In a year of unusually high uncertainty over admissions at private colleges, Ithaca College appears to have missed its target by a larger margin than most.
Now it is dealing with the financial consequences—even paying 31 students up to $10,000 each to defer their enrollment for a year—and adjusting its admissions policies and financial-aid spending plans in response.
Ithaca had aimed to enroll 1,700 to 1,750 new freshmen but found itself with an incoming class of 2,027 for this fall.
Ending up with a class that is 20 percent larger than expected is certainly better than having to operate with a class that is 20 percent under target. But “coming in heavy” with a class, as this circumstance is known in the field, can often bring its own short-term and long-term costs, and create some added financial instability.
“They have to feed that animal for four years,” said George Dehne, a longtime consultant to colleges, whose firm does not count Ithaca as a client. “It looks like someone took their hands off the wheel.”
The feeding includes extra spending for financial aid, for additional instructors (Ithaca had to hire several dozen), and for a new temporary residence hall, constructed in six weeks at a cost of $2.5-million.
It also means the college will very likely have to aim for smaller classes in the next few years. For a tuition-reliant institution like Ithaca, that means reduced revenues and less flexibility.
‘An Extreme Case’
Dozens of private colleges have reported record enrollments this year, according to the Web site of the National Association of Independent Colleges and Universities, but few if any are believed to have brought in a freshman class as unexpectedly large as Ithaca’s. A confluence of circumstances, some within the college’s control and others beyond it, led to the overenrolled Class of 2013, Ithaca officials said.
“It’s an extreme case of what we’re likely to see in other places,” said John C. Nelson, managing director of the division at Moody’s Investors Service that rates colleges’ debt. In addition to adding physical capacity, Ithaca’s challenge is to “manage the student services extremely well,” he said, particularly in light of the competitive and demographic challenges facing private colleges in the Northeast.
In late April, as the 2009 admissions situation became apparent, Moody’s issued a negative outlook on the college’s $140-million of A-rated debt, citing, among other things, Ithaca’s volatile admissions history and student attrition.
Ithaca had suffered a decline in freshman enrollment in 2008, falling 11 percent below its budgeted target of 1,600. Many of the steps it took over the past year to enroll the entering class in 2009 were designed to compensate. The steps included lowering selectivity (Ithaca accepted 73 percent of its 2009 applicants, compared with 59 percent in 2008) changing its merit-aid policy so money could be spread among more applicants, and intensifying “yield” efforts to get more admitted students to attend.
Other colleges did the same things, according to a survey released last month by the National Association for College Admissions Counseling.
But Ithaca lacked some of the levers colleges traditionally use to give themselves more control over admissions, most notably the early-decision option.
Many colleges use early decision to lock in a portion of their class early in the admissions cycle, which helps reduce some of the risks inherent in later stages of the process, when institutions decide how many students to admit outright and how many to place on the waiting list.
Ithaca’s decision to offer more $6,000 merit scholarships, and fewer $16,000 ones, appears to have been effective in getting more students to enroll, said Eric Ma guire, who became vice president for enrollment management on June 1. The additional merit awards, coupled with higher demand for need-based aid, are expected to raise the freshman class discount rate from 41 percent to 44 percent. (The discount rate is the percentage of gross tuition the institution spends on student aid.)
Carl Sgrecci, vice president for finance and administration, said the net financial effect of the overenrolled class will be positive. Ithaca expected to run an operating deficit of 2.5 percent on its $190-million annual budget this year but is now projecting a modest surplus. Faculty and staff members may even now get salary increases for the year.
The Net Effect
But because the class came in so much over projections and in excess of the college’s capacity to accommodate, the extra costs will take their toll on net revenue per student. By contrast, the University of Richmond, which has an overenrollment of 15 percent this fall, said it expects to net much more from its unexpectedly large freshman class because it won’t have some of the expenses Ithaca has. Richmond won’t need to build a new residence hall to house its class of 919 students (114 over target), because it will keep in use a dormitory that it had planned to renovate this year.
Mr. Sgrecci said Ithaca’s admissions decisions were influenced by concerns about the impact of the economy: “We didn’t know how many families would be able to afford the price of a private higher education.”
Turnover at the helm of the admissions office may have also been a factor; the college’s longtime director of admissions died in September 2008, after a four-year bout with cancer. An alumnus who works as an admissions consultant, Rit Fuller, filled in for the past year.
Mr. Maguire, Ithaca’s new enrollment-management chief, came from Franklin & Marshall College and, under a new administrative structure, will work directly for the president. He said the college is reinstating early decision, two years after dropping it. Without it, he said, Ithaca didn’t have a solid picture of its admissions situation until very late in the process. Freshman deposits came in with a “huge spike at the very end of April.”
He also plans to raise admissions standards, although he acknowledges that after lowering selectivity in 2009, Ithaca will face a challenge in getting that message out to applicants.
The Cost of Too Many Freshmen
Ithaca College made several adjustments in policies and spending after enrolling 20 percent more students than it expected to this fall. These included:
- Reinstituting early decision, to give the college more control over admissions earlier in the process.
- Raising admissions selectivity for the fall of 2010 to reduce the admit rate.
- Erecting a temporary residence hall in six weeks at a cost of $2.5-million.
- Allocating up to $1.2-million in additional funds to hire nearly 50 part-time faculty members, two new full-time faculty members, and to pay 30 current full-time professors overload pay for teaching extra courses.
- Providing 20-percent reductions on room charges, and paying the cable-TV bills, for students who had to be housed in lounges.
- Offering admitted students up to $10,000 each to defer their enrollment for a year (Ithaca says 31 students took the offer, at a total cost of about $250,000).
- Providing $2,000 in incentives to upperclassmen to move off campus.
