A Quarter of Private Nonprofit Colleges at Risk of Closure or Merger

A new analysis projects that more than a quarter of private, nonprofit four-year colleges and universities in the United States are at risk of closing or merging within the next ten years. The projection, based on financial and enrollment data, comes amid a broader decline in the number of higher education institutions and students nationwide.

Projection Details

A study by Huron Consulting Group indicates that 442 of the nation's 1,700 private, nonprofit four-year colleges and universities are at risk of closure or merger within the next decade. More than 120 of these institutions are categorized as being at the highest risk level. Collectively, the colleges identified in the projection enroll approximately 670,000 students.

The analysis considered multiple factors, including enrollment trends, tuition revenue, assets, debt, and cash on hand.

"We have too many seats. We have too many classrooms... So over the coming five to 10 years, this shakeout is going to take place." — Peter Stokes, Huron Consulting Group

Sector-Wide Trends and Contributing Factors

The higher education sector has been contracting for over a decade. The total number of degree-granting colleges and universities in the U.S. has declined from a peak of 4,726 in 2012 to about 3,700. Most closures since 2012 have been private, for-profit schools.

Several demographic and policy trends are contributing to financial pressure:

There are 2.3 million fewer students enrolled in higher education than in 2010.
The proportion of high school graduates enrolling in college has decreased from 70% in 2016 to 61% in 2023.
A decline in the birthrate is projected to reduce the number of 18-year-olds through at least 2041.
The number of visas for new full-tuition-paying international students dropped by nearly 100,000 (36%) this year.
New caps on federal loans for graduate study, effective July 2024, are expected to impact a key revenue source for many institutions.

Financial Indicators and Leadership Concerns

Recent financial data and surveys reflect widespread concern within the sector:

Research indicates nearly one-third of private, nonprofit colleges posted deficits in 2024.
A December survey by the American Council on Education found 86% of college and university leaders are concerned about their institution's long-term financial viability.
A separate survey found one-fifth of college presidents have had serious discussions about merging with another institution.
A new analysis by the consulting firm EAB noted that "every major revenue stream and expense category is under pressure at the same time."

Case Example: Sterling College

Sterling College in Vermont, a small rural institution, announced it will close in May 2024. Its enrollment fell to about 40 students this year, down from a peak of 120. The college is the seventh private college in Vermont to close since 2016. Sterling allowed students a final semester to complete degrees or transfer.

Closures "leave craters in the small rural communities that they have been a part of for, in some instances, decades or a century." — Scott Thomas, President of Sterling College

A study by the State Higher Education Executive Officers Association (SHEEO) found that fewer than half of students at colleges that close continue their education. Of those who do transfer, many lose credits, and fewer than half eventually earn degrees.

Broader Institutional Impact

Financial strain is reported across different types of institutions:

Public universities and community colleges are also facing challenges. Fitch Ratings cited slowing economic growth and federal policy changes as factors for public institutions.
Several major universities, including the University of Southern California, Stanford, Northwestern, and DePaul, have announced layoffs.
Daniel Greenstein, former chancellor of the Pennsylvania State System of Higher Education, stated community colleges face a "slow erosion of capacity."