When It Comes to College Closures, the Sky Is Never Going to Fall

We used to call it “the shakeout.” This was the term we used in our corner of The Chronicle newsroom when I first joined the publication a decade ago to describe what some of us assumed would be an imminent wave of college closures bound to crest any day. We used the term sparingly in the copy we filed, but it popped up in meetings regularly. After all, how could all these struggling colleges survive the aftereffects of the recession, the rising tuition-discount rates, and the mounting questions over the cost and value of a college degree?

But the shakeout didn’t come. And at this point, I don’t expect it this year, or next year. Or ever, maybe.

A handful of private nonprofit colleges will close each year, as they almost always do. But what has become a nearly annual round of ominous rumblings from pundits and zeitgeist-palpating media musings — including, occasionally, in The Chronicle — over whether this is, finally, the year that the feeblest canaries in the ostensibly treacherous coal mine that is 21st-century American higher education gasp their last en masse seems ever more misguided to me.

I’ve learned a lot of things about how colleges work in the last 10 years, including that they die hard. They make new appeals to students and alumni. They scrimp. They raise their tuition-discount rate yet again. They limp along with budget deficits, sometimes for years. They make withdrawals from their endowments. They sell off assets. They look for partnerships, mergers, and buyers, although sometimes when it’s far too late.

Even when they try to close, they sometimes refuse to die. Two of the most high-profile closures of the past decade — Sweet Briar and Hampshire Colleges — never actually happened. After their leaderships decided to close the institutions, in 2015 and 2016, respectively, because of precarious finances and what they perceived as unpromising futures, devoted alumni swept in and said not so fast. Both colleges are still in operation.

As far as mass-extinction events go, despite worries and some expectations, the 2008-9 recession didn’t do it. The promise of a free-education revolution offered by massive open online courses, or MOOCs — remember them? — didn’t do it. So far, Covid-19 and continuing demographic shifts haven’t done it either.

That said, a global pandemic and the end of federal pandemic-aid dollars and a host of existing financial and demographic pressures that have increased the number of colleges with under 1,000 students — a cadre experts consider the most vulnerable to closure — makes for an ominous set of circumstances.

So while I think it’s unlikely that there’ll be a huge wave of college closures this year, or next year, or any year soon, I’m just a reporter, and any opinion I might offer will only be as valuable as the facts in which it’s rooted. I reached out to some sources to ask, Could I be wrong? Is there a raft of college closings around the corner and I just don’t see it?

For those closest to it, the death of a college is often like a death in the family. Perhaps a trade school doesn’t generate the same angst, but when a residential campus closes for good, it dooms an institution that nurtured and housed thousands of students for years through one of the most formative periods of their lives. Professors may have dedicated decades of their careers to it. Workers lose their jobs, and their town loses a major, if not the major, employer and center of culture and activity.

Undeniably, the death of a college, or the possible deaths of many colleges, is a great story for journalists who cover higher education. There may be beleaguered administrators, head-shaking alumni, and worried students to profile. There’s inside-baseball business-model stuff to explain. There may be entrails to read and fortunes to cast about the future of institutions with iffy balance sheets, and anyone who works at a college that isn’t rolling in students and endowment money will probably click.

Nonetheless, college closures are rare. Robert Kelchen, a professor of educational leadership and policy studies at the University of Tennessee at Knoxville, has been tracking institutional closures for several years. Data from the federal Postsecondary Education Participants System, which tracks institutions that disburse federal financial aid, indicate that somewhere between five to 12 discrete four-year nonprofit colleges have closed annually over the past eight years, a typical pace going back to 2000.

A Chronicle analysis of the same data found similar results. Since 2000, as few as five stand-alone private nonprofit colleges have closed in a single year, in 2001 and 2005, and as many as 21, in 2018. Unlike Kelchen’s count, The Chronicle analysis did not exclude special-focus institutions, like art schools.

