone here (or elsewhere) predicted three months ago that a college with a maximum $1.2 billion endowment would be on the hook for $503 million in outstanding cash call commitments.</p>
<p>BTW, I'm not sure Amherst will "be fine". Oh, it will "be fine" in terms of fiscal stability and offering an excellent product. However, the situation they face right now is the kind of game changing miscalculation that repositions a school. For example, before making a major miscalculation about enrollment growth in the 1970s, Haverford had a larger per student endowment than Swarthmore. They churned through the endowment with operating deficits and have never recovered in terms of matching the very top schools in financial resources or physical plant.</p>
<p>"I don't think anyone here (or elsewhere) predicted three months ago that a college with a maximum $1.2 billion endowment would be on the hook for $503 million in outstanding cash call commitments."</p>
<p>Pretty amazing.</p>
<p>I don't understand what the financial managers were thinking?</p>
<p>I'm not really sure about Amherst and other institutions.</p>
<p>I'm trying to be optimistic.</p>
<p>These illiquid investments and capital calls are scary.</p>
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I don't understand what the financial managers were thinking?
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<p>They were thinking, "Wow, this is great. 30% returns. We'll just use the cash from the partnership distributions to buy more private equity. We are so brilliant!"</p>
<p>Then, there were no returns and no cash distributions. Uh, oh.</p>
<p>I have not seen a college with anywhere near the cash call commitments Amherst is facing. Swarthmore and Williams are at $220 million and $265 million respectively, or about half of what Amherst is looking at. </p>
<p>Swarthmore had moved 15% of its endowment into cash and T-bills -- about a $168 million cash position on July 1st. They had gotten very nervous about the markets and moved agressively last spring to a more defensive posture in terms of cash.</p>
<p>Hey, Amherst could turn out to the big winner if their private equity partnerships pay off big over the next three to five years. They are leveraging their investments heavily, which will either multiply their losses or their gains. The problem is that, by all reports, any leveraged buyout equity deal done over the last two or three years is essentially worth zero today -- hammered by the double-whammy of market declines and huge debt.</p>
<p>Nah. Amherst is a loser in PE. The PE investments of the last few years are toast. They aren't coming back unless the value of the dollar is destroyed.</p>
<p>You know what might be a great service? When decisions come in, parents/kids could order a report that has schools on their list of acceptances analyzed for all this stuff.. like what kind of projects are being put off, the stability of their investments, etc.</p>
<p>Looking at giving an institution more than $50K a year I really do want to have a better idea of how that product might fall in the next four years. After all, I'm talking about a school's resources over the next four years and not the next 20 or beyond (except for an overall reputation etc). Certainly it would just be one factor of many, but even for those who are dependent on financial aid, a school's (company) healthy would be valuable to know before you start something you might not be able to finish.</p>
<p>So if I could send my kid's acceptance schools for a comparison without having to do all the research myself of something I don't really know what all I should be looking at, that would probably fill a nice little niche these days.</p>
<p>^^sure. I think that would make for a fun thread. except, that in applying interesteddad's analysis there'd scarcely be anything to discuss: your kid's school doesn't have an endowment of $1 million per student? it's toast. :)</p>
<p>Not really. It's all relative. You have to look at each school viz-a-viz similar schools in the same financial tier.</p>
<p>I wrote the other day about how impressed I am with Dickinson's management. This is school with a fairly modest per student endowment that was in decline a decade ago. It is a very well managed school with high per student net revenues coupled with significant enrollment growth and a growing endowment. </p>
<p>One of the problems with following lower tier schools is that they don't alway publish much financial information. A school in financial stress usually doesn't post its annual fianancial report.</p>
<p>are haverford and swarthmore "in the same financial tier"?</p>
<p>^^^ No.</p>
<p>They are both excellent colleges, but they are not comparable in terms of financial resources.</p>
<p>I wasn't talking a thread, I meant as a professional business. You've got all these private college admissions counselors, well that's about brand and/or fit I suppose. But once you get in to get a personal review of just your colleges -- and I think it says something if it's not even published to those people who know where to look and what to look for -- it might be a very different story (especially between when you applied and May). You could even review in line with your interests (capital improvements or lack thereof)</p>
<p>I was just thinking for example: Middlebury having updated, renovated and added certain capital improvements over the last few years, but for the next four years do they need to do more right away? Unlike Georgetown who really really needs to update their sciences, but can't. That was on Amherst's "to do" list as well. So even though a school like Midd or maybe Colgate (not sure) haven't put off this stuff and might have smaller endowments, they can get by with less in their endowments because less of it is needed for operations.</p>
<p>Maybe colleges that have completed major facilities renovations/ additions in the last ten years ought to have some additional appeal now, vs. others that maybe were planning to do likewise imminently but now likely won't, over the term one is likely to be there.</p>
<p>Not that I know which those are.</p>
<p>Colgate just finished two huge capital projects - a new library and a new state of the art science center. I don't think there were any similarly scaled projects on the immediate horizon. That's fortunate timing.</p>
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<blockquote> <p>They are both excellent colleges, but they are not comparable in terms of financial resources.<<</p> </blockquote>
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<p>Well, this gets interesting, then. Are Swarthmore and Middlebury "in the same financial tier"?</p>
<p>I know Barnard was building a new student center which is a humongously significant project there, I assume they are going to finish it, they essentially have no choice. Very fortunate that they undertook that when they did. Oberlin was building some new facility for their Jazz department I think, I assume that will get finished as well.</p>
<p>see? Based on these things I really think yield will be an added surprise this year -- some positive and some, maybe not so much. Certainly there are some real intangibles when picking a school, but given that a kid has option to attend, say, four different schools. Every one of those might have been in the "I'd be really happy to go there" pile. And so one might wonder if some schools won't offer aid at a better package (a teaser rate (for lack of a better analogy), especially for those that need only half or something.</p>
<p>^^^i can certainly see a scenario where every tier I LAC but Swarthmore cuts back on need-blind aid for internationals (Middlebury and Williams have already hinted broadly at doing so.) People would then have to decide whether having 5% of a student body from overseas rather than 10% is a deal-breaker for them.</p>