Dive Brief:
- Talladega College has secured a $15 million loan to help the institution as it tries to right its finances after recent years of enrollment declines.
- In a Tuesday news release, leaders of the historically Black college in Alabama described the working capital loan from Hope Credit Union as a sign of confidence and an investment in the institution. The proceeds will be used to help Talladega refinance its debt and pay vendors.
- The college has made other moves to shore up its finances as well, including cutting athletics programs, ramping up collections on unpaid tuition, folding some vacant employee positions into other roles and working with a third party to boost enrollment, officials said at a press conference last week.
Dive Insight:
At a press conference last September, Talladega officials acknowledged the steep financial challenges facing the college after double-digit declines in enrollment in recent years on top of rising expenses, particularly in staffing.
One of the main causes for concern was the college’s struggle to make payroll that spring — typically a sign of deep distress that can send institutions into a tailspin. Shortly after the cash issues surfaced, Talladega’s then-president resigned, as did its chief financial officer.
Since then, the college has pared down its expenses, including by shuttering sports programs, which has garnered the institution plenty of media attention.
In a February editorial, Talladega Interim President Walter Kimbrough, who joined in June, noted that the college under his leadership has cut four sports programs “that all began in the last 3 years without any plan for funding,” which he described as “bad decisions, point blank.”
He also addressed the decision to cut Talladega’s gymnastics program, which lost the college significant amounts of money.
“One of my first tough decisions was to end gymnastics, a feel-good program that cost almost $400,000 and generated no revenue,” Kimbrough wrote. “Just from a practical perspective, we did not have a place for our gymnasts to train, which meant traveling to Trussville three days a week for practice, adding to costs.”
Perhaps the college’s largest source of financial pain, though, has been its shrinking student body. Between 2018 and 2023, Talladega’s fall headcount dropped nearly 31% to 837 students. That decline has brought revenue pressure with it. Just between fiscal years 2022 and 2023, net tuition and fee revenue fell by just under $1 million to $5.6 million.
Talladega leaked money in other ways as well. At the April press conference, Kimbrough noted the college had not previously employed a debt collection agency to recoup unpaid tuition and fees.
Since the fall, a team of staff from across the university has worked to reach out to students to reduce the college’s bad debt — moving the figure from $1 million down to under $100,000 “in a couple of months,” Kimbrough said.
To help boost enrollment, Talladega has recently worked with a marketing firm that has done some pro bono work looking at ways the college can stand out, Kimbrough said.
Providing a loan to the college was “a no brainer,” Bill Bynum, CEO of Hope Enterprise Corp. and Hope Credit Union, said at the April press conference. Bynum noted Talladega leadership had what he called a “clear strategy” for moving the institution forward.
“Pound for pound, no one does more with less than HBCUs,” Bynum added. “So it’s a bet that we’re glad to make.”
