Among the striking statements that came with the announcement this week of the planned closure of Sweet Briar College were those by the college’s president and its Board of Trustees, which painted the decision as inevitable. The college faced "insurmountable" financial challenges, they said, amid a "declining number of students choosing to attend small, rural, private liberal-arts colleges and even fewer young women willing to consider a single-sex education."
That scenario suggested that Sweet Briar, with an $84-million endowment, was an early victim of a wave of closures about to sweep through higher education, claiming other colleges like it.
Is that actually the case? Running a small college is not an easy job these days, but there are many that have managed to survive, even grow, with smaller endowments and less-recognizable names than that of Sweet Briar College. And yet Sweet Briar’s high-profile closure will probably be of concern to those colleges that share some of the characteristics that marked it as vulnerable: a tiny student population, a rural location, a questionable niche, and programs that may have been expensive to maintain, such as the college’s well-known equestrian program.
With the closure just announced and scant details on the college’s finances available, it’s difficult to say for sure what factors made leaders at Sweet Briar throw in the towel, and what other colleges should see as warning signs to avoid a similar fate.
For now, there are only hints. The college’s full-time-equivalent enrollment this year was just under 700, a number that many financial analysts consider unsustainable for a tuition-dependent college. Its tuition-discount rate had climbed from 49 percent in 2009 to 62 percent this year.
To add to the burdens, the college had a faculty-to-student ratio of eight to one—admirable, perhaps, in the attention students got, but difficult to support, given the financial troubles. In total, the college has just over 300 employees, about 85 percent of them working full time.
In perusing the college’s tax report for 2013, the latest available, Kent John Chabotar couldn’t find many red flags. Mr. Chabotar, president emeritus of Guilford College and an expert on college finance, said that Sweet Briar’s debt, at $26-million in 2013, was not out of the ordinary relative to its total assets, compared with other institutions. (It seems that the college has paid down its debt over time.)
But at least one line in the tax form gives pause: The college lost roughly $4-million in investment income compared with the previous year, for unknown reasons. That year the college posted a deficit of $3-million, compared with a $325,000 deficit the previous year.
Of course, this might not be the end for Sweet Briar. Already alumnae networks have started an online campaign to reboot the college. (If Antioch College can come back from the dead, surely Sweet Briar could.) But if that campaign fails, Mr. Chabotar said, the college will face a long, painful process of giving endowment money back to donors and trying to find a caretaker for the campus, near Lynchburg, Va.
More Vulnerable Colleges
Mr. Chabotar said it was hard to say what might have persuaded the college’s leadership to close at this point, but he doubted Sweet Briar would be the last college to do so in the near future.
"It won’t be in one fell swoop," he said, but there are about 250 vulnerable institutions across the country. "I am not saying there is going to be a wholesale slaughter tomorrow. I am saying that they will be increasingly more feeble." Pressure is on all the traditional college revenue streams, Mr. Chabotar said: tuition, government support, endowments, and philanthropy.
Kevin W. Crockett, an enrollment and college-marketing expert who is president of RuffaloCODY and Noel-Levitz Enrollment Management, said the economics of running a college the size of Sweet Briar are challenging, no matter what its setting and educational offerings are.
"There are places where there are more of those schools," he said, "and you look at those places, and it’s really hard to make the math work, unless they have substantial donor activity or a monster endowment" or some other revenue stream, like a popular graduate program.
A key to survival, he said, is to be realistic about the prospects. Mr. Crockett’s company has just done an enrollment-projection analysis for a college in the Northeast that attracts many education majors. "It’s a pretty unpleasant picture," he said. "When schools get those projection models, they tend to not like them." They often insist they could do better than what the models suggest.
"Schools that look in the mirror and understand the cold, hard reality of the situation," he said, are often better off.
It’s not clear if Sweet Briar did that. The college’s undergraduate program dominates, and it has almost nothing in the way of graduate programs, which have been a boon for many women’s colleges.
Ed Schrader, president of Brenau University, a women’s college in Georgia, runs a tight ship, monitoring every penny the institution spends on students and expanding coed graduate programs to support the traditional women’s program. All of that takes a hard-nosed approach to what’s working, what’s marketable, and what’s not.
"I worry about sentimentality ruling logic, and I am afraid that is happening in the isolated ivy halls," he said. A college of 700 students could make choices that would enable it to survive—by cutting faculty members, by rejiggering programs, by changing the investment strategy—"but you’d have to make nontraditional academic decisions," he said.
"That may be too much" for a traditional four-year college, he acknowledged. "There are a number of other colleges that go up that Virginia spine, that shall remain unnamed, that are pretty much in the same category, and I am worried about all of them."
One thing is certain: Sweet Briar’s closing casts a pall over the small-college market, perhaps reinforcing views that those colleges are an endangered species.
After Sweet Briar’s announcement, Nancy Oliver Gray, president of Hollins University, another women’s college in Virginia, was quick to post an assessment of where her institution stands financially: The endowment, at $180-million, is the highest it has ever been. The college raised $162-million in its latest campaign, it has expanded its academic programs, and it has erased all of its debt.
"I thought it was important to get the story out there that we are saddened by their closure, but that doesn’t mean that other schools are going to close as well," she said. The casual observer might see Hollins and Sweet Briar as in the same bracket, given that they are both women’s colleges in western Virginia and serve as athletic rivals.
But Ms. Gray acknowledged that the closing of Sweet Briar provided evidence to those who posit that small, private colleges are antiquated.
"We have got to help people understand that there are other institutions that, yes, face challenges," she said, "but are doing all they can in order for their institutions to flourish."
Scott Carlson is a senior writer who covers the cost and value of college. Email him at email@example.com.