So reads the headline of an article in the Chronicle of Higher Education. Another reads, “Where Did All the Students Go? Five Views on the Great Enrollment Crash.”
The Lord has been kind to us.
While nationwide enrollment is down 1.7%, we experienced another record in freshman and overall enrollment. These are very good days, and we hope to keep it that way. Higher education in general has some problems that we will have to overcome in order to do so. Please allow me to make you aware of some of the coming challenges.
- Smaller Net Tuition Revenue Increases
As we look at the sector of higher education, Moody’s has issued a negative credit outlook and has recently stated that net tuition revenue (NTR) would drop to an increase of 1.1% for small private colleges.
- Increasing Discount Rates
As discount rates increase, it means serving the same or more students with the same or less money. As the resources become tighter, faculty and staff are asked to do more. Schools that are desperate to survive drive up their discount rate to unsustainable levels. That competition forces other schools to increase their discount rates to remain competitive. There is a bubble that will eventually burst. We want to position ourselves at the bottom of that bubble so that we can survive and even thrive after it happens. Our overall discount rate is in the low 40s. Here is a chart on 2019 freshmen that gives some perspective to that.
- Declining High School Graduates
The number of high school graduates is expected to decrease significantly beginning in 2025 and continuing through 2030. Some estimate this number as high as 15% nationwide. Combine lower NTR with higher discount rates and fewer students to recruit and you will see our sector become more and more competitive with more schools closing. Here is a chart that provides two different projected models for high school students in Ohio.
We must prepare well for 2025-2030. If at all possible, we don’t want to be in a position of reducing our faculty and staff during that time frame. This means we should at least consider the following steps to prepare for what we see coming.
- Remain Fiscally Conservative
We are trying to eliminate all debt. We do not need to take on new debt unless we have to do so for revenue-generating construction, such as residence halls. We will raise the money for all new buildings in the Campus Master Plan and pay cash for them. This also means that we have to be careful not to expand too quickly in times of prosperity. We must continue to budget conservatively and not take growth for granted. Finally, we must be good stewards of what we have and reinvest wisely to ensure future stability and growth, both in academic programs and in maintaining existing facilities.
- Create Reserves
We will be working to create reserves that can help cushion any enrollment decline. In our budgeting processes, we will develop fiscally conservative budgets that give us room to absorb an enrollment miss. We will also use some portion of any surplus generated by this conservative budgeting over the next five years to ensure we pay cash for buildings and to create financial reserves through quasi-endowments. My goal over the next five years is to work hard to set aside dollars with the anticipation of using that pool of funds, if needed, to keep our institution stable through the projected enrollment crash. This stewardship of our resources would provide stability, Lord willing.
- Efficient and Student-Friendly Transfer Policies
A rule change from NACAC this year now allows schools to more aggressively recruit transfer students. This has not happened in the past, and it will put pressure on schools to make sure they are as student friendly as possible. This means we must be student friendly when it comes to transfers: generous in our acceptance of credit, efficient in our response times, and aggressive in the retention of our own students and the recruiting of other transfer students.
- Maintain Our Mission and Purpose
If we continue to stay true to our mission and purpose, then we may not experience the decline as significantly as other schools. I believe that God has blessed us because we have faculty and staff who genuinely love the Lord and teach in accordance with a biblical worldview in every course. We must resist all challenges to a biblical worldview in every discipline and in every classroom as well as across every co-curricular campus activity. By staying true to our vision of standing for the Word of God and the Testimony of Jesus Christ, not only are we faithful to our Savior, but we also create a unique purpose driven education that attracts Christ-followers.
Right now God has blessed us with a season of prosperity. We need to double down in dependence upon Him through prayer and give Him the praise that He alone deserves. Attempting to be faithful stewards, our goal is to make wise decisions that honor Christ and serve you well. Toward that end, we will continue to be fiscally conservative even in the midst of an aggressive Campus Master Plan, and while we will celebrate our enrollment success, we know that we must keep working hard as the education sector anticipates difficult days ahead. By God’s grace and diligent preparation, we will continue to transform lives through excellent education and intentional discipleship