Finlandia University Closing Series: Debts Dating Back to the 90’s
In 1994 Finlandia University saw a dramatic drop in enrollment. Having lost over 125 students in less than two years. That loss in enrollment started the university on a track of taking out loans, with the department of education, and private loans from members on the school’s board of trustees. The source of the schools debts were discovered by Leadership Reporter, David Jesse, of the Chronicle of Higher Education, in his recently published article The College that Mortgaged Everything.
The other thing that’s unique, it’s very unique for board members to offer loans to a college. Normally if you’re at a struggling college, and you’re a board member, especially a private school, you’re there and you’re a donor because you have some sort of connection to the university. And so when they’re struggling you give money to them, but it would be a gift. Here’s 100,000 dollars, a million dollars. But to do it in the form of a loan and to acquire interest on that, that’s very unique. We’ve really only seen it happen at a handful of schools. And only Ohio Valley University comes to mind. – David Jesse, Leadership Reporter, Chronicle of Higher Education.
While trustees loaning money to an institution they are in charge of, is not common. It has happened at other schools. Some of which have closed. Typically financial support comes in the form of gifts to the university. The other unique aspect to Finn U’s closing, was a lack of knowledge about those older debts dating back to the ‘90s.
I mean these things stretch back into the 90’s. The first one was in ’94, with the U.S. Department of Education. And there’s been a number of them since. So when the new president came in, about a year ago now. He came in, and there had been changes in the CFO, in the financial department, there are relatively new board members. And so you kind of had a new leadership team from the ground up. And so as they started making those changes, that’s when they ran into road blocks. – Daivd Jesse, Leadership Reporter, Chronicle of Higher Education
Tomorrow we plant to look more into the liens placed on Finlandia properties by the Department of Education . In working on part one of our series we reached out to President Pinnow for comment. If you are interested in reading David Jesse’ The College that Mortgaged Everything, you can find the article link here. The Chronicle of High Education does charge readers to view their articles.