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Table of Contents
Higher Education in Peril? Predictions and Reality
A Moody’s Investor Service report in 2015 shocked many in higher education by predicting institutional closures would outpace mergers. The report also highlighted financial struggles, including that “small colleges with a sustained three-year growth rate of less than 2 percent increased fivefold, to 50 percent, from 2006 to 2014.”
Instigating fears further, Clay Christensen predicted half of colleges and universities would go bankrupt or close within a decade. Each year brings more financial trouble: a quarter of all private nonprofit institutions experienced deficits in 2017. More than two-thirds (68 percent) of financial officers at four-year private colleges reported their tuition discount rate was unsustainable. The National Association of College and University Business Officers (NACUBO) estimated average discount rates for first-time, full-time freshmen students attending four-year private, nonprofit colleges was 49.1 percent in 2016–17, and preliminary estimates for 2017–18 indicate a 49.9 percent discount rate.
Variables identified as predictors of closures and mergers include unsustainable tuition discounts, frail endowments and lackluster fundraising, enrollments of fewer than one thousand students, missions misaligned with diversifying student demographics, and rural campus environments. Will these variables lead to closures and provoke similar institutions to consider mergers? Moody’s 2015 prediction has yet to occur, and this issue of Liberal Education examines a sample of new ideas and attempts to restructure institutions.
The following table briefly summarizes institutional interventions, many implemented to forestall a closure or merger and to help expand financial security. This list was compiled by analyzing published reports and, in some cases, cross-checked with a list of institutional closures from the US Department of Education’s Federal Student Aid (FSA) office. FSA records are compiled from institutional self-reporting and do not always account for sudden changes. References for this introduction and the following table can be found at the end of this article.
Click image below to view expanded table on institutional closures, mergers, and restructuring.
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BETHANY ZIMMERMAN is a program coordinator in the office of Quality, Curriculum, and Assessment at the Association of American Colleges and Universities.
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Lederman, Doug. “Clay Christensen, Doubling Don: Despite emerging questions about applicability of his ‘disruption’ theory, the business guru still believes half of colleges could close in a decade, driven by the spread of online learning.” Inside Higher Ed, April 28, 2017. https://www.insidehighered.com/digital-learning/article/2017/04/28/clay-christensen-sticks-predictions-massive-college-closures.
Lederman, Doug. “A Quarter of Private Colleges Ran Deficits in 2017.” Inside Higher Ed, June 27, 2018. https://www.insidehighered.com/quicktakes/2018/06/27/quarter-private-colleges-ran-deficits-2017.
Lederman, Doug. “Peril for Small Private Colleges: A Survey of Business Officers.” Inside Higher Ed, July 20, 2018. https://www.insidehighered.com/news/survey/peril-private-colleges-survey-business-officers.
National Association of College and University Business Officers (NACUBO). “Average Freshman Tuition Discount Rate Nears 50 Percent.” Press Release, April 30, 2018. https://www.nacubo.org/Press-Releases/2018/Average-Freshman-Tuition-Discount-Rate-Nears-50-Percent.
Seltzer, Rick. “Discounting Keeps Climbing: The average first-time, full-time discount rate edged even closer to 50 percent in 2016-17 as net tuition revenue and enrollment struggled.” Inside Higher Ed, May 15, 2017. https://www.insidehighered.com/news/2017/05/15/private-colleges-and-universities-increase-tuition-discounting-again-2016-17.
Seltzer, Rick. “Days of Reckoning. Recent closures make it more likely a trend of private college consolidation has started. Institutions feeling particular pressure are small colleges, those in the Midwest and Roman Catholic institutions located away from Catholic population centers.” Inside Higher Ed, November 13, 2017. https://www.insidehighered.com/news/2017/11/13/spate-recent-college-closures-has-some-seeing-long-predicted-consolidation-taking.
Seltzer, Rick. “Moody’s: Private-College Closures at 11 Per Year.” Inside Higher Ed, July 25, 2018a. https://www.insidehighered.com/quicktakes/2018/07/25/moodys-private-college-closures-11-year.
Seltzer, Rick. “’This Isn’t Just a Financial Problem:’ CFOs need board and presidential support to put turnaround plans in place, presenters at the annual business officers’ meeting say.” Inside Higher Ed, July 25, 2018b. https://www.insidehighered.com/news/2018/07/25/cfos-are-key-college-turnaround-plans-they-cant-do-it-alone.
Woodhouse, Kellie. “Closures to Triple: The inability of small colleges to increase their revenue will result in triple the number of closures in the coming years, a new Moody’s report projects.” Inside Higher Ed, September 28, 2015. https://www.insidehighered.com/news/2015/09/28/moodys-predicts-college-closures-triple-2017.
Woodhouse, Kellie. “ Mergers on the Rise? As institutions struggle with enrollment and money, more join forces or consider doing so. But sometimes a merger is really more of an absorption.” Inside Higher Ed, July 7, 2015. https://www.insidehighered.com/news/2015/07/07/colleges-struggle-some-look-partnerships-and-mergers-relief .
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Beifuss, John. “Citing declining enrollment and real estate debt, Memphis College of Art announces impending closure.” Commercial Appeal, October 24, 2017. https://www.commercialappeal.com/story/news/2017/10/24/memphis-college-art-close/794024001/.
Cox, Peter. “As school faces closure, one last graduating class.” MPR News, December 16, 2017. https://www.mprnews.org/story/2017/12/16/as-school-faces-closure-one-last-graduating-class.
