Mt. Ida, Green Mountain College, Hampshire College have all recently been in the news: struggling to stay afloat or closing completely!
Q: I’ve seen recent news stories about colleges closing. How can we make sure that we don’t choose a college for our child that won’t be here five years from now?
A: Of course, there is no guarantee that a college will be here five years from now. But there are a few things that you can do to assess the financial health of the colleges you are considering.
Each year Forbes compiles College Financial Grades for four-year institutions. In 2017, they gave Mt. Ida a D-, the lowest grade assessed. Hampshire College, however, seemed about average and less of a concern.
It should be no surprise that the most highly selective institutions generally have the largest endowments and, therefore, are the most financially stable. But there are exceptions!
Moody’s gives credit ratings to colleges and universities on a yearly basis. This past year, Moody’s estimated that only 11% (or 500) institutions have the financial stability to stave off demographic, economic and technological shifts. And several well-known universities have credit ratings far below what one would expect. Georgetown University? UMASS Amherst? Baa2!
So, when on campus, ask about the credit rating, how is all that new building being paid for, how tuition-dependent is the school, what is the endowment. It won’t give you a perfect answer on financial health, but it’s a good start.