Why Are Colleges Going Out of Business?

From 2016-2019, nearly 100 colleges shut down or merged with other schools, and over 50 closed permanently during the 2019-2020 school year. These numbers can be partially attributed to falling enrollment numbers and students failing school. From 2019 to 2021, undergraduate enrollment fell by nearly 8%, and in 2022, there were 1 million fewer students enrolled in college compared to before the pandemic. 

 

There are many reasons why enrollment is tanking. Studies show that rising education costs, lower return on investment, lack of interest, and smaller candidate pools are the leading reasons for this decline. In addition, the pandemic only accelerated these declining numbers. Almost 60% of college students share that they could no longer afford their tuition in 2020, and 70% say that this lack of affordability affected their education plans in 2021. This financial strain impacts the decision to go to college in the first place as well, as studies show that 27% of students will take a gap year to save for college and 36% will attend a community college.

 

Institutions across the country have been affected by this phenomena. For example, The University of Arizona projected $250 million in lost tuition revenue due to Covid-19 and 74% of higher education professionals say their institution is facing significant financial constraints. This leaves many colleges competing for business, as they are extending their application deadlines past the traditional May 1 and increasing tuition across the board. Because of this, Ivy Leagues and other selective schools have a competitive advantage because their services are more sought after than many public and community colleges. In addition, large endowments allow for more funding towards public service missions, student aid programs, general operations, and research or fellowships.

 

This begs the question by many students: Is my college at risk? Students can check on the status of their respective institutions by reviewing endowment reports, checking financial responsibility composite scores, seeking tuition discounts, and staying updated on news reports that show any changes to the university itself. These methods, among other preventative actions, help students across the country to be prepared for the worst and protect their educational future.