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Baylor Financial Statements: Highlights & Questions

Baylor posts its audited financial statements on its website, but how many people realize they’re there – or take the time to look them over? This post highlights some of the information in those financial statements and raises questions that can’t be answered by the financial statements.

It’s important to start by noting that rumors have circulated over the past several years that Baylor is in financial trouble because of the debt it has incurred over the past 13 years beginning in 2002.  It’s true that Baylor’s total liabilities are approximately $850 million, but it’s also true that Baylor’s net assets (total assets minus total liabilities) are twice that amount or $1.7 billion.  Baylor has a healthy balance sheet.

That said, here are some questions that should be asked – and deserve to be answered.  We hope that you’ll join the discussion by adding to the comments at the end of the post.  But we will ask you to identify yourself before posting.

  1. How much debt are Baylor students incurring in order to help maintain Baylor’s healthy balance sheet?
  2. What percentage of Baylor graduates are graduating with student debt, and what is the average debt of those graduates?  Baylor doesn’t report the average debt of its graduates to U.S. News — or anywhere else for that matter — so there’s no way to know how much current students are borrowing against their futures in order to finance a Baylor education.  Do all of the regents know the answer to this question?
  3. Is Baylor counseling students about taking on too much debt and making sure students (and their parents) understand what the monthly payment on their student loans will be at various debt levels?

Baylor has been able to balance its operating budget and even run a surplus for the past 10 years even though the average discount on tuition and fees has risen to approximately 40% versus a projected discount rate of 24% used in the Vision 2012 financial model (as revised in 2004).  Baylor has been able to do that by enrolling a couple of thousand more students per year than were projected in that Vision 2012 financial model.   Here are the questions that need to be asked that can’t be answered by the financial statements.

  1. How dependent has Baylor become on tuition dollars funded by taxpayer-guaranteed student loans to generate the revenue required by the operating budget?
  2. How much will Baylor be impacted if those taxpayer-guaranteed student loans are curtailed as the national debt approaches $20 trillion and our politicians are forced to look for ways to trim other areas of the federal budget when interest rates normalize and interest expense in the federal budget doubles or triples over the next few years?
  3. What if students and their families simply wake up to the fact that even though taxpayer-guaranteed student loans are available, that it’s probably not a wise financial decision to borrow $60,000 or $80,000 or even $100,000 for a college education?

Baylor raised $104 million — or approximately $21 million per year — for its endowment over the five years ended May 31, 2014.  For the year ended May 31, 2014, Baylor received $19.9 million in contributions to endowment versus $62.9 million as projected in the revised Vision 2012 financial model.  Here are the questions that need to be asked that can’t be answered by the financial statements.

  1. Is that an acceptable level of donations to endowment for a university of Baylor’s standing?
  2. How much have those donations been impacted by the ongoing dispute between Baylor and the BAA, especially in light of the fact that the greatest transfer of wealth in history is occurring right now?
  3. Have the significant amount of restricted gifts for the stadium, business school and other specific facilities and programs hurt Baylor’s ability to attract gifts to the general endowment?

Again, we invite you to join the discussion in the Comments and raise other questions that you have after reviewing the numbers.

Editor’s Note:  Readers can see the full set of Baylor’s financials in just four clicks by going to the website, clicking on About on the toolbar, then clicking on Senior Administration followed by Facts & Figures, and then Financial Highlights.  You can then choose the specific fiscal year that you want to look at.

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8 thoughts on “Baylor Financial Statements: Highlights & Questions”

  1. Seven Questions

    Is an education from Baylor University a good value? I’m beginning to hear that question more often—not from people who have no heritage at Baylor but from supporters and graduates who love the school. Anecdotally, I hear about students in the last ten years graduating with debt loads of over $50,000. I look at and find that Baylor is number 541 on the list of American Colleges and Universities for a return on investment in the cost of a college education. It’s a sobering thought when, as a Baylor graduate, you know that your expensive education has you far down the list of salary and wage earners in the United States.

    Even more sobering, on the same website, is the list of average student loan amounts. Baylor has the second highest in the nation. When you combine the aforementioned return on investment rank with this average student loan amount rank, anyone will question the value of a Baylor education. It even calls into question academic quality. Why are Baylor graduates not making salaries high enough to increase this return on their education dollar investment?

    That leads to a third question. Why does a Baylor degree cost approximately $200,000 for four years of school? I understand that there is a 40% discount and that drives the cost down to $120,000. However, here is a fourth question. Is a discounted Baylor education cost affordable for a middle class family? I doubt that most middle class families, parents and children, can probably manage more than $30,000 to $40,000 in savings per student for a college education. If that’s the case, then the rest of it has to be financed with debt—in the neighborhood of $80,000 to make up the difference for the discounted tuition, room, board and fees of $120,000. The $80,000 is student loan debt.

    The fifth question: Has the Board of Regents really analyzed this financial direction being taken by Baylor? These folks are accomplished in their own fields and have prepared corporate, government and church budgets. To me, an income stream primarily based on 22 year old note payers is tentative at best. The lenders (mostly the U. S. government) are already beginning to place restriction on these loans and are requiring loan counseling, which reveals to the debtor the magnitude of the loan and its payback consequences.

