Is your college at risk for closing?

by Grace

The closing of Sweet Briar College caught many students and potential students by surprise, disrupting their plans and creating uncertainties in carefully laid-out plans of how to pay for college.  No one wants to be in that situation, and the Washington Post offers tips on “How To Spot A College About To Go Out Of Business”.

Applicants should try to know as much as possible about the financial strength of the schools they are considering. One-third of all colleges and universities in the United States face a financial future that is significantly weaker than before the 2008 recession and are on an unsustainable fiscal path, according to an analysis published in 2012 by Bain & Company. Another quarter of colleges find themselves at serious risk of joining them.

Possible indicators of diminished financial strength:

  • Lowered bond ratings
  • Growing tuition discount rate
  • Failure in meeting enrollment targets
  • Increased debt load
  • Frequent changes in leadership positions

Smaller colleges are at higher risk for closing.

“It is becoming increasingly difficult for the smallest colleges to compete for students, and any college with fewer than about 1,500 students is particularly at risk for closing,” he told me. “Coming up 50 students short in an incoming class would be a rounding error for large colleges, but potentially devastating for a college with only 300 first-year students.”

Even if a college is not forced to close its doors, financial stress can affect students if it means staff cuts, limiting course options, inadequate building maintenance, and more.  So it’s a good idea to include financial strength to the components to consider when selecting a college list.

 Related:  “Downsizing trend hits higher education”

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Jeffrey J. Selingo, “How to spot a college about to go out of business”, Washington Post, March 11, 2015.

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