FINANCIALLY FRAGILE
The Inquirer examined the financial health of 13 small, private Philadelphia-area universities — schools particularly vulnerable in the competitive higher-education market.
Lucia Madron hadn’t planned to attend her mother’s alma mater, but now, as a freshman at Rosemont College, she can’t imagine having gone anywhere else.
“I fell in love with the place,” the 19-year-old philosophy major from Kennett Square said in mid-October as she helped sell cupcakes outside the library for the school’s recently revived student newspaper, the Rambler.
As a freshman determined to make a difference, she has already started a club, too, focusing on Bible study. But what she likes most about the more than century-old Catholic college with the neo-Gothic architecture and leafy campus on the Main Line is its size: “Power of small,” she says enthusiastically. “Every voice counts.”
But the 774-student private college’s small size, along with its dependency on tuition and its location in a college-saturated market, is also what threatens it. Rosemont reported operating losses for five straight years through June 2023, and since 2020 has borrowed millions from its restricted endowment to meet operating expenses.
Rosemont was one of 13 small, private universities The Inquirer examined because of their vulnerability. Not only do these largely tuition-dependent institutions face a shrinking number of high school students like other colleges across the country, but they also do so with the smallest endowments in the region alongside dozens of other schools elbowing their way to enroll the same regional population. Even bigger Philadelphia-area schools that cast a wider net, like Drexel University, are struggling.
“I don’t know that there’s a lot of rosiness on the horizon,” said Jessica Wood, sector lead for higher education at Standard & Poor’s Global Ratings. The next five to 10 years are expected to be particularly challenging for schools like these. “They’re going to see more declines over the next few years,” Wood said.
Following the abrupt closure of the University of the Arts in June — a shocking collapse with many unanswered questions that left hundreds of faculty and students scrambling to find alternatives — The Inquirer asked Julee Gard, a finance executive at a small college in Illinois, to calculate the financial health of the following schools: Widener, La Salle, Arcadia, Delaware Valley, Gwynedd Mercy, Eastern, Holy Family, Immaculata, and Neumann Universities; Chestnut Hill, Rosemont, and Ursinus Colleges; and Moore College of Art and Design.
Using a financial viability index Gard developed as a University of Pennsylvania doctoral student to look at fiscal years 2015 to 2023 — or 2024 for schools that had already published their latest financial statements as of Nov. 8 — The Inquirer found:
Four of the schools in 2023 scored 35 or less in the 100-point index, deeming them in poor financial health. They were La Salle, whose score of 19 was the group’s lowest; Rosemont, which had a score of 21; Doylestown-based Delaware Valley, which got its start as a farm school in 1896, with 23; and Neumann, a Catholic school in Aston, with 25. Neumann’s score rose to 37 in 2024.
Other schools with low scores since 2015, such as Chestnut Hill, Ursinus, and Immaculata, also have shown signs of financial recovery.
There were additional bright spots: Holy Family in Northeast Philadelphia was in excellent financial health — with a score of 75 and above — every year of the analysis. Setting it apart, the school does not draw on its endowment for operating expenses, which has allowed it to grow.
Colleges are aggressively reducing expenses and adding programs in new high-demand fields, hoping to solidify their futures: Eastern’s big push into online and low-cost graduate programs, such as a $9,900 MBA, enabled it to solve the problem of stagnant tuition revenue. And Neumann made significant financial strides in the year that ended June 30 by cost-cutting.
- Holy Family is one of the financially healthiest small, private colleges in the Philadelphia region, a standout as many others struggle.
- As a Penn doctoral student, Julee Gard created a tool to measure the financial health of universities. Here’s how it works.
The challenges of measuring university financial health
Exactly how many colleges have closed over the last few years depends on how they are counted.
Higher Ed Dive, a news outlet that published a national map tracking closures and mergers of public and nonprofit private colleges, reported there were 24 so far this year, up from 14 in 2023. Six of them from this year are in Pennsylvania: UArts; Cabrini University in Radnor, which closed in June; Salus University, which was merged into Drexel this summer; Pennsylvania College of Health Sciences, which was merged into St. Joseph’s University; Clarks Summit University; and Pittsburgh Technical College.
In addition, Peirce College in Philadelphia plans to merge into Lackawanna College in Scranton next year, and just two years ago, the University of the Sciences was merged into St. Joe’s.
