When you are the head of an organization that has been around for 193 years, you don’t expect to face tough questions about the sustainability of the institution. But higher education has been, and continues to be, under the microscope. Driven in part by an increasing rate of small liberal arts college closures and mergers, these questions also arise from concerns about higher education’s business model and coming demographic changes that threaten to further disrupt an industry already under considerable stress.
Actually, I don’t mind these questions. It reminds me that people care about Wabash. It also gives me a chance to talk about the work we are doing to sustain our College. In the early years of my presidency, much of that work was framed in terms of the immediate impact of the pandemic—including the roughly 33% drop in the stock market and the substantial number of students who chose not to enroll or to pause their studies.
While the impact of the pandemic is largely behind us—enrollment this fall exceeds 900 students and the short-lived downturn in the endowment value was followed by gains that have brought it to $450 million—sustainability remains my top priority for Wabash. My focus is now on addressing two long-term trends that challenge our business model.
The first challenge we face is to set our endowment on a course to provide the purchasing power that it had in previous decades. While the endowment value today is at a record high, that statistic hides the fact that, after adjusting for inflation, we have substantially fewer dollars to support College operations than prior to the Great Recession of 2008. Our endowment suffered a significant loss in that period, followed by a decade when, on average, investment gains and donor contributions were eclipsed by withdrawals for operations and the effects of inflation.
Our approach to an endowment that sustains the College is multifaceted. By controlling costs, we reduced the endowment draw percentage substantially, from a level well above that of our peers to a value below the median. The Giant Steps campaign set us on a course to increased endowment contributions that we have been able to maintain. And, in a collaboration between the Board of Trustees’ Investment Policy Committee and our endowment managers, we have evolved our asset allocation to produce returns expected to exceed the draw and inflation rates over the long term.
The second big challenge we are addressing focuses on the demographic changes referred to as the “demographic cliff.” American birth rates declined substantially during the financial crisis, which means that in the coming years there will be fewer high school graduates.
For Wabash, the effects of the demographic cliff are amplified by our high proportion of students from Indiana. For
example, an aging population and outmigration of young people put downward pressure on the number of high school graduates. But even more concerning is the decade-long decrease in the college-going rate for Hoosiers. The most recent data shows that only 45% of male high school graduates enrolled in college, down more
than 60% at the time of the financial crisis.
Sustaining enrollment under these conditions is a grand challenge that calls for multiple approaches. Identifying select out-of-state markets, such as Texas and Arizona, where demographics are more favorable, has been successful over the past few years. Recent efforts to expand on-campus summer programming for high school students are showing great promise for both identifying recruits and giving them an understanding of the Wabash value proposition early in their college search.
In addition to these efforts to expand the pool, we have developed best practices to leverage the strength of the campus community and the alumni network. Examples include striving for best-in-class visit programs and connecting prospective students with graduates who are leading the lives these young men imagine for themselves.
Wherever I go on behalf of our College, alumni, parents, and friends always ask me the same thing: “How can I help?” To sustain the momentum we have established, we need you to submit the names of talented high
school students you think could benefit from a Wabash liberal arts education through our website: apply.wabash.edu/register/refer.
As we look ever more closely at our bicentennial in 2032, it is my goal to position Wabash as a financially sustainable private college that controls its own destiny. By managing our finances, building on our grand tradition of philanthropy, and introducing a new generation of young people to our College, we will do exactly that.
Scott Feller
President | fellers@wabash.edu