Reached on the phone, Richard A. Hanson isn't quite sure he's ready to give an interview about the recent sale of Waldorf College. The college's president has talked quite a bit locally, trying to assure students, professors and the residents of Forest City, Iowa, that selling the liberal arts institution to a for-profit, online university is the best (in fact, only) option.
What persuaded Hanson to talk about what's happening at Waldorf is the question of whether he thinks other colleges will soon be facing the same choice. "You are going to be seeing a lot more of this from colleges like us," he said. So he agreed to describe why and how Waldorf decided to become a part of Columbia Southern University—and why he is hopeful for the college's future (even if he isn't at all sure he'll have a job).
Many experts have been predicting—just like Hanson—that in the next few years more for-profit universities will buy financially struggling nonprofit colleges. And the model that Waldorf and Columbia Southern are following—where the nonprofit institution retains some identity and a campus, even as it add programs linked to the larger for-profit interest—appears to be growing.
It was novel a few years ago when Bridgepoint Education purchased the Franciscan University of the Prairies, also a small, religious Iowa college. Today the renamed Ashford University has both the former institution's campus (since improved), but also new online programs. While such purchases may not be taking place everywhere, they aren't so unusual anymore. Recently, ITT Educational Services Inc. announced that it would buy Daniel Webster College, keep the college's name and program, but make investments to add and improve programs. And last month, New Mexico Gov. Bill Richardson announced a plan to save the College of Santa Fe, a private college, in which local officials would buy the campus and Laureate Education Inc. would manage the academic programs.
While details remain minimal on the Santa Fe-Laureate deal, and these sales all differ, they involve large for-profit entities taking over small, primarily undergraduate institutions that have found themselves unable to balance their books in an increasingly challenging economy. And that is resulting in partnerships that might once have been viewed as unlikely.
Consider Waldorf and Columbia Southern. Waldorf was founded in 1903 by Lutheran leaders and the institution was proud of its rural, religious roots. When Hanson arrived as president four years ago, the college had only 600 students. Forest City is a city of 4,500—a few hours' drive from either Des Moines or Minneapolis—that boasts of being the smallest city in the United States to have its own YMCA.
While Waldorf never attracted students for big city excitement, it had a degree of student-faculty interaction, and of everyone knowing everyone, that led to deep commitments to the institution. Faculty members—about 50 of them in all—know their students. Classes are small. Campus theater and cultural events are a big deal.
Columbia Southern, based in Alabama, proudly describes itself as student-centered, but in a very different way. All of the 17,000 students are enrolled online, and most courses are taught by the 180 adjunct faculty members, themselves spread across the country.
So how did Waldorf come to be selling itself to Columbia Southern this week, following months of negotiations? This wasn't a choice Waldorf embraced with speed. Indeed Hanson is frank that over a two-year examination of options, the college didn't talk to for-profit institutions until other options were explored and found inadequate. Waldorf's endowment never topped $10 million and the college was pretty much dependent on tuition, but with only 600 students (in good years), that wasn't enough.
The college survived based on raising $3-4 million a year from donors, with most of the money coming from three or four very loyal supporters (one of whom typically provided up to $2 million a year). Even before the economic meltdown last year, Hanson said that his board instructed him to start exploring options. First up, he spoke to the most loyal donors and they weren't sure of their ability to provide the same support over time. Then the stock market and economy collapsed last year.
"We had been living on the backs of our donors and suddenly those dollars were not available," he said. The big donors didn't drop to zero in donations but to "very low" levels of support. Alumni were surveyed on their willingness to provide more and many gave generously for their circumstances, but well below levels that qualify their gifts as "major" at most institutions. Lutheran leaders were consulted and couldn't offer much financially (and they have blessed the sale). Nonprofit colleges were approached about a possible merger and none found that viable. "They wanted to help. They did, but they couldn't."
"I went to our bond underwriter and told him to put out the word that we were looking for a partner," Hanson recalled. "He said, 'What kind of partner?' and I said, 'Any kind of partner.' "
The For-Profit Possibilities
Waldorf was approached by several suitors, all for-profit institutions, generally online only. For all of its problems, Waldorf not only had loyal students and professors, but something quite valuable: regional accreditation. When a college is purchased, accreditors review the circumstances, so the regional accreditation doesn't automatically simply transfer, but it can transfer, and many online for-profit institutions have felt stymied by having national accreditation, which many students and some institutions considering transfer credit or graduate applications consider inferior.
Columbia Southern was among several entities with accreditation from a nationally recognized agency interested in Waldorf. Hanson said he didn't just look for the highest bidder. "I evaluated on two or three levels. One was financial capacity, but more important was their character, their willingness not to just flip us," he said. "I was interested in their willingness to let us stay in Forest City and be pretty much who we are."
"Most of those criteria were met," Hanson said. Columbia Southern is clear that it will keep the campus and invest in better facilities. The university stressed its commitment to the long term, and its history as a family owned company, not one reporting to thousands of investors. Columbia Southern sent numerous officials to Forest City to meet those on campus, and it brought faculty members to visit the Columbia Southern headquarters in Alabama. A delegation from Columbia Southern was back last week for graduation ceremonies. "I don't think they had seen anything like it before," Hanson said.
Robert Mayes Jr., president and co-founder (with his father) of Columbia Southern, said he sees many benefits to acquiring Waldorf. There is the accreditation, of course, and Mayes said that should speed the way for the university to enter nursing and education programs more broadly than it can now. But Mayes said that he thinks even current online students want to feel some connection to a place, to a campus. "Even if they never come, they feel a connection," he said.
And Mayes said that he envisions Waldorf soon attracting many more students. With help from Columbia Southern, the college is introducing five new majors this fall—in fields such as organizational behavior and fire science—that will feature some content provided online by Columbia Southern. Soon, existing Waldorf programs in business and education, among other subjects, will expand into master's degrees, Mayes said. In fact, the only change in Waldorf's name that he can envision is changing from "college" to "university" down the road.
"We are definitely committed to staying there, and to opening doors for the college," he said.
(Excerpted from the May 6, 2010 edition of InsideHigherEducation, article by scott Jaschik.)
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