Gard, who developed her financial viability index as part of her 2023 dissertation at Penn’s Graduate School of Education, is adamant that her system — with an emphasis on how well a school can cover its expenses with student-driven revenue — is not designed to predict college closures. Rather, it is meant to give administrators and boards another way to look at their institution’s financial health — and time to act.
However, it’s notable that both UArts and Cabrini were in poor financial health on Gard’s index before they closed. Also, in her dissertation, Gard noted that nearly 80% of the 39 private institutions that had closed since 2017 had the poorest financial health immediately prior to closing. Since then, the percentage has grown to about 85%.
Gard’s system elicited some criticism from college presidents when The Inquirer asked for comment about the results.
“It unfairly rates institutions using a set of data, which I understand seems logical to use, but it’s not the whole picture,” said Chris Domes, president of Neumann. “It takes into account a limited set of data. It doesn’t take into account the factors on the ground at an institution.”
He prefers ratings by financial agencies, such as Standard & Poor’s, which include many more data points and incorporate an interview with university leadership, he said.
Anne Prisco, president of Holy Family, said she also prefers the Standard & Poor’s rating. No one measure is perfect, she emphasized.
“I’m pleased that we are doing well, but every rating has its pluses and minuses,” she said of Gard’s model. “Right now, what that is demonstrating is that we are in a strong financial position, and we are.”
Standard & Poor’s, as well as other ratings agencies, gets paid by the universities for its ratings and focuses narrowly on the schools’ ability to pay municipal bond debt. Of the schools Gard analyzed, Rosemont, Chestnut Hill, and Moore do not have credit ratings from any of the major agencies because they don’t have publicly traded debt.
Predictions and warning signs
It’s relatively easy to spot financially weak colleges, but what comes next is hard to predict, said Robert Kelchen, a professor in educational leadership and policy studies at the University of Tennessee, Knoxville. It’s tough to know if boards of trustees are willing to make large cuts or sell assets, he said, and public financial measures are often lagging by a year or two.
“Colleges can often hang on for a very long time,” he said.
But among the warning signs he recently cited in the Chronicle of Higher Education were continued operational losses, low or declining enrollment and revenue, heavy draws from endowments to cover losses, and accreditation sanctions.
There’s no question that it’s a perilous climate for small, private colleges without large endowments at a time when affordability has become more of an issue for many students.
Colleges with small endowments must depend on revenue from a shrinking pool of undergraduates. Only two of the schools in The Inquirer’s analysis have endowments worth more than $100 million. The biggest is Ursinus, with $147 million. The smallest is Rosemont, with $16 million. By contrast, the endowment at Bryn Mawr College — a selective women’s school — was worth more than $1 billion in June 2023. (The median nationally for private schools is $238 million.)
Given that there’s so much financial pressure on the sector and so many schools in the region, potential mergers and closures are the talk of Philadelphia’s higher education community. The number of Pennsylvania colleges in talks about merger or closure possibilities is in the low double digits, said Kate Shaw, executive director of the Pennsylvania State Board of Higher Education and deputy secretary and commissioner for postsecondary and higher education. She declined to disclose the names of the colleges.
“There are discussions all the time among institutions at all levels, and anyone who doesn’t acknowledge that, I think, is probably not being as forthcoming as they need to be,” said Jim Cawley, Rosemont’s president. “Many times, most times, those discussions don’t lead anywhere.”
His comments came in response to questions about a visit officials from Alvernia University made to Rosemont earlier this year, giving rise to speculation Rosemont was in talks with the sister Catholic university in Reading. Cawley declined to confirm talks with Alvernia, while Alvernia president Glynis A. Fitzgerald said talks with Rosemont and other institutions have been informal and focused on how they could work together.
Cost-cutting and growth efforts
To cope with financial pressures, a number of universities, including La Salle, Neumann, and Gwynedd Mercy, are reducing the size of their academic structure, moving to fewer colleges or schools and de-emphasizing programs with low enrollment.
Some, including Ursinus and Widener, have reduced faculty and staff or offered buyouts.
Ursinus, a liberal arts school in Collegeville, which scored 37 in 2023 on the index, eliminated 13 full-time employees last year. That move was expected to save $3.2 million a year, according to a bond offering statement. Ursinus now has a staff of 350.
