Hundreds of colleges in the United States live on the financial margins. Typically small and private, they struggle to pay bills, recruit students, and raise money. Yet few of them fail.
As Sweet Briar College’s projected demise and unexpected revival illustrate, small colleges are a resilient bunch. There are about 1,600 private, nonprofit four-year colleges in the United States, but only a handful close each year. In 2012, the most recent year for which data are available from the National Center for Education Statistics, just two of those institutions shut down.
College leaders and their advisers say that a number of factors keep troubled institutions in business. For one, even broaching the idea of a college’s demise is emotionally fraught. To students, professors, administrators, alumni, and trustees the meaning of their time on a campus depends, in many ways, on the college’s continued existence. Students and alumni may have had life-altering experiences or developed important networks, while professors may have found a community of like-minded people with whom they could picture spending their careers.
As a result, colleges will often either delay hard choices or find creative ways to keep going, says David L. Warren, president of the National Association of Independent Colleges and Universities, which represents private, nonprofit institutions. “We’re dealing here with a host of very compelling intellectual and emotional and professional forces.”
Moreover, neither trustees nor presidents want to be known as the ones who pulled the plug. “The phrase ‘not on my watch’ probably sums it up,” says Mr. Warren. He recalls his time as senior vice president at Antioch University in the early 1980s, when, because of financial difficulties, he was responsible for closing down most of the college’s off-site, degree-granting learning centers. “I became known at the Grim Reaper,” he recalls.
That desire to avoid turning out the lights sometimes results in fatal choices, as leaders put off maintenance or convince themselves they can spend their way toward increased enrollments. “If you have a college really committed to staying alive and you don’t get yourself in desperate debt, that is one of the keys,” says Mary-Linda Merriam Armacost, a past president of Wilson College, a Pennsylvania institution that nearly closed in 1979.
The Adaptable Survive
If avoiding major debt is the first criterion for survival, being adaptable is the second, says Ms. Armacost and others. “Small colleges are certainly pretty nimble and pretty entrepreneurial, and if they get an idea they can ramp up pretty quickly,” says Richard Ekman, president of the Council of Independent Colleges, which represents about 700 small and midsize liberal-arts colleges.
One form of entrepreneurship, he says, is to add programs that bring in revenue. Mary Baldwin College, like Sweet Briar a women’s institution in Virginia, opened a College of Health Sciences last year. Utica College, in New York, started nursing programs, including one in Florida. “You get cross subsidies in all of this,” says Mr. Ekman.
Mr. Warren calls the various factors in a college’s survival strategy the five M’s: mission, market, money, model, and the media. Many struggling colleges find a larger purpose in their work because of their mission, whether it’s reaching disadvantaged students in urban areas or in the hills of Appalachia. They’re willing to run bare-bones operations because they believe strongly in the value of their work.
Smart colleges also continually evaluate their markets in order to find new money, Mr. Warren says. Are there underserved adult students in their area? Should they start recruiting in China? They may change their business model by going coed or adding profitable programs, like business degrees. Finally, if they can find ways to better spread the word, they can draw in new students.
“Probably about 20 percent of our clients were institutions that were struggling mightily and realized that if they didn’t do something significant, they were destined to close,” says John Stevens, president of Stevens Strategy, a higher-education consulting firm. The ones that change in alignment with their values, he says, are the ones that succeed.
Sometimes the proposed solutions are more wishful than practical. “People tend to think, ‘We haven’t found the money, but it’s there,’” says Mr. Warren. But maybe there really are no strong or lasting new markets to explore, or if there are, they don’t fit the college’s mission.
As he watched the intensity of faculty and alumni opposition to Sweet Briar’s closing, Mr. Warren says he wondered if they felt that the leadership had not done all it could to explore those different strategies. “None of these questions,” he says, “should go unanswered if raised.”
Ms. Armacost, an adjunct professor at the University of Pennsylvania’s Graduate School of Education, says that for colleges like Wilson and Sweet Briar, new money, committed alumni and other volunteers, and a change in administration also seemed critical to survival. “Some colleges don’t have that kind of bench strength.”
She notes that two other colleges announced this month that they were closing: Marian Court College, a Roman Catholic institution in Massachusetts, and Clearwater Christian College, in Florida. Both institutions have wrestled with debt, declining enrollment, and limited endowments and donor support.
Troubled Publics Rarely Die
Struggling public institutions have their own set of issues. Joni E. Finney says politics, bureaucracy, and tuition increases are three top reasons why so many of them remain open. Ms. Finney, an expert on the public finance of higher education and director of Penn’s Institute for Research on Higher Education, says state higher-education systems rarely kill their struggling campuses. No matter how feeble the outpost, she says, “it’s always been someone’s legislative district.”
There also are no incentives for administrators to close a campus, since there’s no guarantee the cost savings would be pumped back into the system. In public institutions, she notes, the market is largely shaped by a set of public policies rather than by student demand or price.
Public institutions that operate as part of a larger system also engage in a game of one-upmanship, in which administrators, faculty members, and local politicians push for more money, more programs, and more degrees rather than ask tough questions about how best to serve the community. “Within a system framework, everyone needs to be the top institution,” she says. As a result, it’s rare for a system to voluntarily scale back or close campuses (Georgia has consolidated some of its institutions in recent years).
Finally, even when state support for higher education has dwindled, administrators have often avoided hard choices by raising tuition. “It’s probably insulated them from changes they need to make in programming, students, and mission,” says Ms. Finney.
Small colleges may be adaptable, but Mr. Ekman says it’s a continual challenge to meet the changing needs of their markets. Many flocked to online education early on, he notes, only to saturate the market. The same happened to colleges that saw pharmacy schools as their lifeline. Health sciences now seems a good bet, but that too could change. “It’s a matter of identifying the right niche and moving quickly to fill it,” he says.
And as nimble as many colleges are, some higher-education administrators and consultants say that it may become easier to kill the weakest among them.
“The forces that kept a college going are changing,” says Kent John Chabotar, president emeritus of Guilford College, in North Carolina, and an expert on college finance. The numbers of Americans who are of traditional college age has declined. The recession has drained many families’ savings accounts, leaving them with less money to pay for their younger children to go to college. And fewer tax dollars are going into higher education.
“I think you’re going to see an acceleration [in closures], particularly in schools that are 1,000 students and under, in a rural location, without a larger endowment, and without a market niche,” says Mr. Chabotar.
Mr. Stevens, the consultant, agrees that it’s a particularly difficult time for small, independent colleges. Still, he says, “every decade there’s a new doomsday view of the future of higher education.”
“And somehow,” he adds, “it survives.”
Beth McMurtrie writes about campus culture, among other things. Follow her on Twitter @bethmcmurtrie, or email her at beth.mcmurtrie@chronicle.com.
