Moody's Investor Services reported recently that 1 in 5 small, private colleges face "fundamental stress" and that as many as 15 colleges will close by the end of the year (as reported by CNBC.com). Small liberal arts colleges in the Midwest and New England are particularly under pressure, and four
Vermont colleges have closed within the past year.
What's going on?
First, changing demographics provides part of the explanation. There are simply fewer people in the traditional college-going age, and this population decline is especially acute in rural areas where a great many small colleges are located.
Second, tuition costs have risen sharply in recent years, and potential students and their parents are experiencing sticker shock at the prospect of paying $60,000 to $70,000 a year to attend a small, liberal arts college. Even though liberal arts schools have been discounting their tuition by 50 percent or more, these slashed tuition rates are still often higher than the cost of attending a public university.
Finally, fewer students want to study liberal arts, which has traditionally been the core mission of small, private colleges. For example, the University of Tulsa, a highly regarded private university, is shifting its mission from liberal arts to science and technology and intends to cut 40 percent of its programs--primarily in the humanities and natural sciences--in order to focus on STEM-related academic programs.
Without question, many small, liberal arts colleges are facing an existential crisis, and they have tried a variety of strategies to boost their enrollments. Some have invested in athletics programs, hoping to attract students who are interested in sports. Others have rolled out new vocation-based majors like criminal justice, sports management, and business administration.
But these tactics are often unsuccessful. A college that was founded to be a traditional liberal arts institution often finds it difficult to break into new areas of study, particularly those fields that have been offered by public universities for decades.
Furthermore, new majors usually require new faculty members--and that costs money. Colleges cannot easily lay off tenured liberal-arts professors s in order to replace them with business and criminal-justice professors. Schools that try to cut faculty positions in order to balance their budgets often run into threats of litigation, as the University of St. Thomas in Houston recently discovered.
A fair number of private colleges are going to fail in the coming years, regardless of the tactics they employ to boost their enrollments. Obscure liberal arts schools with religious affiliations seem especially vulnerable because the millennials are far more secular than previous generations. Many young people have no interest whatsoever in religion. Moody's estimate of a 20 percent attrition rate may understate the crisis.
While shopping for a college, potential students and their parents need to realize that the small, liberal arts college they may be considering could be closing in the near future. Does anyone want to take out student loans to attend a college that could be shutting its doors within the next five or ten years?