Home > Educational Leadership, Educational Reform, Higher Education > One-Third of Colleges Are on Financially ‘Unsustainable’ Path, Bain Study Finds

One-Third of Colleges Are on Financially ‘Unsustainable’ Path, Bain Study Finds

By Goldie Blumenstyk

An analysis of nearly 1,700 public and private nonprofit colleges being unveiled this week by Bain & Company finds that one-third of the institutions have been on an “unsustainable financial path” in recent years, and an additional 28 percent are “at risk of slipping into an unsustainable condition.”

At a surprising number of colleges, “operating expenses are getting higher” and “they’re running out of cash to cover it,” says Jeff Denneen, a Bain partner who heads the consulting firm’s American higher-education practice.

Bain and Sterling Partners, a private-equity firm, collaborated on the project. They have published their findings on a publicly available interactive Web site that allows users to type in the name of a college and see where it falls on the analysts’ nine-part matrix.

The methodology is based on just two financial ratios, and they produce some findings that may seem incongruous with conventional views on colleges’ financial standing. The tool classifies wealthy institutions such as Cornell, Harvard, and Princeton Universities as being on an “unsustainable path” alongside tuition-dependent institutions like Central Bible College, in Missouri. But the very public nature of the findings is sure to bring some attention to the analysis. Bain and Sterling provided advance copies of the analysis and the tool to The Wall Street Journal and The Chronicle.

Visit: http://chronicle.com/article/One-Third-of-Colleges-Are-on/133095/

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