.ou don’t think Harvard is running a deficit? Or Stanford? Everybody is running a deficit!” Those emphatic words are from Fred Prager, of Prager & Co., dean among Wall Street financiers specializing in higher education. He is speaking about the effects of the pandemic on colleges and universities.
More mergers are coming, but don’t expect private colleges to start closing en masse. According to Richard Ekman, president of the Council of Independent Colleges, whose 700 members range from Middlebury College in Vermont to Gonzaga University in Washington, most colleges — even those seemingly on life support — will survive the Covid-19 pandemic.
School closures may not be imminent, but change is coming. “Colleges are not going to come out of this period and return to ‘business as usual’ as too much has changed in the way we do business and the priorities of students,” predicts economist Lucie Lapovsky, former president of Mercy College. “Those schools which have trimmed down and positioned themselves to be able grow in new ways once the pandemic is over will survive and thrive.
There are some standouts in our ranking. Oglethorpe University, a liberal arts college in suburban Atlanta, has made a big comeback in the last five years. It received a failing grade in our 2016 financial grades, which averaged two years of financial data from the 2013 and 2014 fiscal years. Oglethorpe’s core expenses were nearly double its $19.4 million in core revenues in 2013, adding to a heavy debt load.
Rural Virginia’s Emory & Henry suffered the largest decline in the last five years on our numerical GPA scale and earned a C-plus after receiving an A in 2016. Its net assets slightly decreased in the 2018 fiscal year and its operating margin was in the red, a far cry from its 35% average margin in 2013 and 2014. But it remains on better financial footing than many of its peers, sliding in at about the 50th percentile overall this year.
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