Why so many colleges are closing now — and what it means for students

Why so many colleges are closing now — and what it means for students

When the University of the Arts shut down in early June, Ciara Duggan, a recent graduate, was shocked to learn that the Philadelphia institution had been struggling.

“Everything looked very good,” Duggan said. She added that aside from the sale of a dorm building in December 2022, students saw few signs of financial issues.

Then the Philadelphia Inquirer broke the news: UArts would be closing its doors in just one week.

UArts is one of 15 nonprofit colleges that have announced closures, mergers or acquisitions so far this year, according to Higher Ed Dive. In 2023, there were 20 such announcements.

And more may be coming. Other colleges have made cuts to programs and staff as they look to stay on a financially sustainable path. At one point this year, schools were announcing shutdowns at a pace of about one per week on average.

The announcements come as schools face challenges fueled by a decline in students enrolling in the wake of the pandemic and a “demographic cliff” that has seen a steep drop in the number of students of traditional college age.

“Like with every other product, it’s a supply and demand issue,” said Gary Stocker, founder of College Viability, an organization that analyzes colleges’ data to provide information about financial stability to an institution’s administrators, faculty, staff and students.

College closures may be inevitable among schools that aren’t well equipped to serve students, and the market will consolidate, according to Stocker.

The situation poses challenges for students, faculty and staff.

Students protest

When UArts closed abruptly, without much notice and without signed teach-out agreements that would allow students to seamlessly finish their degrees at other schools, students’ lives were turned upside down, said Duggan, who had graduated only two weeks earlier. Students organized protests, with some sleeping on the steps of a UArts building.

For protestors, a major concern is a lack of clarity surrounding the school’s abrupt closure, Duggan said.

“We’re not necessarily trying to resurrect UArts, we just want the answers,” she said. “We just want open, honest communication. We just want to know — how did this happen?” At the last minute, the school canceled a town-hall meeting that was intended to answer questions from the community, she said.

The closure of UArts came after the school struggled with declining enrollment, drops in revenue and ballooning expenses, according to the school. The university’s accreditor also stripped UArts of its accreditation, which is required for a college to receive federal financial-aid funds.

Requests for comment sent to multiple people connected with UArts received no response.

Financial instability is the primary cause of college closures, according to a 2022 report by the State Higher Education Executive Officers Association and the National Student Clearinghouse Research Center.

Typically, schools that close are small, for-profit private institutions. But some nonprofit colleges are also facing financial issues. On average, nonprofit colleges are forgoing more than half of the revenue they would collect if they charged students full price, according to a recent study from the National Association of College and University Business Officers. It can be challenging for some schools to make this high-tuition, high-aid strategy sustainable.

In addition, this year’s FAFSA fiasco — in which severe delays to the release of the updated form jeopardized students’ ability to submit their financial-aid applications to schools in a timely fashion — could also hurt enrollment, putting still more schools at financial risk, Stocker said.

Schools can help smooth the transition

When a school has no choice but to shut down, the way administrators approach the closure defines the experience for students, faculty and staff. Presentation College in South Dakota, which announced its closure in January 2023, guided students through an orderly process.

Presentation’s closure was announced a full semester before the school officially ceased operations. The admissions staff became a “transition team,” and the administration signed 36 teach-out agreements, according to Catherine Marciano, vice president for partnerships at College Possible, a nonprofit helping under-represented students earn college degrees. Teach-out agreements allow students to study at a partner institution that has agreed to accept all credits, match tuition costs and allow students to complete their degrees in the expected time frame.

Presentation also partnered with the organization to provide each of the school’s students — almost 400 people — with direct coaching services.

Marciano reported that 88% of students had graduated or enrolled at another institution in the fall of 2023, the semester after Presentation closed, and 83% were still enrolled at a school in the spring of 2024.

Typically, fewer than half of students re-enroll when their colleges close, SHEEO and NSCRC reported. And among students who do re-enroll, fewer than half stay long enough to complete a credential.

These students, whose status is referred to as “some college no credential,” don’t get a substantial income boost over people with no college experience, but they often have student debt, according to Terah Crews, CEO of ReUp Education, an organization that helps people with that status return to higher education.

When a school closure is not abrupt, students are more likely to re-enroll and complete a credential, according to SHEEO and NSCRC. This is largely because teach-out agreements save students from having to navigate the credit-transfer process. That process often deters people from re-enrolling, according to Charles Ansell, the vice president for research, policy and advocacy at the nonprofit Complete College America.

Presentation College’s former president, Paula Langteau, is now a consultant helping other institutions that are facing closure. She emphasized the critical importance of providing sufficient notice to the college community — she advises six to 12 months — and not waiting until financial resources have been completely depleted to begin the closure process. Some administrations maintain hopes of turning the institution around eventually, but they still need to be ready for closure, Langteau said.

Students need to make a plan

Even if they receive help from the institution, students at closing colleges need to take action. They’ll have to decide whether they will go to another school and, if so, which one. They’ll also need to make a plan for finishing their desired degree, get official copies of their transcript and look into loan-discharge options.

Aside from the effects on students, college closures leave faculty and staff without jobs and sometimes even without severance packages, said Robert Kelchen, a professor at the University of Tennessee, Knoxville, and an expert in higher-education finance.

Presentation College’s Langteau said that the timing of a closure announcement is important for faculty, who are in a better position to line up a new job if the announcement is made in or before January, when the academic hiring cycle begins for the fall. For staff, the institution should support employees as they seek new roles and plan for the possibility that they will leave their jobs before the college closes, she said in a blog post.

Closures can also affect the local community’s economy, Kelchen said. Economic impacts are a particular issue in rural areas, where the community may rely on the institution’s presence, he added.

In some instances, struggling colleges may be acquired by or merge with larger institutions, Kelchen said.

For students, an acquisition or merger is preferable to a closure, since they are typically able to complete their degree without any hiccups, Kelchen said. For faculty and staff, however, jobs are still at risk, he added.

In the future, more campus communities may find themselves coping with their school’s financial challenges or eventual closure, experts say.

Stocker predicts that for many schools, “the die is already cast.”

But some experts say that schools have options for dealing with demographic challenges. ReUp Education’s Crews urges struggling institutions to look to the adult population instead of placing hopes for enrollment recovery solely on 18-year-olds.

As for whether closure should be a concern for the average college student, Kelchen cautions against excessive worrying. He noted that among nonprofit colleges, closures like that of UArts are unusual. And in the grand scheme of things, the number of colleges that are closing is still quite small.

“It’s a larger number than a few years ago, but it’s by no means a mass extinction event,” Kelchen said.