After nearly two decades of soaring growth, evangelical colleges and universities are seeing their fortunes turn downward, and—in a few instances—fall off a cliff. The severely weak economy is hurting private higher education as it is nearly every other business.

Heavily dependent on tuition-paying students, these schools are doing everything they can to maintain their enrollment numbers for this fall 2009 semester. The challenge is immense. Job losses and a growing inability to borrow for college are two major factors at play.

Naomi Spinella is a senior psychology major at Azusa Pacific University in Southern California. Her parents emigrated from Italy to provide more opportunities—including college education—for their children. But her family had to start from scratch when they arrived in the U.S., and by 2007, her family's income was just above $20,000.

When it came time for Naomi and her older brother to enroll, her parents weren't able to afford Azusa Pacific, the school Naomi had dreamed of attending. Instead, she relied heavily on grants and scholarships, which nearly paid for her first two years. She then turned to student loans to make up the difference.

Naomi also relied on California's generous Cal Grant program, which provides grants (not loans) to qualified low-income students. More than 280,000 students expected to receive a grant for the 2009—2010 school year. Instead, California Gov. Arnold Schwarzenegger has proposed phasing out the popular program to save more than $500 million for the state's crippled budget.

Having used Cal Grants for eight semesters, Naomi struggled to figure out how to pay for the rest of her schooling, since she needed four and a half years to complete her degree. "This last semester was a struggle," Naomi says. "The Cal Grant saved me $33,000 in the past three years, and that's hard to make up." She had to work furiously with Azusa Pacific's financial aid office—where she is employed—to arrange funding for her final year, but there was no guarantee.

"Going into my senior year, I was really afraid," Naomi says. "I wondered, How do we get through my last semester?" Azusa Pacific was able to arrange $6,000 in financing for her fourth year, making Naomi one of several students for whom Azusa Pacific has provided emergency financing. But she plans to graduate in December 2009, leaving her final semester still unpaid for.

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Multiple Challenges

Naomi's story illustrates the multiple challenges facing private Christian higher education across the country. Families have seen sharp declines in household income, and the crippled national banking system and near-bankrupt state governments are unable to maintain existing aid programs.

In order to keep students on campus, some colleges have launched new strategies. Last fall, for example, Biola University in La Mirada, California, initiated a student economic response council, which created two funds. One, raised mostly through student giving, provided $90,000 to students who would have otherwise needed to drop out.

"These tough economic times have been very hard on my family, as my dad works in the financial industry," one student wrote in a thank-you note to the school. "And I most likely would have had to leave had I not been granted this scholarship."

The second fund provided $100,000 for international students who were hit by the spike in the value of the U.S. dollar. In all, 150 students were able to stay on Biola's campus because of the program.

But making school affordable for financially strapped families isn't enough. Christian colleges face further obstacles:

  • plummeting endowments, torpedoed by the market crash;
  • competition from cheaper community and public colleges, despite Christian schools' lower costs compared with non-sectarian private schools;
  • a credit crunch that has made loans more expensive or unavailable; and
  • fewer or smaller donations from wealthy donors and foundations compensating for losses in their own investments.

Paul Corts, president of the Council for Christian Colleges and Universities (CCCU), believes the financial crisis has only exposed problems that were ignored in better times.

At Vanguard University in Orange County, California, the economic crisis brought to light serious financial problems that had long been lurking on the school's balance sheet. For much of 2008, Vanguard was fighting for its life, burdened with a $42 million debt. Its accreditation was at risk due to the financial pressure. But a retired real-estate investor died and left a major portion of his estate to the school at the end of February. Vanguard remains on probation, but its accreditation is no longer threatened by debt.

Other campuses and schools have not been so fortunate:

  • Taylor University in Upland, Indiana, closed its Fort Wayne campus, which had an average deficit of $1 million a year.
  • Cascade College, the Oregon campus of Oklahoma Christian University, and Vennard College, a nondenominational school in Iowa, both shut down operations.
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  • Crichton College in Memphis decided in April to sell itself to a group of private investors that had already led a turnaround at Grand Canyon University in Phoenix (see "A New Way to Finance Education").

Nearly all evangelical colleges face some measure of financial pain. At Calvin College, faculty and staff have had their salaries frozen. Students will pay higher tuition as the Grand Rapids, Michigan, school anticipates lower giving and a 20 percent decline in its endowment. Pepperdine University in Southern California laid off 50 full- and part-time employees, 2 to 3 percent of its workforce, and shuttered three sports programs.

Earlier this year, Christian Leadership Alliance (CLA) surveyed a sample of its 8,000 leaders on how they and their 4,500 institutions (including colleges) were coping with the poor economy. Most organizations reported that donations and cash reserves were declining and that they had reduced travel, canceled pay increases, and cut overall budgets to stay afloat. CLA president Frank Lofaro concluded that a "new reality" had taken hold and that Christian leaders would have to take significant steps to adjust.

Corts from the CCCU says, "Many schools are taking advantage of this period to make hard choices. They are reducing resources for disciplines that are struggling in order to focus on the growing fields of health care, technology, and engineering." But he is convinced that strong, sustainable growth will return to Christian higher education once the recession is history.

Indeed, looking at fall enrollments, insiders at Christian schools are less pessimistic in the short term. With classes starting in a few days, initial evidence suggests that enrollments are healthy and will withstand the recession.

"From what I can tell, it looks like things are okay," says Nick Wallace, director of higher education services at Capin Crouse LLP, an audit and advisory firm that consults for Christian schools.

Cracks in the Tower

One former Christian college professor sees things differently. Beneath the economic reasons most organizations are cutting costs, says historian Allen Guelzo, are cracks in the very institution of Christian higher education.

