Benedict College struggling financially

Benedict College ended its last fiscal year in such a weakened financial state, according to an audit by the U.S. Department of Education, the school now must take extra precautions to assure the federal government of its ongoing financial viability.

Benedict will have to make financial aid disbursements to eligible students and parents before it can request funds from the government to cover the financial aid, and then only for the amount actually disbursed.

In addition, Benedict must meet a host of new requirements by notifying the federal Education Department within 10 days of any negative changes in the school’s finances or its status with oversight agencies, such as those that accredit the college.

The Education Department notified Benedict in April that it missed the standards set for financial responsibility under the federal financial aid program. The school, which is up for re-accreditation next year, scored 1.3 out of a possible 3.0 on a test of financial fitness. Colleges and universities must score at least a 1.5 to be judged “responsible.”

Benedict is one of 114 private, nonprofit colleges in the United States that failed to pass the federal government’s financial aid test. In South Carolina, Clinton Junior College in Rock Hill also made the list.

The audit findings — specifically, failure to meet the testing standards — is seen by some as a possible precursor to collapse, though it certainly is not in all cases.

A U.S. Education Department spokesman said Benedict could continue to operate offering federal financial aid indefinitely.

Benedict president David Swinton said the college is taking steps to comply with the new requirements, paying down its long-term debt, raising funds and concentrating on enrollment.

Swinton said the college’s creditors, business partners, students, alumni and others should not be concerned about the audit’s findings and the school’s finances.

“The ratio in question should not impact our students or our ability to serve our students in any way,” Swinton said in written responses to questions posed by The State about the audit and the school’s standing. “Servicing our students is always our paramount concern.”

Swinton said Benedict’s creditors “know we have never missed a debt payment, and our business partners know how much we value their loyalty and dedication to the college.”

Swinton, who became Benedict’s president in 1994, said the school’s failure to meet the required 2008 federal financial ratio for student aid is attributable to the recent downtown in financial markets (which caused a drop in the value of the school’s endowments), and more than $8 million in write-offs of student loans.

Still, Swinton said, “Every student eligible for financial aid (this year) will receive financial aid.”

Swinton said the college has current total assets of $117.8 million, with liabilities totaling $94.2 million, and net assets of $23.6 million. By comparison, in 2006, federal audits showed the college had $136.7 million in total assets, $101.2 million in total liabilities, and $35.5 million in net assets.

Student enrollment is the lifeblood of the college, where tuition and fees are $15,590 annually, and is made possible for most students only through financial aid.

Records show when enrollment drops, or does not meet budget projections at Benedict, revenue falls short of expenses, and problems arise.

In 2006, Swinton cut college salaries by 7.5 percent and eliminated some programs.

Enrollment at Benedict topped out in 2002 at 3,005 students and was 2,550 in 2005.

Swinton said enrollment has grown the past two years. The school enrolled 2,889 students last fall and expects at least 2,950 students when classes resume this fall, he said.

Financial woes have been at the heart of Benedict’s operations for years and have caused some to question Swinton’s leadership.

Benedict has expanded its physical plant, refurbished parts of its campus, built a new football stadium and helped develop the neighborhood around the school with its land holdings. But those ambitions helped push Benedict’s debt past $100 million. Such debt may not have been a problem with growing enrollment and a stable economy. But a faltering economy and once-soft enrollment forced Benedict to have to furlough employees and delay paychecks in recent years.