Reporting on College Finances

The Education Writers Association held its annual Higher Education Seminar in Philadelphia last September. The panel “10 Story Ideas on College Finances” had journalist attendees scribble notes like students. Don’t worry; we collected the best tips for financial coverage going forward.

What Was the Session About?

Though many journalists  tend to shy away from numbers, the panelists emphasized how money is an absolutely integral part of higher education coverage, especially today. 

As colleges grapple with how to handle COVID-19-related enrollment declines, high distrust toward higher education and an approaching enrollment cliff, many small universities are incurring unsustainable debt unbeknownst to taxpayers, donors, students, staff or faculty. The nearly 150-year-old University of the Arts in Pennsylvania closed with a week’s notice, to the devastation of staff, faculty and students. And it’s not alone: On average, according to The Hechinger Report, about one college a week closes in the U.S. 

The panelists also spoke about how to recognize early warning signs of a college on the brink of closure or economic collapse, how to navigate complex 990 tax forms and where to find them and which figures to pay attention to.

Who Spoke?

• Julee Gard, vice president for administration and finance and chief financial officer, University of St. Francis (Illinois)
• Jon Marcus, editor and reporter, The Hechinger Report 
• Stephanie Shonekan, dean of the College of the Arts and Humanities, University of Maryland

What’s Important to Know?

• When discussing college closures, these are mostly private, nonprofit colleges and universities, Marcus said.
• Enrollment is down, and that means tuition is down not just for one year, but for four years that class is there, having a compounding impact on the income a college receives. Shonekan emphasized the importance of meeting students where they are – and for reporters to look at how colleges are aligning their offerings with the economic reward for the school. 
• Look at institutional borrowing – or institutional debt in 990s forms. Colleges borrowed at steadily increasing rates in the 2010s. For instance, in that decade, the nation’s higher education institutions incurred $357 billion in municipal bond debt – what colleges use for credit, Marcus said. If the amount a college owes exceeds their assets, that’s a red flag. 
  • While other indicators, such as audits, tend to be lagging, because they reflect the data from the last year and not present financials, looking at institutional debt is a good way to tell when a college may be in potential financial trouble. Debt exceeding value isn’t always bad, but it is a good indicator that something may be up.
  • You can look up your nonprofit private institution on ProPublica 990 forms, and find this under part 10 on the 990s.
  • Part 9, interest paid on debt, is just as important, Marcus said.
• Gard advises reporters to use audited financials, not Integrated Postsecondary Education Data System (IPEDS), which can be outdated. These audits can show cash flows and net cash flows.

Story Ideas:

• Write about the amount of debt per student, Marcus said by dividing the amount of debt interest per student. Often student fees pay for this, and students may not realize how much their colleges need from them.
• Compare debt to annual operating value of campus and endowment value, which can be found in audit reports and 990 forms, Marcus said. What is the difference and how is the school working to address it?
• How many new staffers are schools hiring, and how is this affecting their revenue? What is the staff to student ratio? Historically, Marcus said, this has been high and rising.
• How are colleges working to restore enrollment after COVID-19, and how are they preparing for the enrollment cliff?

Resources: 

• Federal Audit Clearinghouse is a great place to access audits, Gard said.
• Financial Viability Index Tool, created by Gard, helps people recognize when a college is in financial distress. If a school is in the red zone, they must act immediately, she said.
• Integrated Postsecondary Education Data System, or IPEDs, can tell you hiring salaries and benefits per personnel (public universities will give you this in public records requests often). 
• Municipal Securities Rulemaking Board (MRSB) EMMA Labs can tell you who borrowed what municipal bonds in a state, and you can search by college, Marcus said.
• ProPublica’s 990s form database – Look at an institution’s debt, revenue, expenses, endowment value, research grants, etc.