Posts tagged ‘higher education downsizing’

March 17, 2015

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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March 5, 2015

The higher education downsizing trend hits Sweet Briar College.

by Grace

Sweet Briar College announced Tuesday that it is shutting down at the end of this academic year.

This closure “stunned many in higher education”.

Small colleges close or merge from time to time, more frequently since the economic downturn started in 2008. But the move is unusual in that Sweet Briar still has a meaningful endowment, regional accreditation and some well-respected programs. But college officials said that the trend lines were too unfavorable, and that efforts to consider different strategies didn’t yield any viable options. So the college decided to close now, with some sense of order, rather than drag out the process for several more years, as it could have done.

The future looked bleak for Sweet Briar, consistent with Moody’s dire predictions of a higher education “death spiral” that is considered “particularly acute at small, mid-tier private’ colleges“.

Too far from Starbucks

Sweet Briar officials cited overarching challenges that the college has been unable to handle: the lack of interest from female high school students in attending a women’s college like Sweet Briar, declining interest in liberal arts colleges generally, and eroding interest in attending colleges in rural areas. Sweet Briar is in the foothills of the Blue Ridge Mountains in Virginia. “We are 30 minutes from a Starbucks,” said James F. Jones Jr., president of the college.

Families have a “declining interest” in paying big bucks for a lower-tier college education.  The annual cost of attending Sweet Briar College was $51,000 in 2013-14.  However, the school’s average discount on tuition had grown to 62%.  That was clearly unsustainable.

Here’s advice from Business Insider:

A college with a $94 million endowment is shutting its doors, and people in higher ed should be scared

ADDED:  Tennessee Temple University is closing

Students have the option to move to Piedmont with assured admittance and continue their education at a discounted price, but the merger effectively means that come May 1, Tennessee Temple University will no longer exist.

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Scott Jaschik, “Shocking Decision at Sweet Briar”, Inside Higher Ed, March 4, 2015.

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