Report Suggests More Than 400 American Colleges Could Close Over Next Decade

Report Suggests More Than 400 American Colleges Could Close Over Next Decade

This is the way of things. The market has become oversaturated and the return on investment just isn’t there.

The College Fix reports:

442 colleges could close in next decade over ‘financial exigency’: report

Nearly one in four private, nonprofit colleges and universities in the U.S. could close due to financial problems within the next decade, according to a Huron Consulting Group report.

The report warns that “as many as 442 of the 1,700 private nonprofit degree-granting institutions … will arrive at the cusp of financial exigency.”

With more than four million students currently enrolled in nonprofit universities, 671,000 students and $23 billion in endowment assets could be affected.

Further, “Another 392 institutions with more than 800,000 students and $34 billion in endowments will face moderate existential threats,” the report states.

Between 2020 and 2025 alone, more than 130 private nonprofit colleges and universities announced closures or mergers, impacting nearly 200,000 students and more than $2 billion in endowment assets at the time.

The Huron report predicts this trend will significantly worsen over the next ten years.

Preston Cooper, a senior fellow with the American Enterprise Institute, attributed part of the issue to high tuition prices in an interview with The College Fix.

“Don’t underestimate the power of tuition reductions. Demand curves slope downwards—lower prices lead to more demand,” he said.

“Some of the struggling small liberal arts colleges are still charging outrageous sticker prices, which I simply don’t understand,” Cooper told The Fix via email.

Additionally, Huron Managing Director Peter Stokes told Bloomberg, “The problem is we have too many seats in too many classrooms and not enough prospective students to fill them.”

“Over the next decade, we’re going through a very painful but necessary rebalancing in supply and demand,” he said.

Offering a solution to the crisis, Huron researchers suggested building a “partnerships marketplace that connects financially challenged and financially solvent institutions to promote institutional resilience.”

“Strategic partnerships, including mergers and acquisitions, provide struggling institutions with a means to shape the fate of their missions, the disposition of their assets, and the well-being of their communities,” the report states.

“Forward-thinking leaders can acquire programs, talent, and assets that strengthen and diversify their portfolios, their reach, and ultimately, their resilience in an increasingly volatile climate,” it states.

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