Can Small, Struggling Colleges Survive?

This is crunch time for the budgets of small private colleges, as leadership begins to get a sense of what fall enrollment will look like following this spring’s FAFSA fiasco. As of mid-May, only 41.5 percent of high-school seniors had completed the FAFSA, compared to 50 percent in 2023. Some colleges won’t survive: Wells College, in New York, Fontbonne University, in Missouri, and Birmingham-Southern College, in Alabama, have already announced their impending closures. More closures are likely to be announced in the coming weeks as optimistic enrollment and fund-raising projections meet the cold reality of empty bank accounts.

The increasing number of college closures has led to a great deal of conversation regarding mergers between colleges as a way to save struggling institutions, and so a new book on the subject, Inside College Mergers: Stories From the Front Lines (the Johns Hopkins University Press), is particularly well-timed. The book, edited by Mark La Branche, chancellor emeritus of the University of Tennessee Southern, covers seven institutions that considered merging with another institution or being acquired, with some being much more successful than others. For struggling, small colleges, a few clear lessons emerge.

Three key criteria determine a small college’s merger appeal for a partner or an acquiring college or system. The first is having substantial assets that would tempt other institutions, which is often not the case for institutions on the brink of closure. With the notable exception of Sweet Briar College’s attempted closure a decade ago, most colleges that consider closing have little in the way of endowment funds or cash on hand. Institutions often think that they can make it on their own until the very end, and completing a merger can easily take two or more years.

The second criterion is real estate. The largest asset that most struggling colleges have is their physical campus, and that is often of limited value to others. This is a particular issue for rural colleges in areas with declining populations, as there is little interest in trying to start a new endeavor in areas already facing demographic challenges. Iowa Wesleyan University, one of the book’s featured institutions, is held up as a success story until a hastily added addendum notes its closure in 2023. The university took on $26 million in U.S. Department of Agriculture loans to update facilities, but the majority of its campus recently sold for just $1.25 million to the local school district.

Colleges in urban areas have better prospects. Boston University’s acquisition of Wheelock College and Villanova University’s acquisition of Cabrini University both preserved some aspects of the smaller institutions, but they were driven in part by a desire from larger institutions to expand operations in attractive parts of metropolitan areas. Sometimes the move is all about real estate, such as Washington University in St. Louis agreeing to take on Fontbonne University’s Saint Louis campus following the latter institution’s scheduled closure in 2025.

The third key predictor of a successful merger or acquisition is state support. For states with underdeveloped public higher-education systems, acquiring a new campus can be an attractive option. This has happened in Tennessee (the former Martin Methodist College), New Jersey (Bloomfield College), and Delaware (Wesley College), with Martin Methodist becoming a free-standing campus within the University of Tennessee system, and Bloomfield and Wesley being folded into existing public universities. Each of these efforts relied on bridge funding from the state to help the private college survive until the takeover.

But many things must go right for the state to provide a lifeline to a struggling private college. The first hurdle to overcome is to find champions in the legislature and the executive branch. While some colleges have succeeded in this area, there have also been some notable failures. Iowa Wesleyan closed after the state’s governor declined to provide one-time pandemic-relief funding that she said would not solve fundamental issues. Birmingham-Southern closed after the college was unable to get sufficient legislative support to override the state treasurer’s denial of a low-interest loan.

Even if legislators are interested and funding is available (another big if), there is the question of whether there is a need in the local area for another public college. Martin Methodist was far enough away from another public university to reduce concerns, but this is often not the case. In a time of declining enrollment in many states, existing public colleges would rather pick up students from a closed private college than find themselves competing with a suddenly better-resourced nearby public competitor.

Before seeking potential mergers, struggling private colleges tend to pursue two strategies in a last-ditch effort to expand tuition revenue. The first is to try to add undergraduate and graduate programs in high-demand areas such as STEM, health, and business, while simultaneously paring back the liberal arts. But these new programs are often expensive to operate due to specialized facility needs and relatively higher faculty salaries, partially offsetting the revenue gains from enrolling new students. These programs also often have high start-up costs, which can be a concern for colleges that are already spending heavily out of their endowment funds in an effort to stay afloat.

