Okay, I found the discussion of percentage of student athletes at a school and the pay-to-play phenomenon really intriguing. I went to this governmental website and downloaded the data for 4-year public and nonprofit private schools with a population under 5k.
I then did a little simple math (added the total # of unduplicated males and unduplicated females for the total # of athletes and then divided that by the # of undergrads) to get the percentage of undergrads who were athletes. And I’m excluding U. of Fort Lauderdale because it somehow has more athletes than undergrads and I’m not going deep enough into the rabbit hole to figure out why. But suffice it to say…
First, some frames of reference for this 2022 data (the most recent year available).
A few schools more familiar to CCers that are considered athlete-heavy are Williams (35% athletes), Amherst (32% athletes), and Middlebury (26%).
Here’s a summary of how the schools broke down:
6 schools between 90-95%
12 schools between 80-89%
24 schools between 70-79%
47 schools between 60-69%
74 schools between 50-59%
99 schools between 40-49%
165 schools between 30-39%
203 schools between 20-29%
251 schools between 10-19%
193 schools between 1-9%
Here are the athlete percentages at some schools mentioned upthread:
Wittenberg: 59%
Birmingham-Southern: 47%
William Jewell: 62%
Keystone: 40%
Mount Mercy: 50%
Eastern Nazarene: 50%
So now in researching schools for financial viability, I think that athlete percentage would be a good one to include. And it’s also something to look at for people interested in smaller schools…when more than half of a school’s population is a varsity athlete, it will almost certainly have a very different culture than one where varsity athletes make up a much smaller percentage.
That’s what was done at NCF in Florida, at least their first year (no idea whether it’s still true). This under 1,000 student college had the largest baseball team in the State. It totally changed the nature of the college but it worked in terms of recruiting students.
Ugh. I tried to find some information on NCF’s website, and it appears that they have quite an aggressive tracking system. It’s not easy to opt out. I will warn those who are not interested in the school not to visit their website.
Not your fault! It took me by surprise to see a two step process to keep a college website from selling my information. I’ve never seen that, and I just wanted to warn people.
Anyone see reliable information about Albion College? My son was interested and I saw articles about their financial struggles and spending cuts. I’m trying to determine how much risk there is that they would close.
Their rating by S&P has been lowered each of the past 2 years, first from BBB+ to BBB, which is 2 steps above junk, and then to BB.
It has had modestly declining enrollment at a time when the number of high school graduates has been increasing. Starting next year, the number of high school graduates begins to decline, which means fewer applicants available for colleges.
Albion is exactly the kind of school which has been targeted for potential closing, i.e. low enrollment (1300), low endowment ($160 million), highly dependent on tuition for economic stability.
I have no idea if they will close or if their efforts to stabilize their finances will work, but they are certainly at risk. Whether or not they will still be solvent in 4 years is anyone’s guess.
Just as a data point, not an inference as to their financial health, but 41% of Albion’s undergraduates are varsity athletes, per the source a couple posts above.
One of the schools my D25 is considering has a S&P rating of Baa3 rating, which concerns me. Are there questions I could ask of the financial aid department (or somewhere else) that would either reassure me that this school isn’t going to fold in the next four years or that would convince me that this is no longer an option for her?
Unlike Forbes ratings an S&P rating (and Moody’s or Fitch ) have a direct impact on a college’s cost of raising capital. Investors in the school’s municipal bonds use the ratings as a measure of financial risk which in turn will be reflected in the yields they demand to purchase those securities.
Baa3 is the lowest investment grade rating there is. This means the school is in a tenuous spot. They are already paying a premium for capital and if they are downgraded to below investment grade they may loose access to further funding.
Most institutions in this situation will take actions to adjust their operating budget. These include cutting costs by eliminating majors or sports teams, raising tuition, putting on hold facility improvements, staff cuts or reducing financial aid, etc. All obviously negatively impacting students experiences.
The extent or impact of these measures would typically be offset by endowment size or alumni donations.
Personally I would not want my kid to start attending a school in the midst of such financial concerns playing themselves out. You may be able to get a “watchlist” report from one of the rating agencies but I suspect this won’t eliminate concerns as their job is to highlight risks. I also wouldn’t bother doing your own financial analysis given your conclusions are irrelevant relative to the markets focus on the ratings agencies. You could find yourself being right in principle but wrong in practice at your kids expense. Ultimately the rating drives the colleges borrowing cost not your independent analysis.
Keep in mind you should not be looking at this from the perspective of an investor but as a student whose experience will be impacted. The schools capacity to pay its debt or exist as an ongoing entity is largely irrelevant to the student. What will matter is the likely measures taken to improve the credit worthiness of the college at the expense of the student experience
Sorry wish I could provide a more optimistic picture.
Thanks. I’ve seen much of that data along with the Forbes articles and articles about cuts. This just reconfirms the concerns. They gave my son a large scholarship making it the least expensive school, which I know is another red flag. He won’t be going there.
Does the large amount of scholarship athletes mean something?
I think it only means that they value him as one of their top projected students. Since money is dear to them, they have to be careful about how much money they give out, so they must think very highly of him.
To complicate things. One of our schools is rated Baa3 by one agency and A- by two others. I’ve eventually decided I’m ok with this…but am nervous about the Baa3. Another college is listed as BBB…so which is better?
They are relatively the same - BBB minus is the lowest S&P investment grade. So it’s more of a BAA3 while a BBB would be more like a BAA2.
The question that @illneversaynever asked and I answered wasn’t about the experience but whether the school will be there in four years.
If they are BAA3 or BBB, I imagine they’ll be there even longer than four years. They’re in near zero danger of immediate failure.
Even highly rated schools cut programs or supports - but that wasn’t the question asked. The question asked was related to their existence in a few years.
I own bonds like these - Hendrix, Guilford (which has cut substantially) and some Missouri directionals - and I have near zero concerns.
Might the experience lack - perhaps - but that wasn’t the question asked. And that can happen at highly rated schools too.
Bond ratings are measuring the ability to pay back debt (and yes, the issuer will pay more for a lower rating) but the rating agencies are assessing that ability as strong - or they would not be investment grade, which they are. Yes, they could be cut to junk - but even that is not a deathknell. On the other hand, they can be raised. It goes both ways - and sometimes ratings change based on a methodology change and not a borrower change.
I can’t comment on whether or not Albion might be in financial trouble, but I have read some articles over the past couple years in the Detroit Free Press that discuss the school. You might want to check them out. The school has a good reputation, but I don’t know how it’s doing now. They have traditionally had success preparing students for medical school. You might want to see how their recent success with medical school placement compares to past for an idea of how things are going.
I just looked up their accreditation, and their accreditator issued a Statement of Financial Distress in late November: Albion College | The Higher Learning Commission. You should read the letter and decide what it might mean for your child.
There appears to be some confusion. Where you looking for insights that might holistically impact your child’s college experience or looking for other posters to share their college municipal bond investment experience and or their opinions on the eventual solvency of an anonymous school?
Thanks just trying to make sure I stay on topic and don’t get drawn into debate. Happy to offer any expert advice via DM on ratings agencies methodologies and or bond markets given that is what I do professionally and I can draw on the expertise of a public finance team of professionals that works for me.
