Study: A Third of Colleges on Unsustainable Path

Tim Goral's picture

Ten Connecticut universities and colleges find themselves on a financial path of late that is unsustainable in the long term – including Yale University, according to a study that arrives amid continued hand-wringing over the debt students and families are incurring to pay for their degrees.

Nationally, a third of all colleges and universities are in a weaker financial state today than before 2005, according to a study by Boston-based Bain & Co., whose consulting practice includes one focused on higher education.

Bain compared university equity ratios (equity as a percentage of assets, lower than in past year) with expense ratios (expenses as a percentage of revenue, up than in past year) and added that endowments are unlikely to recover to the annual growth trends they enjoyed leading up to the recession.

In short, Bain said, colleges have more liabilities, higher debt service and increasing expenses without the revenue or cash reserves to back them up – and with only limited ability to pass those costs onto families who themselves are scrutinizing their options against available college tuition and financial aid packages.

In Fairfield County, Bain included Fairfield University and Western Connecticut State University in its quadrant of institutions deemed to have the least sustainable financial structure, along with Wesleyan University in Middletown and Yale.

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