The Tip of the Iceberg: Can Small Colleges Survive in the 21st Century?

If you live in New England, you’ve likely heard a great deal about the imminent demise of small private colleges. Just today, Southern Vermont College announced it would close.

Boston Magazine led with a cover story headline last month: The End? Boston’s Small Colleges are Expensive, In Debt, and on the Verge of Collapse.

This followed news of the highly publicized mergers and closings of Wheelock, Mt. Ida, and Newbury College as well as the heavily-covered potential closing of Hampshire College in western Massachusetts.

The fact is that colleges are merging, closing, or being acquired more frequently in a trend that is likely to continue.

As in any industry, some colleges will not survive. Others should not survive. If a college or university does not deliver a product — in this case, a college education — that has value and is affordable to the market they serve, the outlook is appropriately grim.

Demographic Decline Is One of Higher Education’s Challenges

Economist Nathan Grawe offers an especially stark assessment for one of the underlying causes that he calls a “birth dearth.” Grawe concludes: “The Great Recession did not simply delay births — it eliminated them.” He sees a time bomb with an 18-year fuse that will decrease the pool of potential college applicants by 24 percent by 2029. Scott Jaschik recently reported in Inside Higher Education that even the University of California system is reporting a modest decline in enrollment.

The likely demographic collapse of the traditional-age college applicant pool illustrates that the problems facing small private colleges extend well beyond their group. It suggests that the small, under-resourced, tuition-dependent private institutions may be the first to feel the dramatic effects of demographic change.

But the recent Rand study that argues for the closing of many of the smaller public universities in Pennsylvania illustrates that the problem is not confined to one sector of higher education. It further intimates that the competition for students in a shrinking applicant pool will be fierce and ugly.

The shame is that closures, mergers, and acquisitions are just as likely to come from a series of other factors.

Unprepared Trustees are Risk Factor for Many Institutions

Another risk factor for colleges and universities is the complete failure of the stakeholders who share governance to understand the challenges. They are woefully unprepared for what they and their successors will face.

For many presidents and boards, the inability to meet enrollment targets is a campus problem, solved simply by increasing the tuition discount rate. At these institutions — shaped by a lack of transparency, misunderstanding of the overall state of higher education, and general incrementalism — the lawns will be cut and the dorms will be full on the day that the closure is announced.

It is the responsibility of management, the faculty, and trustees to know what is transpiring beyond the college gates. The best strategic planning discussions on campus are now filled with discussions about the impact of changes occurring outside the institution.

Senior Management Often Not Up to the Task

Another risk factor for colleges is that management is often not up to the task of leadership during a changing industry. The SEC and New York State Attorney General are investigating the College of New Rochelle over alleged improprieties that have caused a severe financial crisis that may close the college. The sad truth is that most college administrators are ill-equipped to handle crisis management in an environment where incrementalism emerges from process-driven decisions that often produce a climate of campus inertia.

Regulatory Uncertainty is Risk Factor for Colleges, Universities

An additional risk for institutions are the regulators and the uncertainty of their future actions. Hampshire College is moving toward probable closure because the trustees and management fear changes mandated by state regulators and want to get ahead of the curve.

How exactly do state and federal regulators work with colleges to strengthen their financial standing, improve their overall health, and provide peace of mind for prospective applicants when the optics they offer in the name of regulation effectively destroys any opportunity for the college to make the changes that it must make to survive? The media shines a harsh and unforgiving light on even the most enlightened intentions.

We seem to be lost in the forest and stumbling through the trees. For the large and complex mix of institutions — especially east of the Mississippi River — there are several basic policy questions to consider as they determine the best way to move forward:

  • Do they throw in their lot together, anticipating major structural changes that dramatically impact people, programs, and facilities?
  • Do they kick the can down the road, pushing the problem on to the next generation of leadership?
  • Are public colleges immune to industry risks, or, with state support declining, will they face similar pressures in the future?
  • Will only large, rich (i.e. well-endowed) institutions survive?
America has a rich, complex, and storied collection of colleges and universities that the rest of the world seeks to emulate. Yet, the world is changing around us.

The task ahead is to figure out how to shape a future that preserves one of the most unique features of the American democracy. Frederick Jackson Turner argued that the frontier was a kind of “safety valve” that opened the promise of America in the 19thcentury. Colleges serve the same function today. It is our job to figure out what to do with them and help them

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