The true problem, says Guelzo, is not the normal retrenchment caused by a slowing economy, but rather the schools' loss of identity and mission. Guelzo believes if this loss of identity is not addressed, the recovery of evangelical higher education is uncertain.

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Guelzo spent decades at Eastern University in Philadelphia and is now Henry R. Luce Professor of the Civil War Era at Gettysburg College. Since 2004, Guelzo has criticized Christian universities for drifting from their core mission toward marketing methods. He believes financial pressures are causing colleges to admit less-qualified students and structure their programs to maximize income, not mission.

The good times that began in 1990 hid deep problems, says Guelzo. Between 1990 and 2004, enrollment at CCCU member schools soared 71 percent. "Endowments were up. Enrollments were up," says Guelzo. "There was lots of optimism, but it was unjustified." The schools' finances were actually much more fragile than they appeared. "Endowment growth lagged [behind] competitors," he says. Schools were over-dependent on high-tuition-paying students.

Guelzo sees four main vulnerabilities that threaten Christian schools' identity. First, these colleges for the most part have weakened their denominational connections in faculty and student recruitment. Growth-seeking schools are looking for new blood beyond their traditional denominational ties. The second and related problem is that many college faculties now identify more closely with their disciplines than with the mission of their schools.

"Faculties have little incentive to buy into a Christian worldview," Guelzo says. "Professional cultures aren't encouraging a Christian worldview." According to Guelzo, a professor who adopts a Christian worldview cuts off future job prospects at non-sectarian schools.

Third, Guelzo does not endorse the model of a Christian college president with a graduate degree in business, such as an M.B.A. Business-minded presidents excel at fundraising but often do not understand academia very deeply, he notes.

Finally, Guelzo says, the role of higher education is changing due to major employment trends, and Christian schools are not adapting well. Today, Guelzo says, higher education has a growing role in credentialing highly skilled workers for health care, education, technology, media, and other service industries. He believes most Christian schools do not have the resources to offer more than a few such programs. Instead, they have sought to broaden their reach by offering online degrees, adult education classes, and other forms of nontraditional schooling. But Guelzo believes that only serves to further dilute their reputation and commitment to mission.

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Paul Corts is convinced that strong, sustainable growth will return to Christian higher education once the recession is history.

Playing on a Broader Field

Like Guelzo, the CCCU's Corts believes that the greatest strength of the Christian college movement is its mission and identity. Unlike Guelzo, though, he doesn't see that fading. "There are institutions that drift away from their historical roots," he says, "but that's just a statement of history."

Corts does not see surging secularism overwhelming Christian higher education. "If you stay focused on what you are all about," he says, "other things fall into place."

Corts also disputes Guelzo's view that Christian higher education is ill-equipped to train skilled workers. Corts believes engineering, green technology, and health care provide growth opportunities for Christian colleges.

In some ways, Cedarville University, with 3,000 students and a small endowment, embodies the "new reality" for Christian higher education. The school is no longer affiliated with the General Association of Regular Baptist Churches, which supported it for generations. The association's member churches provide a smaller percentage of the student body than ever before. As a result, says Cedarville president Bill Brown, the school is forced to interact on a "broader playing field."

Responding to the recession, the school cut expenses and froze salaries. It boosted financial aid available to students by a third, to $11.3 million. With an unprecedented number of applications, Cedarville is upbeat about keeping enrollment numbers stable.

The school sees health care as a growth field. "Health-care education is recession proof," says Brown. Located between Dayton and Columbus, Ohio, Cedarville is opening master's and doctoral programs in nursing. It also has plans to break ground on a health sciences center where students would be involved in rural health-care issues.

But the school's most ambitious project is a new pharmacy program that will take students seven years to complete, beginning as undergraduates and finishing with earned doctorates. "Pharmacy is an expensive program," says Brown. "But we can't sit around and wait until things are perfect for us." Some 50 students will inaugurate the program this fall.

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Further south, Lipscomb University in Nashville just started the Institute for Sustainable Practice, focused on teaching environmental sustainability to a broad range of professionals. The institute offers M.S. and M.B.A. degrees. Dodd Galbreath, the institute's executive director, says, "I began to notice a shift in traditional outdoor environmental enthusiasts," seeing them move from a strictly conservationist stance to a broader focus on sustainability.

The shift has opened the door to new possibilities, says Galbreath: "The tent got bigger." Suddenly, a faith-based school could teach sustainability principles to everyone from health-care professionals to entrepreneurs to food service employees. "Everyone was saying that our lives needed management to live more optimally for quality and long-term survival."

The institute accepted its first students a year ago. These students include engineers, pharmacists, an army captain, a coffee shop manager, and an attorney. Such diversity allows the school to attract students who had been put off by its religious emphasis. "We have a society that's hungry for the true characteristics of kingdom living," says Galbreath.

The current downturn has actually helped the program take off. "If the economy had not faltered the way it did, these concepts would still be on the fringe," says Galbreath. "But businesspeople see this as the only thing that's growing."

In its conclusions, the CLA survey corroborates the idea that leaders and institutions are entering an intense period of innovation. Its 48-page report notes, "It is striking that faith in God is as high as it is. This is the 'Stockdale Paradox' in action: confronting the brutal facts while retaining the faith that we will prevail."

For Christian higher education, this means less reliance on the traditional English-major undergrad or the donor-funded building. The leadership challenge will be to bring change to what Christian colleges do without changing who they are.

Rob Moll, a Cedarville graduate, is a CT editor at large based in suburban Chicago. His book, The Art of Dying: Living Fully into the Life to Come, is forthcoming from IVP this spring.

Related Elsewhere:

See today's sidebar, "A New Way to Finance Education: For-profit Christian education is becoming more attractive."

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