The other strategy is expanding athletics programs to recruit students who are seeking to continue playing sports after high school. Among the examples in this book, both Iowa Wesleyan (before its closure) and St. Andrews University, in North Carolina, sponsored 17 teams. Montreat College, also in North Carolina, which enrolls fewer than 700 residential students, has a whopping 23 teams (varsity cycling was added in the fall of 2024). While the athletics programs generate little revenue from tickets and there are no lucrative television contracts, the goal is to put (sweaty) butts in seats.

So will sports save small colleges, as a Chronicle article asked last fall? The strategy has its drawbacks. For colleges with limited budgets, it can be hard to sponsor a large number of sports while also providing a quality experience to students. A Chronicle deep dive into St. Andrews University highlighted moldy football equipment, the lack of a locker room for years, and low graduation rates. Football is an expensive sport to add, and new research questions whether starting a team (football has the largest roster of any sport and is a key potential source of male students) actually results in increased enrollment in the long term.

The Hechinger Report recently reported that “colleges are now closing at a pace of one a week.” At that rate, it is clear that more colleges need to consider whether they are financially sustainable going forward. Not every college is going to get an unrestricted $6-million gift from an anonymous donor, like the one that saved Montreat College a decade ago — even though it seems like many colleges are banking on that as their survival strategy.

Here are three actions presidents, their boards, and faculty and staff members should take to ensure that, in the future, their institution will act from the strongest position possible:

Figure out the length of the runway. Many struggling colleges cycle through new leaders who make grand promises of enrollment increases, and it is long past time to be skeptical of these claims. Instead, colleges need to operate on what is feasible under a reasonable worst-case scenario. If enrollment does not increase, how much longer can a college continue to operate?

Colleges must have a clear sense of how much time they have to pursue new projects before they run out of money. This influences the options available to colleges, as there are different strategies available with a five-year runway compared to a two-year runway. A shorter runway limits opportunities to start new programs and requires a laser focus on cutting costs and trying to retain students. This would also help to avoid sudden closures, which are devastating to students, faculty, and staff. There should not be any circumstances under which colleges close with less than six months’ notice, yet this keeps happening due to wishful thinking from stakeholders.

Ask: Acquire or be acquired? In Inside College Mergers, Robert Morris University, in Chicago, considered three potential options: acquire a college, be acquired (the eventual result), or make major changes. It is reasonable to assume that most struggling colleges are considering major changes, but joining forces with another institution is another potential option to achieve economies of scale. If colleges act while they still have a runway, they can explore whether there are potential partners for a merger or acquisition.

A caveat on this strategy: Colleges typically wait to consider mergers until it is too late. Two colleges that are both on the brink of closure are unlikely to save themselves by merging — there are simply not enough resources to save either institution. If at least one college still has some available resources, then an acquisition has a better chance of saving the identities of both institutions.

Be transparent with stakeholders. It is crucial to be honest and forthright with students, faculty, staff, donors, and community members about the financial health of the institution. If a college is struggling but still has funds left to operate for several years, communicate that clearly. That shared information has the potential to engage alumni for fund raising and provides a powerful incentive to make necessary changes. Many colleges prefer to operate under a veil of secrecy until the institution is teetering on the brink of closure. An example of this is Northland College, in Wisconsin, which gave its community less than one month to raise $12 million to stay open. The goal was badly missed, but the college still chose to remain open — kicking the can down the road. This is not effective leadership.

Small colleges have a long history of being stubborn and resilient, but the financial headwinds are fierce enough that even longtime survivors are at a real risk of closing. If there was an easy answer, I would become a consultant and get rich selling a solution. Instead, there are only hard-earned lessons and recommendations that can hopefully help at least a few struggling colleges survive.