Dive Brief:
- Albright College has moved to borrow up to $25 million from its endowment as it tries to plug a budget gap and stay afloat.
- The Pennsylvania private nonprofit noted that it has cut staff, faculty and underenrolled programs and sold assets as it wrestles with an “expected cash deficit,” the college said in court papers filed in December and posted online by Spotlight PA.
- The $25 million endowment loan would be paid back over 20 years at a minimum of 3% interest, per the college’s request in local court. The college plans to draw down on the loan as needed over the next two years.
Dive Insight:
Albright is one of many smaller private colleges struggling under enrollment declines. Between 2018 and 2023, fall enrollment dropped by nearly 15% to 1,652 students, according to federal data. And that 2023 count is down by nearly a third from 2010 levels.
That’s a problem for a college that federal data shows derived just over two-thirds of revenue from tuition and fees as of fiscal 2023. The same fiscal year, the institution posted a $20.3 million total deficit, more than 2 1/2 times the prior year’s deficit.
The college’s endowment was valued at $53.1 million as of September 2024, according to the December court filing.
In the court filing, the college said its net assets had declined by $46 million between 2022 and 2024, requiring it to take “significant measures to lower its deficit.” That includes cutting 53 employee positions, according to a Spotlight PA report, which also said the endowment loan had been approved in local court in December.
Even more starkly, Albright called the endowment loan necessary to “ensure its continued existence” and a “critical and integral component of its financial turnaround plan.”
The college also noted that it could not secure a bank loan on workable terms. Quoted terms ranged between 10% and 20% interest, which the institution said “would not allow Albright to recover financially” given that it already has a $17 million loan on its books.
The endowment loan could, in part, be used to refinance that higher-interest loan, the college said, adding that doing so would free up some collateral used to back the $17 million loan.
Along with new financing, the college is trying to cut costs and boost its appeal to students. It plans to phase out majors in economics and philosophy, Albright Interim President Debra Townsley, who began in the role last summer, said in an interview with Spotlight PA.
At the same time, it will launch new more in-demand programs, including cyber criminology, animation, allied health and music production, and is considering adding other programs down the line. Additionally, it has approved new sports and activities, including men’s and women’s wrestling, to appeal to students.
