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Moody’s Finds 1 in 5 Small Private Colleges Now Facing Financial Stress

Moody’s Finds 1 in 5 Small Private Colleges Now Facing Financial Stress

“And the trend shows no sign of letting up.”

The higher ed bubble is real. Could some of these small schools soon be facing closure?

CNBC reports:

The other college debt crisis: Schools are going broke

Small, private liberal arts colleges — a staple of American academia since before the founding of the republic — are colliding with new realities including changing demographics, ever-increasing demand for technical skills and competition with bigger and richer schools.

The result, in many cases, is not pretty.

Moody’s Investor Services estimates 1 in 5 small private colleges faces “fundamental stress” due to declining revenues, rising expenses and little pricing power when it comes to tuition. Analysts project 15 of the colleges will have closed in 2019 — the largest number in recent memory, and three times the rate just 10 years ago.

And the trend shows no sign of letting up.

“It’s here to stay,” Moody’s associate managing director Susan Fitzgerald said in an interview. “I think we see the higher education sector is in a period of real transformation in terms of how students learn and where they learn.”

The closures are concentrated in the Northeast and Midwest, Fitzgerald said, where the demographic pressures — including an aging population — are the highest.

They include Green Mountain College in Vermont, which closed at the end of the spring semester after 185 years. This spring also marked the end of Newbury College in Brookline, Massachusetts, which announced last December that it would be closing after 57 years.

“It is no secret that weighty financial challenges are pressing on liberal arts colleges throughout the country. Newbury College is no exception,” the college’s then-President Joseph Chillo said in a statement.

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Comments

Perhaps increased competition for students will lead to some schools interested in surviving cutting admin staff in half, reducing tuition and dropping majors worth little in the job market. Having just paid $150 for one hour of a local plumber’s time, the solution for students not able to handle a real college education is not a worthless degree and a mountain of debt, but good trade schools.

Oberlin? Oberlin? (Crickets)

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