EY-Parthenon, a management-consulting company, also tracks college closings. According to its count, which includes for-profit institutions, more than 300 colleges have closed since 2000. Just under half of the institutions that closed were for-profit, says Kasia Lundy, a principal at the company and leader of its higher-education practice, and about 80 percent had fewer than 1,000 students.

Predictions of imminent doom for swaths of colleges are also nothing new.

For example, higher-ed journalists often refer to the long postwar boom of the sector, when soldiers returning from World War II stoked the nation’s economy and, thanks to the GI Bill, the growth of colleges, leading to a long stretch of expansion and prosperity that really only ended in the 21st century. I plug this into my stories all the time. And in general outline, it’s accurate. But it’s also true that higher education went through a mini depression in the 1970s.

A variety of factors led to the slump, says John R. Thelin, a professor emeritus of education at the University of Kentucky and a historian of higher education. A stagnant U.S. economy and widespread inflation hurt institutional budgets. The end of the Vietnam War in 1973 depressed enrollments, since fewer young men were signing up for college classes as a way to earn a deferment from the military draft. College attendance declined slightly across the 1970s, with about 25 percent of 18- to-24-year-olds enrolled in 1979, according to federal data, compared with nearly 26 percent in 1970, even though the U.S. population grew to nearly 227 million people in the 1980 census, compared with about 203 million in 1970. And the future didn’t look much brighter. News media and higher-education experts issued grim projections and stern warnings about the challenges ahead for colleges, Thelin says, which is perhaps embodied in the title of Stanford University professor Lewis B. Mayhew’s 1979 book Surviving the Eighties.

“The problems were real. They identified all these factors,” Thelin says, “but the closures didn’t take place.”

Why not? Thelin theorizes that colleges understood the gravity of the situation and went from being relatively passive recipients of students and funding to becoming more active in their pursuit of students and dollars. Colleges also benefited from the early dawning of the data revolution. “It was just the time when things such as computerized capabilities greatly increased,” Thelin says. “There was this managerial revolution in which wise use of data in terms of admissions, development, and all these kinds of external relations the colleges transformed themselves.” Most colleges heeded the warnings, modernized their procedures and decision-making, and that helped stave off whatever disaster may have laid in wait.

There doesn’t appear to be a technological revolution at hand to reinvent college operations for those institutions facing a precarious future in 2023. But I’ve talked to at least two dozen consultants, current and retired leaders, and other experts over the past decade who have repeated the same warnings about the unsustainability of the high-tuition, high-aid business model for many institutions, the need to rethink hidebound academic offerings for a new generation of students and job markets, and the stubborn inertia of traditional and entrenched practices on campuses — warnings often found more or less verbatim in Mayhew’s book and other texts from past crises. Modernizing procedures and decision-making would do many colleges a lot of good, it seems.

If you ask some experts whether there’s a deluge of closures coming, they demur. But that doesn’t mean they don’t think there won’t be more of them.

“If you’re asking whether we’re going to see like a giant wave in the next year or two, I honestly am not sure,” Lundy says. “I don’t think so. I think we’re going to continue to see a trend and maybe even an uptick relative to what we’ve seen before.”

“I think we’re going to continue to see an uptick in closures,” says Andrew Laws, a managing director at Huron, a consulting company that works with colleges.

“I think it’s hard not to see a slight uptick,” Kelchen says.

There are several reasons for this anticipated increase. In fact, it’s the multiplicity of pressures compounding on colleges at the same time, Kelchen says, that makes it seem like a few more than the usual dozen or so could close. In addition to the persistent threats of a declining number of traditional-age students in many parts of the country and increased competition for those that remain, inflation remains at around 6 percent. High inflation raises the costs of operating a college, and leaders can control some of those costs, like paying faculty, to an extent. Others, like paying utility and food-service bills, they can’t. And with many colleges suffering from soft enrollments, he adds, raising tuition to compensate for higher operating costs is less of an option.

