Iowa Wesleyan's fate underscores woes facing others

Many other private colleges also coping with gloomy finances

On its website, Iowa Wesleyan University lists five top reasons to enroll: quality education, personalized experience, affordability and extracurricular opportunities in the small, safe, and friendly town of Mount Pleasant, cradled in the Midwestern breadbasket of Southeast Iowa.

An hour and a half northwest sits Pella’s Central College — another four-year private liberal arts school promoting $24,000 in scholarships to “a select number of applicants.”

Continue an hour west and you’ll hit Indianola, home to Simpson College, a four-year private institution that highlights its affordability.

But all three schools over the past decade have seen noteworthy enrollment and financial challenges in a higher-education landscape that’s become increasingly competitive — not just for students, but for donors willing to support their missions.

“It’s a sobering and disturbing moment,” Jonathan Brand, president of Mount Vernon’s Cornell College, said last week in responding to news this month that Iowa Wesleyan — older than Iowa’s statehood itself — could soon close. “It’s hard not to feel affected by it.”

Iowa Wesleyan — founded in 1842 — has been battling financial woes for years, partnering with banks and federal agencies for loans, trimming programs and costs, and ramping up recruitment in hopes of diversifying enrollment.

But it doesn’t have a healthy endowment or strong donor network, and President Steve Titus and trustees on Nov. 1 gave the school until Nov. 15 to find a solution or risk closure.

“At this moment, the university does not have the required financial underpinnings to bridge the gap between strong enrollment and new programming, and the money needed to keep the institution open,” Titus wrote in a message to the small campus.

Other private schools report similar — albeit not as immediately terminal — challenges in recent years, aggravated by fiscal worries across Iowa’s public universities that several years ago drove them to ramp up recruitment of in-state students, the prime crop of customers for many local privates.

And as the state continues to cut appropriations for public higher education, while also trimming support for the Iowa Tuition Grant — for Iowans interested in a private education — independent colleges and universities find themselves keying on four strategic spokes to keep their wheels turning.

They need to grow enrollment, boosting revenue with the help of tuition increases. They need to diversify their student body, thus increasing their recruitment pool. They need strong partners from the public and private sectors. And they need philanthropy — lots of it.

“Those in the region that have been blessed by wealth and wish for (the schools) to continue simply are going to have to step up,” said Charles Fluharty, an Iowa Wesleyan trustee, University of Iowa professor and founder and president of the Rural Policy Research Institute, a national enterprise committed to assessing the impact of public policy on rural America.

“That’s just a reality. And it’s not happening in Southeast Iowa.”

‘Untapped wealth’

In that most of Iowa’s private universities and colleges have been around for generations, some Iowans take for granted the institutions’ role as economic engines and community glue, according to Fluharty.

“There is an amazing amount of landed wealth in Southeast Iowa, and it’s not expressing itself to support this institution the way it should,” he said of Wesleyan. “There is massive untapped wealth in the 25 counties down there.”

Iowa Wesleyan estimates its economic impact to the region at over $55 million a year. Fluharty said his research indicates that’s low.

“They have no idea what they are going to lose if this institution goes away,” he said. “The reality is you are losing, frankly, the major driver of human, social, and cultural wealth in that region if this place goes away. And people do not understand that.”

The idea that Wesleyan’s looming closure — or threats to any other private schools, for that matter — are just the market right-sizing to the demand is flawed in that it forgets the value of geographic and programmatic diversity, according to Fluharty.

“What is unique about Iowa Wesleyan, and really important there, is it’s in a region down there that has been underserved by higher education for some time,” he said. “And it’s reflected in every socio-demographic number you want to look at.”

Although Iowa’s 30-plus private colleges compete for the same prospective students — a pool that in Iowa has been shrinking and morphing in demographic makeup — Cornell President Brand seconded the idea that school diversity is paramount in fostering a healthy array of academic options.

