According to Mark Cuban (entrepreneur, businessman, philanthropist and owner of the Dallas Mavericks), prospective college students had better check the balance sheets of the colleges they’re considering attending to assess whether the college will still be in business by the time they graduate. Is Mr. Cuban exaggerating the financial problems with colleges and universities? Perhaps. But perhaps not.
His is not a lone voice in the wilderness. Many people with knowledge of higher ed’s finances have been sounding the alarm. The financial situation for the entire sector is eroding. It’s the reason Moody’s Investor Services has issued a negative outlook for the sector. How much and how fast will the four-year college sector fall? I’m not sure. Will some colleges go out of business? Absolutely. Will some have to fundamentally restructure their financial and educational models to stay afloat? Absolutely.
It’s a subject that can’t be covered fairly in a single blog post. For your purposes, it is important to try to assess the overall financial condition of the schools you’re considering. It’s important for the reason implied by Mr. Cuban: no one wants to end up with a diploma from a bankrupt or defunct college. It’s also important because financial problems can impact the student experience in a myriad of ways, including the condition of buildings and equipment, faculty and staff levels and morale, and the quality of programs and services. I’ll provide pointers for uncovering financial distress in the months ahead.
Mr. Cuban goes further and suggests students should prepare what he calls a “college value plan.” If you’re curious, click the link above and read his post. It’s provocative and visionary.