Hat tip to Jeff for this article on Middlebury. There is only a single mention of Williams, so I’ll put my comments below the break.

Middlebury College has been living large. Aside from icons like Old Stone Row – three sober buildings that date back to the 19th century – and Mead Memorial Chapel, today’s sprawling campus would be largely unrecognizable to anyone who attended this rural Vermont college as recently as the 1990s.

During the past two decades Middlebury has undertaken a massive construction campaign, part of a push to secure its place among the nation’s top liberal arts schools. In the past 10 years alone the college has added a $47 million science center and a $40 million library, as well as a 2,100-seat hockey arena and apartment-style dorms featuring an environmentally friendly dining hall with rooftop vegetation.

And so on. Needless to say, Williams has been “living large” as well.

Middlebury’s building boom was underwritten by double-digit endowment returns, generous donations, and, like much of the past decade’s conspicuous consumption, record amounts of borrowing. The college’s debt ballooned from just $5 million in 1987 to $270 million today.

Just like Williams. Too bad we increased the College’s debt by over $200 million, thereby causing a $50 million loss (in addition to what would have happened without this borrowing).

But as Middlebury’s endowment, which weighed in at $885 million last June, shed $200 million in the last six months of the year, the costs of the growth spurt hit home.

I have heard rumors that Middlebury may be close to bankrupt. If endowment stood at $665 million on December 31 and they have $270 million in debt, then their net financial wealth is only $395 million. But how have they accounted for all their private equity and other levered investments? How aggressive was their investment allocation? I lack the energy to find out the details, but Middlebury is in huge trouble.

The cost issue is especially critical at schools like Middlebury that compete for top students but lack the ample endowments of a Harvard, Stanford, or Williams.

Excellent! Every time that Williams appears in the same sentence as Harvard or Stanford (and Amherst does not) is a win for us.

A male student from a top public high school in Vermont has strong grades, a slew of activities, and a glowing report from his interview with a Middlebury alum, as well as high marks from both staffers who’ve studied his file. He also plays the clarinet, so Clagett asks one of the admissions counselors to pull up the list, with skill ratings, of all the clarinetists in this year’s applicant pool. Meanwhile, he scans a sheet with the top 20 prospects provided by Middlebury’s orchestra director. This candidate hasn’t made the director’s wish list, but his admissions profile rates his musical skills a six out of seven, which is enough to put him over the top. “We try to take kids from our backyard,” Clagett explained to me earlier, and now he sounds pleased as he announces, “A clarinet player from Vermont? Very exciting!” On to the next file: It’s midmorning, and the committee still has about 70 files to discuss today.

[D]ecisions often hinge on so-called hooks or handles that grab counselors as they pore over hundreds of applications from varsity team captains and yearbook editors.

Applying from an underrepresented state can be a good hook, as can pursuing a rare hobby, like circus performing (this year, one applicant sent in a link to a YouTube clip of herself juggling and tumbling), or having a Middlebury graduate for a parent. So can a strong application from a student who would be the first in her family to attend college, or who comes from a high school where only 25% of his classmates are expected to earn a bachelor’s degree.

I question the accuracy of the rest of this article because the description of admissions is so naive. No discussion of either under-represented minorities or athletes. 95% of the non-academic admissions decisions are driven by those two factors. Does the Middlebury music department really rate the ability of “all the clarinetists in this year’s applicant pool?” I doubt it.

Of course, being a first-generation college hopeful or coming from an underperforming high school is also an indication that the student may need financial aid. But Clagett and his colleagues ignore that factor. “We won’t know until we mail out the letters what proportion of our students are needy,” says Clagett.

Middlebury won’t know the exact proportion, but it will still have a pretty good estimate. The next few years will provide the amusing spectacle of schools like Middlebury claiming to be need-blind but actually being very need-aware. How will outsiders know that something fishy is going on? Look for increases in prep-school graduates and students taken from the waitlist along with a drop in the number of students with Pell Grants and internationals.

That’s a luxury Middlebury may not always be able to afford. In the past 10 years its annual financial aid outlays have increased by 167%, to $33 million; last year, the average aid package came to $35,000. Most private colleges can’t sustain this policy and admit at least a part of their class with an eye to applicants’ finances, a so-called need-aware approach that should give wealthier kids even more of an edge this year. Middlebury does take need into account when admitting students from its waiting list, and recently adopted the practice in international admissions.

Unless Williams becomes much more aggressive in cutting costs elsewhere, this is our future too.

How long will Middlebury be able to remain need-blind on regular admissions? President Liebowitz has said that any change in its financial aid policy would come only as a last resort. “Different schools have different levels of sacrifice they’re willing to make in order to remain need-blind,” he says, “and the tolerance at our school is very high.”

Brave talk from such a poor school. I give Middlebury three years. Professors care more about their pay and their perks then they do about an abstract commitment to need-blind admissions. This will be all the more true when the faculty discover that teaching well-educated prep-school graduates with 1300 SATs (students that Middlebury used to reject in droves) is actually quite pleasant.

The article ends with a cockamamie plan for Middlebury to make a bunch of money taking on Rosetta Stone. Good luck with that!

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