Like a town with multiple coffee shops, Brand said, the goal isn’t to run the others out of business. Rather, he said, “They want to encourage more coffee drinkers.”

Enrollment woes

But if private postsecondary education in Iowa is caffeine, a growing number of customers are choosing decaf. Undergraduate enrollment across the Iowa privates is down more than 4,000 over the past decade — about 10 percent.

Figures provided to The Gazette by Iowa College Aid, which the Legislature created in 1963 to promote academic accessibility, show the private institutions that have seen the biggest undergraduate enrollment declines since 2008 include Simpson College, down 567 students or 28 percent; William Penn University, down 453 or 26 percent; Buena Vista University, down 572, or 24 percent; and Central College, down 321, or 21 percent. While Iowa Wesleyan more recently has grown its student body, figures show it is down 215 over the last decade, or 26 percent.

More than half of Iowa’s privates have seen some degree of enrollment decline in the past decade — with just as many reporting drops since 2016.

On Oct. 10, Simpson President Jay Simmons sent reported to campus that “significant changes” were ahead in response to “the changing landscape of higher education.”

“Small, liberal arts colleges in Iowa and across the nation have been facing, and will continue to face, financial and enrollment headwinds,” he said in the message. “Our changes today will allow us to continue the mission of Simpson College by investing our finite resources in programs that best serve our students’ futures.”

The Simpson changes involve closing its Department of Art, eliminating its French and German majors and restructuring its Clinical Health Science major — translating to a reduction of 13 positions.

To make up for declines in enrollment, Simpson — along with every other private institution in Iowa — has increased tuition and fees, with students paying a total of $37,663 in the 2017-18 year, up 28 percent from $29,525 in the 2012-13 term.

The Simpson increase ranks as the second highest among Iowa privates during that span, topped only by Drake University, which hiked its tuition and fees 32 percent over the six-year period.

But Simmons echoed the notion that tuition can’t cover it all, and philanthropy is essential.

“You won’t hear one word of disagreement,” he said. “The more endowed resources we have, the less money we have to ask our students to pay in tuition.”

Although every one of Iowa’s private institutions has enacted a rate hike, some have minimized them as they’ve managed to escape enrollment declines.

Those few schools that have added to their undergraduate totals over the past decade include Grinnell, Mount Mercy, and Coe colleges, Iowa College Aid data shows.

“Coe has been fortunate enough to buck the trends, with record enrollments for the past five years,” Coe President David McInally said in an email, praising the increasingly diverse student body at the Cedar Rapids school. “We believe that strong colleges should look like the nation that they serve.”

By stretching their recruiting muscles beyond Iowa, private colleges and universities can avoid a hit from the shrinking pool of in-state prospects.

Alternative paths

Funding diversity, like enrollment diversity, can be imperative for private schools scrambling to stay afloat. That might include bank and federal loans, like one Wesleyan secured in 2016 from the U.S. Department of Agriculture.

The $21.4 million USDA Rural Development loan came with a $5 million loan guarantee to Two River’s Bank & Trust. All the money was advanced to Iowa Wesleyan, and the school is current on its payments — although it noted in its recent campus message a desire to work with the USDA and other regional partners on alternative paths forward.

Darin Leach, a spokesman for USDA Rural Development, said Wesleyan is not the only college or university in Iowa to receive help through the loan program. Other recipients include:

• William Penn University in Oskaloosa, approved for a $43.8 million direct loan in September 2015;

• Upper Iowa University in Fayette, approved for a $75 million direct loan in July 2016;

• Central College, approved for a $66.6 million direct loan in November 2016;

• And Maharishi University of Management in Fairfield, approved for a $12.1 million direct loan in April 2017.

Simmons said Simpson considered a USDA loan, but found it wasn’t the best option at the time. He’s rooting for Iowa Wesleyan’s success, whether through federal support or another philanthropic partnership.

“It’s unsettling when you see a peer institution facing these challenges,” he said. “But it’s an indication of where we are in higher education nationally.”

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