Why Are Colleges Closing — and What If Yours Does?
- More than 50 colleges have closed or merged in the past five years.
- Financial stress due to the COVID-19 pandemic has led to more college closures.
- There are telltale signs suggesting a college's closure might be imminent.
- If your college closes, know your options, such as transferring to another school.
The news was rather jarring: Becker College in central Massachusetts announced plans to close its doors permanently as of August 2021.
I've known Becker for years. I lived nearby for a decade and was a consultant to the school for a time. It's relatively small and not well known outside the immediate area, but it has new leadership and seems nimble and forward-thinking. It even has the second-best undergraduate video game design program in the world.
And it's been around since 1784, making it one of the country's 25 oldest colleges. But just like that, it'll soon be gone.
Not that colleges closing, especially in New England, is anything new. Another school I'm quite familiar with, Newbury College based just outside Boston, closed in 2019. I worked there years ago and knew it had financial challenges. It also was relatively young, especially by Boston standards, tracing its roots to 1962. By then, Becker had been educating students for 178 years.
Why Are So Many Universities Closing?
When it finally decided to shutter, Newbury had an enrollment of only 627. Its tuition was $34,000, compared to $14,600 at nearby University of Massachusetts Boston, which catered to 12,600 undergrads.
Small, private schools like Newbury are particularly vulnerable. The telltale signs of stress include lacking a national reputation, relying heavily on tuition income to fuel the school budget, discounting tuition above 40% to attract students, having a small endowment and significant debt, and lacking online programs to produce revenue.
This profile, unfortunately, fits hundreds of U.S. colleges. For schools located in regions where traditional-age students are declining — especially the Northeast and the Midwest — the problems are even more acute.
Since 2016, more than 50 institutions have closed or merged. Next year, Boston College will take over Pine Manor College.
Examples of Recent College Closures
- Marlboro College in Vermont (acquired by Emerson College in Boston)
- Wheelock College in Boston (merged with Boston University)
- Green Mountain College in Vermont
- Wesley College in Delaware (acquired by Delaware State University)
- Mount Ida College in Massachusetts (absorbed by the UMass system)
- Holy Family College in Wisconsin
- College of New Rochelle in New York
"In a typical year, we see about 5-10 private nonprofit colleges close, and that's roughly out of 2,000," said Robert Kelchen, a professor at Seton Hall University.
Now add COVID-19 to the mix. The pandemic exacerbated financial problems across higher education by shrinking enrollments, robbing colleges of millions of dollars in room and board revenue, and stemming the pipeline of full-pay international students. What was for many colleges a fragile situation suddenly became untenable.
That includes public institutions as well. In Pennsylvania, plans are under way to consolidate universities within the state higher education system. The mergers will combine six institutions into two regional universities, eliminating redundancies to save money. Pennsylvania's system has struggled for years with declining enrollments and cuts in state funding, and the pandemic accelerated this decision.
Similarly, in Wisconsin, where the state's public higher education system faces its "most challenging budget session in recent memory," officials are exploring the possibility of consolidating the system's university branch campuses with its technical colleges.
For-Profit Colleges Are Closing in Even Greater Numbers
The prospect for survival among for-profit colleges is even dimmer. One study showed that from 2014 to 2019, 88% of the campuses that closed operated as for-profit institutions. It's not surprising given that for-profit schools have lower graduation rates, higher loan default rates, and poorer career outcomes than their nonprofit counterparts.
Enrollment at these schools has dropped 40% in recent years, and many have lost accreditation. Dissatisfied students have even sued these institutions, alleging they were misled about educational quality.
Although just 1 in 10 students enrolls at a for-profit college in the U.S., these institutions accounted for nearly 85% of students — roughly 450,000 — displaced by college closures during that span.
Although just 1 in 10 students enrolls at a for-profit college in the U.S., these institutions accounted for nearly 85% of students displaced by college closures between 2014 and 2019.
These students tended to be working adults, with a quarter older than 35. They were most often low-income students — 70% received Pell Grants — and 57% were people of color. Now these displaced students must seek educational opportunities elsewhere, perhaps with limited options.
But students aren't the only victims of colleges closing down. The lives of faculty and staff are disrupted, often even more so. These professionals must find new jobs, a prospect particularly daunting for faculty members, who face a tough market. For those working at a college in a remote area, this likely means uprooting themselves and their families.
Local businesses that profit from the college population suffer, too. When colleges close, the small towns whose economic fortunes are tied to the institutions can experience an exodus of residents and businesses, a drop in property values, and an irreversible depression affecting the lives of everyone left.
How to Tell Whether a College Risks Closure
If you're exploring college options and your choices include institutions you suspect might be financially unstable, there are tools you can use to confirm or refute your suspicions.
These include Edmit's College Financial Health Center, the Hechinger Report's Financial Fitness Tracker, and College Viability, all of which examine key metrics representing warning signs that a college faces potential closure. The federal government also provides Financial Responsibility Composite Scores for all U.S. institutions.
To determine financial viability or instability, here's what experts say to look for:
- Enrollment Trends: Does the college consistently achieve its enrollment goals, or have student numbers been declining recently? Colleges need a critical mass of students to survive. Newbury's enrollment of 627 was a clear signal of imminent demise.
- Tuition Discounting: Colleges routinely "discount" tuition — charging less than sticker price — to entice students to attend. If a college's discount rate exceeds 50%, this suggests it has difficulty attracting students and lacks sufficient financial resources to invest in the educational product.
- Endowment Size: Endowments fuel all aspects of the college experience, including financial aid. Schools with larger endowments — particularly those with high endowment-per-student ratios — tend to be more financially stable.
- State Funding Patterns: If the college is public, look for trends in that state's funding for higher education. Continued cuts in state support can affect facilities, student aid, faculty quality, and student services.
- New Programs: Colleges rolling out new programs — either online or on campus — typically boast the necessary resources to remain nimble and market responsive.
3 Steps to Take If Your College Closes
What if the worst-case scenario materializes and your school announces it's closing? Keep in mind the following tips.
Take Stock of Your Options
Your college might offer a teach-out agreement allowing you to finish your program at another school, which you can accept or deny. You can also transfer elsewhere, but make sure the new institution offers your academic program or something similar.
If you choose the teach-out option, all your credits will likely automatically transfer. Otherwise, a new school might accept up to 60 or 90 credits, depending on the length of the degree program, which could mean you lose ground toward degree completion.
Determine Whether You Can Discharge Your Loans
Depending on how your college closed down, you might be eligible for a federal loan discharge, meaning you won't have to repay it. If your school shuts down completely while you're enrolled, you could qualify. Even if your school offers a teach-out option, you may opt out and still qualify for a discharge.
That doesn't hold true for college mergers or when one school is purchased by another institution. You also can't discharge your loans if you transfer elsewhere. Review your options carefully.
Get Copies of Your Transcript
You'll want to document your progress for other schools and employers. Some institutions will establish a document repository at another institution, while others will use a transcript service. Order several copies, and be sure to keep the school's latest academic catalog for future reference.
How Do College Closures Affect Alumni?
While it may be emotionally painful to see your alma mater close, it doesn't mean your degree loses value or isn't valid. Nobody can take away the education you received and the friendships you forged.
Consider, too, that if your school has merged with another, it could introduce new opportunities for continued learning and provide an expanded alumni network. When one door closes, many more could open.
Feature Image: Bloomberg / Contributor / Getty Images