By Bob Hildreth
In 2016, Forbes Magazine forewarned of their closings in its annual college financial rankings by marking Wheelock C- and Mount Ida D-. Simultaneously, Forbes ranked Emmanuel, Becker, and Cambridge College in the same range. Earning grades of C/C+ were Assumption, Boston School of Architecture, Endicott, Merrimack, and Emerson, which Forbes characterized as just “skating by.”
To be fair the environment facing these colleges could not be worse. As a business, colleges sell seats in classrooms and today’s demographic trends are not producing enough warm bodies to fill those seats. Furthermore, the financial model of colleges is broken, as they increase tuitions each year to receive more government subsidies (student loan transfers), pushing their prices so high that they leave students gobsmacked.
It is a good time to ask, “What is at stake in a college failure?” The degrees of students, the well-paying jobs of professors and administrators, as well as the jobs of workers, the disruption to cities and towns, and the reputation and economic health of our state. Put that together and maybe votes as well.
Where is the Baker administration in all of this? Once Wheelock fell, were they surprised Mount Ida suffered the same fate? It was no secret that both colleges had been looking for merger partners for some time. Does the Baker administration have a plan for the next time?
When I had asked Governor Baker about the abysmal record of the state in providing financial aid to low-income students going to schools like Wheelock and Mount Ida, he responded that he was more interested in the front end in education where Massachusetts students scored highest in the nation in tests like MCAS. It was a little short-sighted as it turned out.
Ironically, corporate bankruptcies are smoother than what happened to Wheelock and Mount. Ida. Companies get protection from creditors and often funding called “debtor in possession” (DIP) which allows for time to sort things out. There is also a check on any backroom deals as shareholders get a vote.
Learning from this experience, Massachusetts Department of Education should regularly collect the public financial reports of private colleges and open a dialogue with troubled colleges. Corrective action may involve a line of credit to the college or assistance in finding a merger partner. The full impact on all parties must inform the discussions.
The alternative is what is happening now: large universities like BU and UMASS swooping down upon little colleges and gobbling up large benefits with little risk. There is name for these kind of mergers — it’s called lunch.