With hundreds of small private colleges under financial pressure, students and families face a costly question: Will the school still be open when the degree is finished?
This transcript was automatically generated and edited for clarity; some differences may remain between the audio and the text.
Why Small Colleges Are Struggling
Sterling College, a tiny private campus on a 130-acre farm in rural Vermont, closed in May. The closure illustrates the financial and demographic pressures facing small private colleges, including declining numbers of college-age students and doubts about whether a degree will deliver enough earnings to justify its debt.
The proportion of students going straight from high school to college has declined. There are also fewer 18-year-olds, a demographic shift tied partly to the drop in births during the Great Recession. Those trends leave fewer students to fill hundreds of campuses.
Among students and families, the return on investment is another concern. Some graduates are underemployed, and some borrowers question whether their earnings justify the debt they take on for college.
What Closures Mean for Students
Experts cited in the podcast said 442 private nonprofit colleges were at risk of closing, including about 120 at severe risk. Those schools enroll roughly 667,000 students.
Fewer than half of students at colleges that close continue their education elsewhere. Among those who transfer, about half still do not graduate because credits may not transfer, tuition may rise or other obstacles get in the way. Many students leave with debt but no credential, limiting their ability to repay what they borrowed.
Closures can also damage communities. Rural colleges bring young people to aging communities, where some stay, start businesses or take jobs. When a campus disappears, local businesses can lose customers, communities can lose a talent pipeline and taxpayers may bear losses when colleges cannot repay government-backed loans.
Warning Signs Families Can Check
Families considering a private nonprofit college should ask whether the institution is financially stable, rather than focusing only on acceptance. The podcast recommends looking for:
- Institutional debt: Check how much the college owes and whether its obligations exceed the value of its assets.
- Persistent deficits: Repeated operating losses can signal that a school is running out of room to absorb setbacks.
- Public financial filings: Nonprofits must file certain financial documents, and some states require colleges in financial trouble to disclose it.
- Transfer and refund protections: Find out what happens to credits, tuition and student records if the school closes.
Families can also ask directly, “Will this college be around in four years?” A school’s answers should be checked against its public financial information.
A Buyer’s Market for College
Financial pressure has created more negotiating power for some families. With fewer students and more colleges competing for them, acceptance rates have risen at many schools. Families may be able to negotiate for additional financial aid, since colleges need both students and tuition revenue.
That opportunity does not eliminate the need for caution. Before signing enrollment documents or taking on loans, compare the school’s financial condition, the total cost and the protections available if the institution closes.
Adapted from a USA TODAY The Excerpt podcast transcript. Figures and claims reflect the source reporting.
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