Report from CIC Conference
Posted on January 5, 2010
I am at the annual Council of Independent Colleges conference this week and, as you might you imagine, most of the talk is of the economic crisis and what private colleges have been doing to respond. Just attended a session by Laura Sander, a VP and Analyst for Moody’s Investor Services.
Her session focused on private colleges and what Moody’s thinks the future holds. First, the last 12 months:
*They conclude that “enrollments were stable, but at what price?” There was an average 9.3% increase in financial aid not funded by endowment.
*Colleges accepted more students and were less selective. *The average number of schools reporting a decline in net student revenue (gross tuition minus institutional scholarship aid) is 4%. Last year it was 30%. If you factor out the selective schools (they tend to skew all averages in this sector), it was probably higher.
*When you look at New England, 48% of the schools saw a decline in net student revenue. By the way, these declines often followed record years in terms of enrollments and revenues.
All of the above reflects our reality.
Looking ahead, Moody’s posits the following:
*Student/family purchasing power will remain stagnant. Think we will see more conservative consumer behavior across all sectors of the economy and certainly in higher education.
*Our sector will need to spend more on marketing to increase name recognition.
*We will need to strengthen value proposition.
*Need to tell a better story about career placement, jobs that graduates get, starting salaries.
*How we structure and manage costs will have a lot to do with how our institutions look in five years.
*Fund raising declined and they think it will take multiple years to return to where it was at its peak.
*They are seeing downward pressure on their ratings (we use S&P, not Moody’s, by the way). They are now looking harder at short term liquidity, but have no working ratios or models of what that should be at any given time (my question to her). It was not the rosiest of presentations. As we have all heard from so many, they see us in recovery, but think it will slow, prolonged, and uneven.
The good news is that we are working on all the items they highlighted. While the cost cutting of the fall was painful, it helped us manage costs in a way that will carry over into next year. We’re spending more on marketing (and getting great respoonses to the new tv ads), buying more leads, focusing on affordability and value proposition, and more. New enrollments for spring look good right now and the new COCE term is also off to a strong start.
While there is a lot of hard work ahead, the dials are moving in the right direction. We have a graduation bubble moving through CE now, so the new student gains are much needed as we see pressure on our retention numbers.
I see at the conference a lot of institutions floundering for a strategy (a session on new models, where we were invoked more than once, was a mob scene). In contrast, we know what we need to do now and we’re making progress.