A company that was blocked months ago from releasing an analysis on colleges that would face closure within the next few years will publish an amended version of that analysis in the coming weeks, and the outcomes may present a bleak picture for historically black colleges and universities.
Inside Higher Ed provides insight on the report, whose details are revealed in tandem with new rules from the National Council for State Authorization Reciprocity Agreements, which will consider financial stability as an element of a school’s eligibility to offer online degrees.
The consumer-focused development comes from Edmit, a start-up advising company that in November planned to release findings from a financial model projecting how many years private nonprofit colleges had until they would run out of money and likely close. It backed off after threats of legal action from some colleges. The company is releasing a new version of its findings that takes into account coronavirus-related financial stresses while avoiding a controversial element of last year’s plan — showing each college’s estimated years to closure.
Now, the company’s findings categorize institutions as being at high, medium or low risk of closure. Institutions deemed at high risk were found to be in danger of depleting their net assets within six years, a period that lines up with the time it takes many students to graduate with bachelor’s degrees.
The report’s focus will be on private institutions, and there’s a good chance that a sizable number of those schools will be historically black colleges and universities.
These disclosures will publicly attach schools’ names to two-year-old financial data published by the U.S. Department of Education and will classify them by their level of risk. Many of the schools which will be designated as ‘high risk’ we’ve already classified as such in our communities for years.
Private HBCUs will need to prepare for this report and its public ramifications. Now is the time to start preparing FAQs on what Heightened Cash Monitoring means, how endowments are funded and support the school, and how losses impact operations.
Our schools need to start having public conversations about debt, credit ratings, and revenue streams, and how all of these things are reflected in accreditation matters.
For years, HBCUs and advocacy organizations have worked quietly with Congress and government agencies to offer context on why HBCUs should have a reprieve from financial and student achievement guidelines. They have rightfully and successfully argued that HBCUs can’t play by the same rules when those rules were designed and upheld for generations to sabotage HBCUs’ existence; the mission of educating America’s poor and disenfranchised guarantees that success metrics like graduation rates, loan default rates, post-graduation debt load and job placement, and time to completion were never the point of historically black higher education.
But now the United States is running out of money. State and federal governments will have every reason to divest in higher education at large, and specifically in schools that they feel have outlasted the socioeconomic demand for public funding.
Consider the recent report from the New York Times:
Looming ahead is an even bigger problem, one that will last for years after the pandemic itself is over. The severe economic contraction is pummeling state tax revenues. Moody’s Analytics projects a 20 percent decline in state receipts next fiscal year.
If historical patterns repeat, public college and university budgets will be slashed, sending tuition and student loan debt skyward. Some institutions will be so starved of funding that they will effectively cease to be “public” at all. Others will have a greatly diminished ability to help students learn.
The Trump Administration has made historic investments in HBCUs, but those will not be transferrable to either his next administration or one under the leadership of Joe Biden.
HBCUs will not be able to depend on Congress or state governments when there simply is no money left to give. Now is the time for institutions to be straight up with their stakeholders and to lay out the bottom line proposition: if Black America does not enroll in HBCUs, donate to HBCUs, or influence corporations to do business with HBCUs, many of them will simply close.
