The Hechinger Report just published a study contending that “More Than 25% of Private Colleges Are at Risk of Closing.” This is a must read for every private college president and board member. Are you on the Hechinger List? Here is the citation: As one Vermont college finishes its last semester, a new projection shows that 442 more are at similar risk .
I, also, found the same potential for deep financial distress for private colleges in an analysis of 994 private colleges conducted three years ago.
The findings showed that 51 (5.4%) colleges faced a very high risk of closing within three years. These colleges had enrollments of less than 1,000 FTE students. Another 242 (25.5%) private colleges had a risk score placing them at great risk of closing within between three and six years. This risk band included colleges with enrollments between 1,000 and 2,000 FTE.
The analysis employed a Vulnerability Gauge based on a two variable logit regression that had an 86.3% prediction rate. The model used IPEDS data from the five-year period ending in 2024. My speculation is that as the slope of the demographic cliff increases many of the ‘great risk’ colleges will slide into the ‘high risk’ category.
The Hechinger Report and the Vulnerability Gauge need to be taken seriously by presidents and boards of trustees of private colleges. The window for taking strategic action will shrink quickly as each semester passes-by. When a college enters the Spring budget season, and if its risk continues to grow because enrollment and cash reserves are falling precipitously, the well-known strategy of ‘kicking the can down the road’ will no longer work. Under this strategy, the college could discover, all too soon, that the college has little or no financial reserves available to put an effective strategy into place.