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Liberty University Homecoming

As I think I have mentioned before, Liberty University has something of a checkered past from a business perspective. There was a time in the Eighties when Old Time Gospel Hour was subsidizing the school pretty heavily, with occasional giant single donations from people like A. L. Williams or Art DeMoss. Sometimes bills got paid in full and on time; sometimes they didn’t. This was a business model that worked reasonably well when Old Time reached hundreds of markets, Jerry was consistently in public view dealing with political issues, and the school was only five thousand or so students.

None of this is true now; Jerry Jr hasn’t stepped into his father’s shoes as a political figure, Old Time stopped being a cash cow more than ten years ago, and the resident population of the school has more than doubled. There are still occasional one-time donations (Jerry Sr’s life insurance policy; millions from Tim and Beverley LaHaye), but they tend to have strings attached: everybody loves seeing a building with their name on it; nobody wants to drop ten million dollars into the general operating fund.

So Jerry Jr is facing a difficult task: keeping a business growing while changing its business model. The school has raised tuition (nominally about $24,000 [link]) and cut scholarships (e.g. a Pastor’s Scholarship used to be a two-year tuition waiver; now it’s $500/year) and the cash cow is now Liberty University Online. LU Online requires very little in terms of faculty, staff, facilities, etc. on an incremental basis. Servicing an additional dozen online students doesn’t represent anywhere near the comparable cost of servicing the same number of students on campus. The problem, of course, is that LU Online faces some competition and has an incentive to keep costs low. It can’t e.g. double per-hour fees and expect the number of students to drop by less than half.

Over time, for things like capital improvements (read: tearing down “temporary” structures and replacing them with “permanent” structures) the school will need an endowment. Its current endowment is tiny, about $5000/student, while the average for rest of the Big South Conference [link] is more than $400,000/student ($50-70,000/student being typical). To build an endowment the school needs alumni dollars, and lots of them.

Unfortunately Liberty does not produce graduates who are likely to return millions of dollars to the school. This year there were 8600 graduates; here’s a breakdown from the most recent (paper copy of the) Liberty Journal:

  • Aeronautics: 22
  • Arts and Sciences: 2192
  • Business: 1273
  • Communication: 279
  • Education: 1050
  • Engineering and Computational Science: 81
  • Government: 287
  • Law: 57
  • Religion: 886
  • Science: 81
  • Seminary:  1479

While it’s not out of the realm of possibility that many Business grads will become millionaires, it seems unlikely given this distribution of graduates that Liberty will produce over the next twenty years lots of high wage earners who will help fund its endowment.

Unfortunately, producing lots of science, engineering, and law graduates will take a lot of money up front, and Liberty isn’t currently in a position to spend it. Liberty still doesn’t have e.g. a Chemistry or Physics undergraduate major. It doesn’t pay competitive salaries, allow for course loads low enough to leave time for funded research, etc. I have a hard time seeing how this is going to change.

When we visited Liberty a couple of weekends ago, we saw pretty much what I saw when I was there: lots of nice people, good people, etc. attending a football game, relatively few devoting those same hours to studying in the library. This was a problem when I was there: a tendency to produce people who were honest, decent, future workers, but not likely to also be high wage earners who can fund an endowment.

As per usual there’s a glimmer of hope: Liberty capped enrollment this year, and that’s a good first step toward producing high-earning graduates. I look forward to seeing what the next step will be.

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