Liberal Education

Higher Education in Peril? Predictions and Reality

A Moody’s Investor Service report in 2015 shocked many in higher education by predicting institutional closures would outpace mergers. The report also highlighted financial struggles, including that “small colleges with a sustained three-year growth rate of less than 2 percent increased fivefold, to 50 percent, from 2006 to 2014.”

Instigating fears further, Clay Christensen predicted half of colleges and universities would go bankrupt or close within a decade. Each year brings more financial trouble: a quarter of all private nonprofit institutions experienced deficits in 2017. More than two-thirds (68 percent) of financial officers at four-year private colleges reported their tuition discount rate was unsustainable. The National Association of College and University Business Officers (NACUBO) estimated average discount rates for first-time, full-time freshmen students attending four-year private, nonprofit colleges was 49.1 percent in 2016–17, and preliminary estimates for 2017–18 indicate a 49.9 percent discount rate.

Variables identified as predictors of closures and mergers include unsustainable tuition discounts, frail endowments and lackluster fundraising, enrollments of fewer than one thousand students, missions misaligned with diversifying student demographics, and rural campus environments. Will these variables lead to closures and provoke similar institutions to consider mergers? Moody’s 2015 prediction has yet to occur, and this issue of Liberal Education examines a sample of new ideas and attempts to restructure institutions.

The following table briefly summarizes institutional interventions, many implemented to forestall a closure or merger and to help expand financial security. This list was compiled by analyzing published reports and, in some cases, cross-checked with a list of institutional closures from the US Department of Education’s Federal Student Aid (FSA) office. FSA records are compiled from institutional self-reporting and do not always account for sudden changes. References for this introduction and the following table can be found at the end of this article.

Click image below to view expanded table on institutional closures, mergers, and restructuring.


To respond to this article, email with the author’s name on the subject line.

BETHANY ZIMMERMAN is a program coordinator in the office of Quality, Curriculum, and Assessment at the Association of American Colleges and Universities.



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Seltzer, Rick. “Days of Reckoning. Recent closures make it more likely a trend of private college consolidation has started. Institutions feeling particular pressure are small colleges, those in the Midwest and Roman Catholic institutions located away from Catholic population centers.” Inside Higher Ed, November 13, 2017.

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