Chester-based Widener implemented a voluntary retirement program last year, which cost it $6.9 million, according to the school’s fiscal 2024 audit. Eighty-two employees opted for the program, a university spokesperson said. The move came during the same year the school saw a 67% increase in its freshman class. It handed out 20% more financial aid but collected only 2.4% more tuition.
Universities are not only trying to shrink their way to financial health, but also trying to grow through new programs, such as data science, cybersecurity, and health sciences.
Eastern stands out. Several years ago, it introduced its “life flex” online programs that, for example, allow a student to obtain an MBA in 10 months for under $10,000. Its enrollment has more than doubled.
“That product has really taken off and worked for them,” said Stephanie Wang, an S&P higher education analyst who is based in Philadelphia. But given the newness of the program, there’s not enough data to assess its quality, she said.
Chestnut Hill, which recently came off a federal Department of Education monitoring list for schools with low financial responsibility scores, is following Eastern into the low-cost MBA business, said interim president Brian McCloskey. Graduate programs are attractive financially because they have better profit margins than traditional undergraduate education, he said.
Chestnut Hill has had about a 9% drop in undergraduate enrollment over the last few years, he said. And Chestnut Hill’s tuition revenue is down 27% since 2015, the second-steepest drop in the region after La Salle.
A wave of gifts commemorating former president Sister Carol Jean Vale’s 30-year presidency helped patch over the tuition decline and grow the school’s endowment. It’s now worth $23 million — still very small, but double its value a few years ago, McCloskey said.
“We’re not out of the woods, but we’re certainly moving in the right direction,” he said.
Here’s a closer look at some of the schools that are struggling:
Neumann: ‘Our story is one of resilience’
Like many schools, Neumann had a tough time financially when federal pandemic aid went away after the 2021-22 academic year.
Thanks to federal COVID-19 grants, Neumann had swung to an operating profit of $3.9 million in the year that ended June 2021, following two years of losses. Neumann’s operating loss soared to $10 million in fiscal 2023. That loss helped land Neumann in the lowest category on Gard’s index in 2023.
To cover those operating losses, the school borrowed a big chunk of its unrestricted endowment, or reserves, which fell to $7 million by June 30 from $20 million two years earlier.
Anticipating a big loss in the 2022-23 school year, Domes, Neumann’s president, met early that year with the entire staff and told them, “We need to go in a different direction,” and asked for their help.
Neumann embarked on a broad cost-cutting effort, going through every expense line with the help of a new chief financial officer from outside higher education. The result was a 20% reduction in contracted services and supplies, $20.7 million from $25.9 million.
Some of the bigger items involved transportation, he said. The school eliminated shuttle service on campus and went from using buses to vans to transport athletes. It also reduced dining service hours, moved printing in-house, and shrunk the number of colleges from four to three.
» READ MORE: Neumann University needed housing. A local convent had space. Now, nuns and students share a ‘dorm.’
Food waste was a target, too. In catering an event for 100 people, much of the food used to go to waste, said Bruce Cairnduff, Neumann’s new CFO. The university now tells the caterer to prepare for 80 instead, he said.
“I’m paying 20% less and I have less waste,” he said. “We saved a lot of money doing that.”
One thing the university did not do was lay off employees, Domes said, and it was careful not to affect the student experience, even adding back some dining service hours after students voiced concern.
The moves reduced Neumann’s operating loss in the year that ended June 30 to $3 million, pulling it out of the index’s lowest category.
Neumann’s management and board felt confident enough that Neumann was turning the corner financially that employees received a 3% pay increase in July, and more raises are planned. The first increase, necessary to keep staff in a competitive labor market, cost $750,000.
In addition, Neumann has added majors in high-demand areas and is expanding its graduate courses, including forensic psychology and a master’s in nursing, as well as more online programs, Domes said. In 2024, the school has seen a 25% increase in online courses over last year, he said.
Total enrollment this fall is 2,244, up 3% from 2,171 a year ago. Domes said he expects Neumann to sustain 1,800 to 2,000 undergraduates, and expects growth to come from graduate programs.
“Our story is one of resilience,” Domes said. “Was 2023 a tough year? Absolutely. But during that period of time, we were doing hard work to make sure that the university was reestablishing itself as a strong institution.”
