Liberal arts colleges fighting to survive are discounting tuition and upping enrollment. It's not working.


Liberal arts colleges fighting to survive are discounting tuition and upping enrollment. It's not working.

Jada Stewart, a junior at Albion College, loads her belongings into her mother's car on Nov. 15 as she moves back to her home in Chicago.David Jess

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Jada Stewart, a junior at Albion College, loads her belongings into her mother's car on Nov. 15 as she moves back to her home in Chicago.

Jada Stewart, a junior at Albion College, loads her belongings into her mother’s car on Nov. 15 as she moves back to her home in Chicago.
David Jesse

DETROIT, Mich. — The sedan swooped in to Albion College, stopping alongside the curb next to a dorm. The trunk popped open and in the wind, rain and cold one day last fall, Jada Stewart loaded her belongings, bag after bag into her mom’s car.

Stewart wasn’t the only remaining student at Albion on that mid-November afternoon, but most were already gone. The biggest things moving in the streets were the last of the fallen leaves. Parking lots were deserted. Campus was shut down. 

Three days earlier, students had been told they had to leave by noon Saturday because of rising COVID-19 cases. Stewart got permission to stay an extra day before her mom drove 3½ hours from Chicago.

Stewart had come to Albion three years ago as part of an ongoing push by the college into the Chicago area in an effort to increase enrollment and diversity. 

Albion needed more students for a simple reason: More students equal more money, at least in theory. Without state aid, private colleges are dependent on tuition, room and board to keep their doors open. At Albion, those three categories brought in 58% of the school’s total revenue in the 2018-19 school year.

But schools often find the only way to bring more students on to campus is to give hefty price breaks, which is exactly what happened at Albion.

Armed with discounts, recruiters went into heavily minority areas where the college previously had not recruited. They were forced into looking into new areas for students because of a shrinking pool of high school graduates in Michigan and intense competition for them.

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The push worked in two ways. More students came and a lot of those students were minorities, diversifying the campus.

But all wasn’t hunky-dory. Because the college gave out steep discounts, its tuition revenue actually went down. And in changing from an almost completely white institution to one on track to become a minority-majority college, Albion also unearthed a host of campus cultural issues.

A sign lets motorists on westbound I-94 know when to get off to go to Albion College.

A sign lets motorists on westbound I-94 know when to get off to go to Albion College.
David Jesse, Detroit Free Press

The financial reality

Nearly two months after COVID-19 chased Stewart and her fellow students from campus, on a bright, sunny weekend in January, some moved back for this semester.

Stewart wasn’t one of them. She opted to stay virtual for the semester “due to mental health. COVID has everything pretty restricted on campus and everything was taking a toll on me.”

If students aren’t on campus, Albion’s budget can take a massive hit. The college pulled in $16.3 million from residential halls in the 2018-19 school year, according to audited financial statements obtained by the Free Press. That was 22.9% of the school’s total $71.1 million in revenue.

Shifting circumstances, like not being able to remain in residence halls, could “increase the urgency of the decisions Albion faces,” according to a confidential assessment of finances prepared for the Board of Trustees in early 2020. An outside consulting firm, EY-Pathenon, put together the report, which was obtained by the Free Press.

The report pointed out what many at the school already knew: While the drive to increase enrollment was successful in bringing more students to campus, it hadn’t solved Albion’s problems.

“We had tried the wait and see, keep your powder dry … approach and it just didn’t work,” board Chairman Michael Harrington told the Free Press. “We had tried to compete on price. That’s fine, for a while.”

The report notes Albion has been beating the trend among its peers in enrollment growth, but has increased its tuition discount rate leading to a decline in net revenue per student.

In the 2018-19 school year, for example, Albion should have brought in a total of $68.2 million in tuition, financial records obtained by the Free Press show. But Albion gave $48.9 million in tuition discounts, leaving it with $19.3 million in tuition revenue.

By comparison, in the 2014-15 school year, Albion should have brought in a total of $46.7 million in tuition revenue, but gave $25.3 million in tuition discounts, leaving $21.4 million in tuition revenue. That meant that despite having more students paying tuition in 2018-19, the school actually had more money in its coffers to spend in 2014-15.

