Scholarship foundation from St. Louis puts QU, HLGU on list of colleges of ‘special concern’ with financial trouble

QUINCY — Quincy University, Culver-Stockton College and Hannibal-LaGrange University are on a list of colleges considered to be in financial trouble in a March report from the Scholarship Foundation of St. Louis.

Teresa Steinkamp, advising director for the foundation, issued what the foundation called an “important alert regarding several colleges in significant danger of closing their doors.” 

The report said 37 of the 203 colleges attended by Scholarship Foundation students have shown signs of significant financial distress in one or more of the last five years.

“Students should exercise extra caution if their school appears on The Scholarship Foundation watch list,” the report said. 

Ten of the 37 schools were highlighted because of “special concern” due to recent financial scores and disclosures. Quincy University and Hannibal-LaGrange University were on that list. Others on that list were Fontbonne, Grand Canyon, Harris Stowe State, Kentucky Wesleyan, Lane, Lincoln Memorial, McKendree, Rockhurst and Webster.

Culver-Stockton was among the other 27 schools on the watch list.

Fontbonne, a 100-year-old Catholic academic institution in St. Louis, announced in March it will close in the fall of 2025 and sell the 16-acre campus to Washington University. Both QU and C-SC have agreements with Fontbonne to become teach-out institutions, which generally means students can automatically enroll in the schools at the same cost and with the same amount of credits.

Steinkamp told the St. Louis Post-Dispatch that most Fontbonne students “are not eager to potentially go down that road again.” The State Higher Education Executive Officers Association says fewer than half of students successfully transfer to another college.

Aside from the financial risks, there are personal consequences of attending a college on the watchlist, Steinkamp said.

“I think there’s a really big emotional, psychic cost to students,” she said. “They’ve invested not just their time and money but parts of themselves and their passions and values. To have that rug pulled out from underneath them can be really damaging.”

In a story published by Forbes in April 2023 that gave financial grades to colleges throughout the United States, Quincy University received a C, Culver-Stockton College received a B and Hannibal-LaGrange University received a C-minus. In 2022, Forbes gave QU a C-minus, while C-SC and HLGU both received Ds.

The Post-Dispatch story provided financial pictures for some of the schools in the St. Louis region, including:

Hannibal-LaGrange University: Enrollment dropped below 400 students in the fall of 2022, down from 730 in 2018. The university did not submit enrollment figures this year to the Missouri Department of Higher Education and Workforce Development. The Christian school is on probation with the Higher Learning Commission accrediting body in part because of a “long-standing culture of complacency with unbalanced budgets and operating deficits.” 

Like other small colleges, Hannibal-LaGrange has borrowed from its endowment to pay the bills. The university had borrowed 75% of its $8.8 million endowment as of June 2021, according to the commission.

Investigators with the Higher Learning Commission visited the campus in April and will release an update this fall on the school’s accreditation status. A loss of accreditation is an effective death sentence for colleges.

On its website, Hannibal-LaGrange states, “We are confident that the plans we have made will be successful in strengthening our institution. Probation can be a very positive event in the life of an institution.”

Quincy University: One of the approved “teach-out” schools accepting Fontbonne students. Quincy is recruiting Fontbonne students with a promise of a similar culture — small, private, Catholic and close to the Mississippi River. But the problems that led to Fontbonne’s closure also plague Quincy, namely a declining number of students (1,113) and higher debt ($36 million) than endowment ($21.5 million as of 2022).

In 2022, Quincy was considered “not financially responsible” on a scale of eligibility for federal financial aid programs. The university has three years to increase cash flow or risk losing eligibility, according to an audit from Illinois accounting firm Gray Hunter Stenn. Last year, Quincy had an operating deficit of $2.5 million.

Also of note from the Gray Hunter Stenn audit: 

• QU had $456,416 in bank overdrafts as of May 31, 2023.
• On June 4, 2021, Quincy University entered into a $24 million promissory note for the refinancing of existing debt. The U.S. Department of Agriculture guaranteed 80 percent of the principal amount of the loan. The USDA funds are payable back in 30 years from the date of the promissory note. 
• QU had $29.55 million in total operating expenses in 2022, and that figure increased by nearly $3 million to $32.49 million in 2023. Net revenue remained relatively the same, but the university’s net assets dropped from $20.12 million in 2022 to $16.33 million in 2023.
• QU had $279,638 in accounts payable (money it still owes people) and accrued expenses in 2022, and that figure increased to $1,828,665 in 2023. The university’s net cash flow from operating activities went from positive $2.03 million in 2022 to negative $4.39 million in 2023.
• The university had an astonishingly low balance of $9,170 in cash and cash equivalents as of May 31, 2023.

The Post-Dispatch report did not include a financial picture for Culver-Stockton.

The Post-Dispatch reported the number of students in two- or four-year colleges in Missouri has dropped by 10 percent since 2018.

“There has always been a perception, and I think it is reality, that Missouri has more universities than it needs,”  Dudley McCarter, Clayton attorney and member of the Missouri Coordinating Board for Higher Education, told the Post-Dispatch. “The next three or four years is going to be a real shakeout.”

The Scholarship Foundation, a federally qualified 501(c)(3) nonprofit organization, helps people get access to higher education through direct assistance programs. It has distributed more than $22 million to students through interest-free, fee-free loans and outright grants.

Below is a copy of the financial audit of Quincy University by Gray Hunter Stenn in May 2023, provided by Federal Audit Clearinghouse.