When there’s high inflation, the country often tips into a recession. Economic downturns are often good for college enrollments, conventional wisdom says, as people shut out of the work force flock to class to get new credentials or get training to change careers. But even though some experts are predicting a mild recession for the coming year, for now the economy remains relatively strong, with low unemployment. “In general, when the economy is strong, fewer people go to college,” Kelchen says. “The combination of high inflation and a still-strong economy that’s keeping enrollment down, that makes it really challenging for colleges.”

Laws concurs about a relatively strong economy depressing enrollment in the near term. While there have been big layoffs in the headlines in recent weeks, they’re often coming from tech firms and other white-collar companies such as Google and Meta, “people that you don’t generally think about as upskill candidates,” he says. “They are already professionals and already have tech degrees, so I don’t know that we’re going to see a boom from those people going back to college in a recession like we have in some past times.”

Besides, for the most vulnerable colleges, it may not take much to push them over the edge. Many public flagship universities have been bringing in record freshman classes over the past three years, and that could help spell doom for some institutions in those states. “Many of these small privates at risk of closure, their freshman classes are made or broken by 70 students,” Laws says. “So when a flagship takes 700 new students, they could decimate 10 privates in their footprint.” Laws is also concerned that after three years of Covid, with many college administrators struggling with work-life balance and many others having left higher education, an “‘industry brain-drain’ will make it even harder for many institutions to react to market challenges.”

If there is any kind of increase in closures, don’t look for it right away. For example, the EY-Parthenon count of college closures shows an average of less than 10 closures per year through the 2008-9 recession, and for several years after, before spiking into the double digits in 2014. Perhaps closures “don’t necessarily happen immediately when an economic event hits, but they may happen four, five, or six years later,” Lundy theorizes, “when institutions that had problems make it last as well as they can for a number of years. But eventually, it’s no longer possible.”

The EY-Parthenon count, which includes for-profit colleges, shows an all-time high number of closures in 2020 of 46 campuses, but the closures may not be directly related to Covid-19. The company analyzed college finances in 2022 using federal data from 2019 and 2020, and a proprietary metric that considers factors such as assets and expenses, enrollment, net tuition revenue, and graduation and retention rates. In 2019 and 2020, EY-Parthenon considered about 20 percent of institutions to be “at risk” and another 20 percent to be at “monitor” status, meaning they could potentially slip into the “at-risk category.” A similar analysis performed by EY-Parthenon in 2023 using 2021 federal data, Lundy says, shows that many colleges’ finances “are way better than anyone would have expected.” The influx of $80 billion from the federal Higher Education Emergency Relief Fund during the pandemic shielded many colleges from the worst financial outcomes, and the company’s subsequent analysis projected only 10 percent of colleges as at risk and 20 percent at monitor status for 2021.

But the surplus cash on hand from federal aid is the only metric that was driving the improvement in finances for many colleges, Lundy says, “and that is so temporary.” If there’s a rise in college closures coming, she adds, maybe it won’t come this year, or next, but in 2025, 2026, or beyond.

So maybe there will be a few more college closings. But probably there won’t be any sort of mass die-off. I suspect something else is underway.

The shakeout failed to materialize after my first year at The Chronicle, or the year after, or the year after, and as I learned more about how colleges worked and talked to more sources, I started to theorize about other evolutionary paths for the ill-adapted colleges of the contemporary landscape than simple extinction.

Put simply, colleges with flagging enrollment and outdated programs and poor appeal for students that have smart, decisive leaders and some resources to invest might make some strategic changes that could improve their plights. Colleges in similar straits that delay or don’t have resources to invest might find themselves changing, too, but perhaps in ways they might not want or otherwise choose. Merger, acquisition, or even closure might lie at the end of the latter path, but colleges don’t just keel over out of nowhere. They close at the end of a long series of decisions, actions, or perhaps inactions.

I could be wrong, of course, and there may be a giant wave of college closures rearing somewhere on the horizon. But I can guarantee you that there are dozens of institutions in danger of quietly slipping toward a gradual end as you read this.

Dan Bauman contributed to this report.