A tuition discount is the difference between the official tuition price and the actual amount paid by students and other parties (outside of college scholarships, Pell Grants, etc).

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All private colleges give some sort of tuition discount, in essence writing off millions of dollars of potential income. That’s good for students, who get a chance to attend schools they couldn’t afford at the published price. But if the discount rate gets too high, it can be disastrous for the institution because there isn’t enough money to pay for the professors, staff or facilities needed.

In order to make up the difference, Albion, like some of its peers, has been tapping its endowment, including for an additional $7 million over its normal yearly draw, which was $5.4 million in the 2018-19 school year. If it continues on its path, it would spend around $48 million from its endowment through fiscal year 2025, the outside firm’s report says. Most of Albion’s peers have also been drawing down endowments, the report notes. Albion’s endowment was about $175 million in the 2018-19 school year, records show. 

Albion can’t simply cut its way to sustainability, the report notes. It offers several suggestions for a path forward. Some are shocking — including merging with a university (no specific one is suggested) to become a liberal arts college inside the university. 

“Albion’s campus community is not characterized by a culture of innovation today,” the report said. “Albion does not have a recent track record of shifting its program offering in material ways, and transformational options will require significant change.”

When asked to react to the report, board Chairman Harrington told a Free Press reporter:

“I didn’t find it as chilling as maybe you did, because we’d lived it for several years.”

The discounted growth model

Coming off the 2008 recession, Albion, like its peers, was hurting. Students weren’t coming and finances were really rocky. Competition in the areas where Albion normally recruited was fierce.

Armed with the willingness to hand out deep discounts, the school went looking for new markets.

One of those was Chicago. Then Albion reached into Atlanta and other major metro areas and is starting to work into Texas, recruiting Latino students.

Robert Joerg arrived as a student in fall 2015 and saw the changing student body firsthand.

“It was very real and brought a different feel to the campus culture,” Joerg, now 23 and the director of advocacy for the Michigan Laborers District Council, said. He was active in campus politics, including serving as the secretary, vice president and president of the Student Senate, giving him access to the administration and board’s decision-making and discussions. He used that access to advocate for students.

Before the enrollment push, Albion largely looked like a white New England campus transported to rural Michigan.

There also was very little socioeconomic diversity. Adding in lower-income, first-in-the-family-to-attend-college students also meant highlighting income divisions on campus.

“The college could have done a better job in preparing for the change in the student body — there were not sufficient resources to help students succeed,” Joerg said.

With the change came a greater emphasis on social issues. Tension built on campus, including around the 2016 election of Donald Trump. There were also racist incidents. 

In 2016, someone painted “#BuildAWall” and “Trump” on a large rock in the middle of campus. That was replaced by a painting of the Mexican and American flags. In 2019, a cardboard box with “KKK,” written on it was found outside a Black student’s dorm room. Earlier in the semester, the same Black student reported finding racist words written on a whiteboard outside the room. This school year, a campus rock that had been painted with Black Lives Matter was painted over in the middle of the night with pro-Trump statements.

As the student body diversified, adjustments were made, right down to what music was played at events and who got to help pick the music, said Stewart, the student from Chicago.

Albion “is slowly becoming diverse and attempting to make changes so that all students, including minorities, are comfortable and feel welcomed on campus,” Stewart said. “(There are) still a few issues that need to be fixed but the college is a work in progress.”

The change in student diversity hasn’t been matched by diversity in faculty or staff. In 2018, the latest year data from the federal government is available, there were about a dozen minority faculty members and just over 100 white faculty members. 

Just like Albion

You could write the names of the 90 or so small colleges in Ohio, Indiana, Illinois and Michigan down on individual slips of paper, throw them in a hat, pull just about any one of them out and substitute that college’s name for Albion when talking about financial struggles.

The struggles have done more than nibble at some institutions. They’ve chewed them up.

A partial list of those includes:

The Liberal Arts building on the Marygrove Conservancy campus in Detroit on Thursday, September 24, 2020.

