Private college had their lawyers threaten to sue Edmit, the advising company, decided against releasing the information when some of the 946 colleges that were to be named in the analysis pushed back or threatened legal action.
The episode set off renewed discussion about the limited information that many students and families possess about the precarious finances of some of the nation’s colleges, hundreds of which have closed in recent years, upending students’ lives.
The financial-modeling tool was developed primarily by master’s students in Brandeis University’s finance program, who took on the project as part of an experiential-learning requirement. Edmit, in turn, hoped to produce better information about colleges’ financial solvency for consumers, including the company’s clients, its founders said.
Unfortunate for the consumer, but understandable from the perspective of the schools involved as such a report might create a self fulfilling prophecy.
I think that consumers are entitled to information regarding the current financial state of colleges & universities. The difficult part is in predicting the future.
Forbes assigns letter ranks assessing the current financial strength of hundreds or thousands of US colleges & universities, and Moody’s Investment Services assigns grades to hundreds of colleges & universities. Neither service attempts to predict the future. Predicting the future is fraught with the potential for error and for liability.
Edmit should hire attorneys in order to put together appropriate disclaimers & cautionary advice to readers of its report.
Furthermore, any school threatening to sue Edmit should be scrutinized for a lack of full disclosure to potential consumers. Too bad that the federal consumer protection agency (CFPB) has been neutered under the current administration.
P.S. I would love to read the Edmit projections about the 946 colleges facing financial difficulty.
A family member is the dean of a department at a financially sinking private college. It is incredibly difficult to convince students to enroll, so the school has ended up with the student body being mostly comprised of low-performing students. Which has led to a lower graduation rate, which has led to yet other problems.
I agree with the decision to not release such reporting. It’s a difficult choice to weigh current applicants’ best interests against the best interest of future students who might benefit from the specific niche this college fills. I know several graduate of the school, from 100 to 25 years old, and most say they could not have succeeded in life as they have if not for attending that specific college.
For now, I’ll side with the potential benefit to future students over the risk that current applicants might have to later transfer if the college folds in two years.
Times change. Once great businesses in many industries no longer exist. College is expensive & requires a substantial investment of time and money–much of which is financed well into the future. Consumers deserve the right to make an informed decision about one of the greatest investments of their lifetime.
P.S. Any concerns about academic freedom, freedom of the press & free speech rights ? Should Consumers Reports be shut down ?
@Publisher, I hear you loud and clear. And mostly agree.
Where we disagree is the assumption that the consumer in this case has no way to obtain the information in the absence of this story. Most of the financial information is publicly available for those who care to do the work. Also, it is my belief that many (if not all) of these struggling colleges have already had articles written in the local press detailing their struggles. In this internet age, most anyone can find out in minutes if a university might be on the edge of insolvency.
My assertion is that including any school on a list titled “Colleges Likely To Fail Soon” is akin to yelling FIRE in a crowded movie theater. Yes, that’s a stretch, I admit, but it’s the closest I can come to defending my weak position here.
Reports such as the proposed Edmit report, Forbes ratings, Moody’s rating, US News, etc. all should share the basis upon which their ratings, rankings and conclusions are reached.
The vast majority of consumers do not know how to assess the financial stability of institutions. It takes a great deal of resources, time & knowledge. If it was easy, then investment bankers & other financial professionals would not be in such high demand & paid so well.