    A sixth question: What is Baylor University doing to cut costs? It appears that there a lot of capital intensive projects being done at Baylor now i.e. buildings, sports facilities, etc., which not only increase the debt load on the University but also have a maintenance cost associated with them. When many universities are moving ahead with online education to increase their efficiencies and reduce capital costs, I’m not hearing much about those possibilities from Baylor. I also wonder if there has been a cost management study done recently to look at the whole financial picture in relation to the education mission of the University.

    The seventh and final question: What happens when parents and students begin to see that the value of a Baylor education is not worth the money you spend for it? I believe that trickle has already started, but it may become a flood in future years unless something is done soon to reduce the financial load being placed on the back of students for the rest of their lives.

  2. Great comments and questions, J. In fact, if you take next year’s estimated total costs of $52,814 (including books and supplies) from the Baylor website at and assume a 6% per year increase over the three following years, the total cost over the next four years will be $231,000, and the net cost after discounting tuition and fees by 40% will be $160,000.

  3. I stand corrected, Kent. Therefore, at a $160,000 discounted cost, a student having $40,000 in his/her own cash resources would end up with a $120,000 student loan debt and a Baylor degree. Is it worth it?

    Moreover, if a couple had three children and wanted all of them to have a Baylor education, they would be looking at close to half a million dollars in total costs, even using the discounted figures.

  4. When I attended Baylor on a preacher’s-kid half-tuition scholarship in the 1940s, Baylor was scrambling for recognition and financial support. That has changed radically. Baylor is known nationally and has attracted supporters with deep pockets. As I see it, reducing the costs to promising students is not only possible, it is very doable if the university makes that an ongoing priority.
    I have degrees from Baylor, an Ivy League school (Columbia) and a large state university (Texas). I have taught at Baylor and at Arkansas and Kansas State where I was also an administrator. Making Baylor financially attractive to promising students would greatly enhance its standing in the academic world. Already, more students are applying than are being accepted. Now is the time to go after the brainiest, not just the most affluent.

  5. Debt Service on new construction is huge since the money raised for those purposes never equals the costs of construction. If there is one proven need for an independent voice at this time it would be to question the finances of Baylor, since no one else will….Stan Schlueter

  6. Thanks for the article and information. I have not taken the time to look at all the information that is available, but does Baylor have a higher percentage of graduates who go into the ministry or education than other schools? If so, I would think that would impact the ROI ranking.

    Baylor tuition is not cheap. But if your child has fairly good grades or SAT/ACT scores, its overall costs–room/board and tuition is competitive with UT Austin…….or at least that is what my calculations showed for one child who picked BU over UT. I must also admit that Baylor is cheaper than TCU and I have that unfortunate experience as well!

    It is a burden for all, but especially anyone in middle class income level or below. I personally did not have the money to go to Baylor without getting loans, grants and scholarships. But I made it through and paid them off and the IRS has the checks to prove what a wise investment that was by the Federal Guaranteed Student Loan program.

    As alums, we need to do our part by contributing what we can to increase endowment and scholarships. That is one way that we can say thanks for our Baylor experience.

  7. Lloyd – Thanks for your comments — it’s always good to hear different opinions and perspectives.

    Virtually every student debt or financial planning website recommends not borrowing more than a student’s expected first year salary out of college. For education, social work or journalism majors, that would be in the $30,000-$40,000 range and for accounting, finance or engineering majors, that would be in the $50,000-$60,000 range. I don’t know of any major that would justify borrowing more than $60,000 for an undergraduate degree – especially if a student plans to borrow more money for graduate or professional school.

    If financing a Baylor education will mean borrowing more than a student’s first year expected salary, there are a couple of other options. If a student is set on going to Baylor, that student should consider going to junior college and living at home for the first two years and then transferring to Baylor for the last two years to take coursework in their major. If a student wants to go to the same school for four years, they should consider a state school. Even a state school will cost approximately $100,000 for four years, which will leave $50,000-$60,000 of debt if a student’s family has $40,000-$50,000 to pay towards college expenses.

    Baylor is a great school that provides a great education, but Baylor — or any other private school for that matter — is not a good choice for students who will have to mortgage their futures by taking on an inordinate amount of debt to attend a private university.

  8. Thomas L. Goodnight

    My years at Baylor were wonderful in the 50s even though they were expensive in that time due to small distribution of money and the lower rate of return on investments as compared to todays economy. However, my most recent experience has been with a grandchild who desired to go to Baylor and being a valedictorian of her high school graduating class applied and was offered a scholarship which accounted for approximately half of the tuition over a four-year period which was very generous. She elected to go to Texas University due to the fact that her living expenses in a dorm at Baylor were far greater then the aid from the scholarship she was to receive would provide.

    At Texas she was able to continue her high scholarship achievements without incurring student debt, as her family could afford to pay other expenses she incurred.
    Thomas L. GOODNIGHT, class of 1958

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