The Liberal Arts building on the Marygrove Conservancy campus in Detroit on Thursday, September 24, 2020.
Ryan Garza, Detroit Free Press

A huge chunk find themselves teetering above a death spiral.

Author and higher education journalist Jeffrey Selingo divides private colleges into two categories — sellers and buyers.

Sellers, he argues in his book, “Who Gets in and Why: A Year Inside College Admissions,” are the most elite and prestigious places that have no problem attracting students, most of whom pay top prices to attend.

The buyers, including the vast majority of colleges in the Midwest, have to use tuition discounts to get students to campus.

That’s not sustainable, said Brian Zucker, the president/founder of Human Capital Research Corporation, an Illinois-based firm that consults on enrollment strategy. He argues colleges should change their focus, especially during the upheaval of COVID-19.

“This is a profound opportunity for innovation,” he told the Free Press. “This has a great deal to do with leadership and the willingness of the organization to pivot.

Not just attending, but belonging

Growing up in the town of Albion, Keena Williams never really spent any time on campus.

Keena Williams, Albion College's chief belonging officer and Title IX coordinator

Keena Williams, Albion College’s chief belonging officer and Title IX coordinator
Albion College

“That wasn’t a place where people that looked like me went,” Williams, who is African American, told the Free Press. “People viewed it as a different world.”

After graduating from high school in 1997, Williams went to the University of Michigan, but ended up dropping out. About five years later, she decided to go back to college and chose Albion. After graduating and working in other jobs, she found herself back on campus just as the change in student demographics was occurring.

Minority students began pushing for more change. There were lengthy meetings with administrators and students.

“That ruffled some feathers,” Williams said, “from people holding on to what Albion had been or had been for them.”

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Albion now is working on making that change. Williams, who was named the school’s chief belonging officer in 2020, is helping to drive it.

“We talk about retention as being everyone’s job. We talk about how belonging is everyone’s job. We’ve reached a tipping point where we have folks in all our stakeholder groups who are committed to this.”

The game plan for revival

As COVID-19 raged across Michigan in early spring, Mathew Johnson was sitting in the living room of the president’s house in Albion. There were chairs drawn up in a socially distanced circle. Groups of faculty, academic staff, student life staff, students and the search committee itself trooped in for their 45 minutes with Johnson, the potential new leader of their college.

Everyone knew the college needed ideas. Some worried about what change would bring.

Johnson, then the associate dean of the college for engaged scholarship and senior fellow and executive director of the Howard R. Swearer Center for Public Service at Brown University, was ready.

“I put a stake in the ground — there is no way to cut our way out of this,” he recalled a few months later, sitting in his office. A large whiteboard filled one wall, scribbled with plans and ideas.

Albion College president Mathew B. Johnson in his office at Albion College in Albion, Friday, Nov. 20, 2020.

Albion College president Mathew B. Johnson in his office at Albion College in Albion, Friday, Nov. 20, 2020.
Junfu Han, Detroit Free Press

Albion wants to stay affordable, but build the quality — to show families why it’s worth the price to send a student to a small school in the middle of Michigan.

That means investments will be needed — in faculty pay, in new programs and in infrastructure. Johnson’s sticking with diversification as a priority, something Harrington said was a key consideration when the board was looking for a new president last year.

“We wanted to find a president who is courageous to make the investments that are needed,” he said. “We agree we need to do some different things.”

The conversation now is about how Albion can become known as a place students come to “because you want to find a purpose in life,” Johnson said. 

That change costs money, and digging into the endowment is unsustainable.

“We’re scrubbing every corner” of the budget, Johnson said, to see where money is being spent and if it’s being spent the “right way.”

He’s aware of the stakes.

“If nothing changes — two years,” he says of how long Albion has to fix things. “That gets extended by every change.”

This story was supported by the Spencer Education Fellowship at Columbia Journalism School, where David Jesse is a 2020-21 fellow. Jesse was selected as the 2018 Education Writers Association’s best education reporter. Follow David Jesse on Twitter: @reporterdavidj.