Presidents differ over value of debt as asset
Guilford College President Kent Chabotar and High Point University President Nido Qubein say they’re good friends. But ask them the best way to run a school financially, and the relationship shows signs of strain.
In September, Guilford took the wraps off a fundraising campaign, dubbed Advancing Excellence, to raise $60 million. But rather than spend it on new buildings — as High Point has done, building 45 since Qubein took over in 2005 — the Greensboro school wants most of the money to go for programs and financial aid. And it’s determined to keep down debt, which has soared from $5 million to about $150 million at High Point to help pay for all that construction. Promotional material pitching Guilford’s campaign called that risky, which didn’t sit well with Qubein.
“If someone is just going to focus on debt, God bless them. The president of Guilford College doesn’t fully understand High Point University. If someone outside the circle comments about inside the circle, you need to get your facts right, correct?” These, he says, are the facts: Since 2005, High Point’s enrollment has increased from 1,465 to 3,800. Revenue has increased from $38 million to $165 million. Net worth: from $55 million to $380 million. Cash flow-to-debt ratio: 2.2. It has raised $175 million. “I don’t want to talk about Guilford College. Look at what we’ve raised against what other colleges have raised. You take the risk out of life, you take the opportunity out of life.”
Guilford can do without the excitement, Chabotar says. “As long as we have strong enrollment, as long as we continue to offer financial aid, as long as the state and federal governments continue to support financial aid, then the calculations in which you take on debt all work. What happens if that changes?” The state is reducing its aid to North Carolina students attending Guilford by 12.3% this year and 8.5% in 2012-13, costing the school almost $1 million. “Whether it comes from being a Quaker institution or some really bad experiences we had with debt years ago, we’ve decided to be more on the program side and minimize our exposure.”
Only two years ago, Guilford failed (by a 10th of a point) the U.S. Department of Education’s financial-responsibility test. That had nothing to do with debt, Chabotar says, but rather a shrinking endowment, which is where most of its fundraising is headed. Guilford passed the test in 2010 by a healthy measure, but the experience might explain why it’s no High Point wannabe.
Chabotar’s model is one county to the east: “I use Elon as an example of how to do it right, keeping your eye on the ball for decades but slowly and surely becoming better and better and better. If all schools had that kind of discipline and focus, we’d all be better off.” After all, though High Point University ranked No. 3 among Southern colleges on U.S. News & World Report’s latest lists, Elon University was the second-best university in the South. Guilford was No. 157 among U.S. liberal-arts colleges.