More than 440 of the nation’s 1,700 private, nonprofit four-year colleges and universities, or about a quarter of the total, are at risk of closing or having to merge within the next 10 years, according to an estimate by the Huron Consulting Group:
The federal government is promising to streamline the process through which struggling colleges are taken over by healthier competitors, for instance. States are ramping up protections for consumers when campuses close anyway, and there is a proposal to do the same thing at the federal level. Lawsuits are multiplying, brought by students and employees against schools that closed. And institutions are trying to identify new sources of revenue.
Twenty-two states now make private higher education institutions pay into “tuition recovery” funds, typically requiring that a percentage of tuition collected be put aside in state accounts from which students could be compensated if the colleges close. While many of these funds were started to protect students at for-profit schools, nearly half have been extended to nonprofit degree-granting colleges.
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In Massachusetts, where 26 colleges have shut down since 2014 and a 27th has announced that it will close at the end of this year, a state law now requires private colleges and universities to provide financial reports to anyone who wants to see them. Regulators have begun conducting annual reviews to determine and publicly disclose whether institutions are at imminent likelihood of failing.
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Meanwhile, legal firms have started filing lawsuits on behalf of students, faculty and staff of colleges that have already closed, generally accusing them of fraud and breach of contract. Three class-action federal lawsuits have been brought against the University of the Arts in Philadelphia alone, which shut down abruptly in 2024.
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So much attention has begun to be focused on college closures that the Education Department has produced instructions for students about what to do if it happens to them. “Try not to panic,” it advises.
That might be hard, considering that fewer than half of students at colleges that close continue their educations, according to the most comprehensive study of this, by the State Higher Education Executive Officers Association. Many of those who do continue lose credits they’ve already earned and paid for, and fewer than half ultimately earn degrees. The 442 colleges Huron projects to be endangered have a collective enrollment of 670,000 students.
Consumers whose colleges close can at least apply to get their federal loans forgiven through two existing routes: the Borrower Defense to Repayment and the Closed School Discharge programs. But that shifts the debt onto taxpayers, who have already had to cover billions of dollars in loans that will never be repaid.
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Agnes Scott College in Georgia started in June to rent out three historic homes it owns. Sweet Briar College in Virginia sells hydroponic lettuce grown in its greenhouses. The University of California, Davis, has launched a line of products from the olives it cultivates for research. The University of Alaska sells permits to harvest firewood from forests it owns. New Mexico State University has licensed its brand for coffee, whiskey and tequila; Mississippi State University for cigars; and the University of Nevada, Reno, for beef jerky.