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.

"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:

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