Look no further than the plight of certain small private colleges to see the pitfalls smaller independent schools must avoid—and the "out of the box" thinking required to get their finances back on track. An article in last Friday's New York Times focused on several small liberal arts colleges that "have been under financial siege, forced to re-examine their missions and justify their existence."
Here's the general path that took many of these schools to that precarious spot. In recent years, facing a "seemingly endless supply of candidates," colleges spent heavily on campus expansion plans. "Some added costly luxury amenities like rock-climbing walls," wrote Anemona Hartocollis. "Some increased tuition on the theory that high tuition connotes prestige, but then cut their cash flow by giving out generous scholarships and grants to lure students despite their price."
Fast forward a few more years, and applicant pools dwindled, particularly for colleges in rural areas and/or serving smaller audiences: women's colleges, historically black colleges, religiously affiliated colleges. Students and parents became dubious of the value of "expensive private schools" that left graduates with debt from student loans but no job guarantees. The schools' inherent weaknesses became more pronounced. And as their debts mounted, they fell behind in meeting demand for expensive science and technology programs, equipment and facilities.
Some schools have bounced back, if not completely. In Virginia, Sweet Briar College staved off closure thanks to a vigorous last-minute rally by alumnae, combined with legal action. In New Hampshire, Franklin Pierce College nearly doubled undergraduate applications due in part to aggressive marketing. Perhaps more importantly, the school also revived a dormant political polling operation in time to generate worldwide news coverage of the 2016 Presidential primaries, lifting the college's visibility significantly.
Last fall, Moody's Investors Service projected that the number of four-year colleges going out of business could triple, from five a year to 15 a year. I believe that smaller independent schools can learn a lot from our higher education counterparts to beat those odds. Here are some of my key takeaways:
- If your school serves a unique market segment (example, it is single-gender or religiously affiliated), you must commit to making that your competitive advantage within your school's marketplace. Own it. Make sure your marketing communications as well as your staff, students and families also own it, by underscoring the advantages of your unique niche and smaller student community.
- Ensure every aspect of your program aligns with and supports your school's mission. If something does not align, ask the difficult but important question, why are we still doing it? Independent schools find it much easier to add programs than take programs away, but deliberate right-sizing is critical to the future success of many schools, especially smaller ones.
- Carefully monitor net tuition revenue, and manage enrollment and financial aid accordingly.
- Identify and capitalize on something unexpected. Franklin Pierce College restored its image by reinstating its political polling to gain attention. What is something about your school that can create "buzz" and help your school gain positive attention?
Remember, great things come in small packages.