Delaware Valley: ‘A delicate balancing act’
Delaware Valley’s financial results also stumbled after federal COVID aid wound down. The school collected $265,000 in fiscal 2023, down from $2.9 million the year before, said university president Benjamin E. Rusiloski.
The school also has significantly higher expenses, partly from new degree programs. The university invested in two new clinical programs, speech pathology and physician assistant studies, which meant hiring 10 staff members before the school could enroll students.
» READ MORE: Delaware Valley University picked a longtime administrator, Benjamin Rusiloski, to be its new president
The university also hired new administrators because half of the president’s cabinet was empty when he started in 2021, he said.
“Fiscal ’23 was the first year I had a full cabinet,” he said.
In addition, he pointed out that the university remains heavily focused on agriculture, with two-thirds of students enrolled in animal-related majors with another large group in plant-related majors.
“They got hit extra hard by inflation,” he said, “things like feed, bedding, fertilizer, veterinary cost. You name it, everything went up. Some of it went up 25% or 30%.”
» READ MORE: Delaware Valley University maintains a close connection to its founder: His ashes are housed in the library
But the school recently graduated its first cohort of students in the physician assistant and speech pathology programs and has improved its financial position for 2025, he said.
“Our enrollment at the undergraduate level went up the last two years,” he said, so much so that the school is housing 30 students at a local hotel and planning to add residential space on campus. “We are above where we were in 2019 in total revenue.”
The university also is looking at new ways to get revenue from its 1,100 acres over three properties; a land asset committee meets quarterly.
Last year, Philadelphia retailer URBN took over the market on Lower State Road that Del Val opened in 2005 and turned it into Terrain Cafe, a garden and home center and event venue. The school now collects more rent on the property, which employs two dozen students, Rusiloski said. “And they use the products in the cafe that we generate on campus … meat and vegetables and fruits. They also allow us to have a farm stand down there.”
Delaware Valley, he said, is working on other similar arrangements that will benefit students in horticulture and beef science. The school received a $2 million state grant this month to help pay for a poultry science center. It also got $750,000 in government funds for a livestock center.
“It’s a delicate balancing act,” he said. “It’s a challenge. … The mindset that I think higher ed has to be in right now is not find a solution and you’re done. This is a continuum to ensure each institution is able to fulfill its mission and support its students, faculty, and staff.”
While its 2024 audit is not complete, the university anticipates an operating loss, though not as big as in 2023. For 2025, the school is projecting a balanced budget, he said.
Rusiloski also pointed to another long-standing measure: More than 96% of Delaware Valley students are employed or in professional school within a year of graduation, he said. About a dozen get into the top veterinary schools in the country annually, he said.
“The institutions that are going to do well going forward are going to be those with differentiation — we have that — and those that can point to outcomes,” he said. “We’ve got that.”
La Salle: ‘Realistic about our situation’
La Salle, which has seen plummeting undergraduate enrollment in recent years, had not just the lowest score in Gard’s analysis, but also the lowest S&P credit rating in the group. The BB- rating indicates that it “faces major ongoing uncertainties.”
Among the schools in the analysis, La Salle had the biggest decline in net tuition revenue from 2015 to 2023. It fell even further in fiscal 2024, to $45 million, half what it was in 2015. La Salle has budgeted an increase in net tuition to $50 million for the current academic year.
The school in Philadelphia’s Logan section has had operating losses seven straight years. To compensate, it has been relying on what S&P called elevated endowment spending, including several years of spending 8.6% of the endowment. A more typical rate is 5%. In addition, La Salle has used $18.5 million from its strategic reserve or unrestricted endowment in its three most recent fiscal years. That fund had just $11 million left on May 31.
A debt restructuring this year will allow La Salle to temporarily conserve $24 million in cash by postponing some debt payments through fiscal 2028. That bought the college some time to turn things around.
» READ MORE: La Salle has a plan to attract more students: Revive baseball, add several women’s sports, start a band
La Salle officials told The Inquirer in April it was restructuring its academic enterprise, embracing its smaller size, and building a more realistic budget. The school launched new academic programs such as a sports management major. And La Salle said it was bringing back baseball, adding new sports for women, beefing up its cheer and dance clubs, and starting a band. It also recently opened its renovated basketball arena. All are designed to improve student life and school spirit.
The school recently reported to bondholders that it enrolled 507 freshmen, up 22% from last year. That report showed a 3-percentage-point jump in freshman-to-sophomore retention over last year.