Crittenden, Jack. “Northwestern cutting back on staff after years of adding faculty.” National Jurist, November 12, 2018. http://www.nationaljurist.com/national-jurist-magazine/northwestern-cutting-back-staff-after-years-adding-faculty.
Flaherty, Colleen. “’Hastily and Without Consultation:’ Philosophers object to Claremont Graduate's decision to close its department and terminate tenured professors. Some see loss of an essential program.” Inside Higher Ed, July 17, 2018. https://www.insidehighered.com/news/2018/07/17/philosophers-object-claremont-graduate-decision-close-its-philosophy-department-and.
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Fosmoe, Margaret. “Holy Cross College officials say finances have stabilized: Changes made over to ensure school’s future.” South Bend Tribune, September 4, 2017. https://www.southbendtribune.com/news/education/holy-cross-college-officials-say-finances-have-stabilized/article_329c9f2c-1cc4-5f9e-8c62-8fa025658bc3.html.
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Hinton, Rachel. “DePaul University lays off dozens of staff: Declining enrollment is one possible cause of staff layoffs this week at DePaul University.” Chicago Sun Times, June 11, 2018. https://chicago.suntimes.com/news/depaul-university-lays-off-dozens-of-staff/.
Jaquiss, Nigel. “How Marylhurst University’s Budget Fell Apart: Some of the problems that led to the abrupt announcement are becoming clearer. One was a partnership with a Portland coding school called Epicodus.” Willamette Week, May 23, 2018. https://www.wweek.com/news/2018/05/23/how-marylhurst-universitys-budget-fell-apart/
Jaschik, Scott. Another Small College Will Close: Memphis College of Art, after 81 years, will end operations.” Inside Higher Ed, October 25, 2017. https://www.insidehighered.com/news/2017/10/25/memphis-college-art-announces-it-will-close.
Jaschik, Scott. “Another Small Private College Will Close: St. Gregory’s, an Oklahoma institution founded in 1875, will cease operations at the end of the semester.” Inside Higher Ed, November 9, 2017. https://www.insidehighered.com/news/2017/11/09/st-gregorys-university-announces-plans-end-operations.
Jaschik, Scott. “Small Black College Will Close: Concordia in Alabama, the only Lutheran HBCU, will end operations. It is second small religious college to announce closure in a week. Inside Higher Ed, February 23, 2018. https://www.insidehighered.com/news/2018/02/23/concordia-alabama-historically-black-college-announces-it-will-shut-down-operations.
Jaschik, Scott. “Another Small College Closing: Mount Ida, after failed attempt at merger, will shut down. It is third college in 2018 to announce it will close.” Inside Higher Ed, April 9, 2018. https://www.insidehighered.com/news/2018/04/09/mount-ida-after-trying-merger-will-shut-down.
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Maine’s Business News Source. “Saint Joseph’s College lands $180K grant to spur interest in STEM fields.” September 5, 2018. http://www.mainebiz.biz/article/20180905/NEWS01/180909983/saint-joseph%E2%80%99s-college-lands-$180k-grant-to-spur-interest-in-stem-fields.
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Seltzer, Rick. “Deep cuts at Aquinas in Tennessee. About 60 of 76 faculty and staff members be out of their jobs.” Inside Higher Ed, March 13, 2017. https://www.insidehighered.com/news/2017/03/13/aquinas-college-plans-shrink-and-focus-training-teachers.
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Verges, Josh. “McNally Smith founders dug deep into own pockets to keep college afloat, bankruptcy filings reveal.” Twin Cities Pioneer Press, April 23, 2018. https://www.twincities.com/2018/04/23/will-mcnally-smith-employees-students-get-their-money-key-bankruptcy-ruling-coming-soon/.
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Whitford, Emma. “A New Vet School Professors Don’t Want: Long Island University, facing enrollment and programming cuts, is building a vet school even though its faculty members are dubious and New York State already has one at Cornell.” Inside Higher Ed, September 7, 2018. https://www.insidehighered.com/news/2018/09/07/long-island-university-building-vet-school-despite-staff-cuts-and-declining.
Williams, Jessica. “Loyola University lays off staff, curbs retirement contributions to balance budget.” The New Orleans Advocate, July 16, 2018. https://www.theadvocate.com/new_orleans/news/education/article_fef93e42-894a-11e8-b5af-479d57eb19bb.html.
Williams, Mará Rose, and Katy Bergen. “University of Missouri freshman enrollment jumps, but overall numbers are still down.” The Kansas City Star, August 20, 2018. https://www.kansascity.com/news/state/missouri/article217040390.html.
Woodhouse, Kellie. “No Choice But to Close? Marian Court College's president says after years of declining enrollment and tuition revenue, the institution ran out of options -- sooner than professors expected.” Inside Higher Ed, June 18, 2015. https://www.insidehighered.com/news/2015/06/18/enrollment-declines-drove-closure-marian-court-college.
Woodhouse, Kellie. “Anatomy of Failed Merger: Negotiations to combine colleges are incredibly complex, as two Massachusetts institutions showed after abandoning a union that, while academically beneficial, would have been a financial drain. Here's how they reached that conclusion.” Inside Higher Ed, August 5, 2015. https://www.insidehighered.com/news/2015/08/05/college-merger-negotiations-are-long-and-complicated.
Woodhouse, Kellie. “Hope for Sweet Briar? Virginia Supreme Court gives opponents of closure another shot at an injunction to keep the college going. But even if that strategy works, will there be students left to educate?” Inside Higher Ed, June 10, 2015. https://www.insidehighered.com/news/2015/06/10/virginia-supreme-court-orders-lower-court-reconsider-injunction-stopping-sweet.
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