Attendance at open houses this fall is up 15%, and completed applications for next year are up 50% over this time last year, a La Salle spokesperson said.
“I’m realistic about our situation,” La Salle president Daniel J. Allen said in April. “La Salle has had a tough go of it. … At the same time, I couldn’t be more confident about this university. And I couldn’t be more confident in the plan that we have articulated for its future.”
Rosemont: ‘Invested in its survival’
Founded in 1921 as a women’s college, Rosemont has faced financial challenges for well over a decade. In 2009, the year it went coed, the school had a $1 million deficit in its then-$20 million budget. In 2015, the college reset its tuition, a tactic in which colleges lower the sticker price to attract more families but simultaneously reduce financial aid. (Ultimately, Cawley, who became president in 2022, said the move hasn’t had sustained success and the college is back into discounting.)
As its financial challenges grew, Rosemont started borrowing restricted funds from its endowment to cover “immediate operational needs.” There was a $3 million loan in 2020, when the endowment was worth $17 million, followed by a $2 million loan last year. Finally, in April, Rosemont borrowed another $2 million from its endowment to help pay off a $3 million line of credit. The Sisters of the Holy Child Jesus, Rosemont’s sponsor, provided a $1 million interest-free loan to cover the rest of the credit line.
Shortly after Cawley arrived, the Middle States Commission on Higher Education warned that the college’s accreditation “may be in jeopardy” because it did not appear to be meeting requirements around planning, budget, and academic assessment. Colleges need accreditation to keep their students eligible for state and financial aid.
A year later, the accrediting body reaffirmed Rosemont’s accreditation through 2028-29, which Cawley saw as an indication the changes he was making were working.
“What we’ve been doing over the past two years is trying to reset the way in which things have more recently been done,” said Cawley, a former Temple University administrator who replaced former president Jayson Boyers after only a two-year stint.
Cawley said he has brought in a new team to oversee enrollment and finances and developed a strategic plan that included expanding student recruiting into North Jersey, Maryland, and the Washington suburbs. The school eliminated a few positions and phased out some vacancies.
The school also is looking for more socioeconomic student diversity, including a larger share of students who can afford to pay tuition, he said. But he emphasized that the school’s commitment to low-income students remains, with Rosemont placing in U.S. News & World Report’s top 30 nationally for social mobility, by graduating large proportions of students who receive Pell grants geared toward low-income families.
Faculty have noticed the efforts and have backed Cawley, said Joanne Campbell, assistant professor of sociology and cochair of the faculty council. He understands their needs, she said, and recently worked hard to get them a raise.
“He has a vision for the future,” she said. “I have a strong love for the institution and I’m invested in its survival.”
But many challenges remain.
Of the colleges assessed by Gard, Rosemont’s campus has the oldest average age of facilities, and that has, at times, affected finances.
Rosemont started classes online for the first week of last spring’s semester because an emergency repair was needed at its 124-student Kaul residence hall. The college shut Kaul this year for a fire system upgrade and window and door replacements, Cawley said.
Taking the dorm offline meant the school couldn’t accept as many freshmen, he said. Overall, enrollment is down 3% this fall, which Cawley also attributed to ongoing problems nationally with federal financial aid forms.
But the campus also includes some beautiful, relatively new buildings, including its community center, named after former president Sharon Latchaw Hirsh. Its main building is on the National Register of Historic Places. Many of its structures were built by John McShain, the same contractor who was responsible for the Pentagon and the Jefferson Memorial. The college also has begun to make facilities upgrades, including new locker rooms for athletes at alumnae hall, Cawley said.
”The challenges right now are just those,” Cawley said. “We also believe with every challenge there is opportunity.”
He would eventually like to return Rosemont’s enrollment to about 1,000.
Students, faculty, and alumni hope Cawley is successful.
Gina Madron, an artist, recently returned to Rosemont for alumni weekend and entered four pieces of her art in a show there. She recalled an earlier weekend getaway with a half-dozen fellow Rosemont alumni when her friend suggested that her daughter, Lucia, might want to attend Rosemont.
Her daughter, now a freshman, had always admired how she had such a tight-knit group of lifelong friends from Rosemont, she said.
“I have no doubt that they are going to make it,” Madron said. “It’s really important for small schools to stay and to thrive.”
