What’s Pushing Colleges Out of Business

From 2019 to 2021, undergraduate enrollment fell by almost 8%, the largest 2-year drop in 50 years. The pandemic is only part of the story; the cost of college is rising at the same time interest is falling. Just half of high schools want to go to a 4 year college today, down from 71% in 2019. The pandemic has made affordability concerns more apparent, but tuition increases were already outpacing family income growth before COVID-19 ever reached the US. 

Despite the high costs of university education, many colleges operate with a tiny margin, some as small as 3%. 74% of higher education professionals say their institution is facing significant financial constraints. 53 colleges closed permanently during the 2019-20 school year, and more could be next. The less selective colleges with fewer than 5,000 students and small endowments are the most at risk. 

What are the signs of a college close to collapse? Potential students should consider an institution’s financial health before enrolling. Reading endowment reports, news articles, and the US Department of Education’s Financial Responsibility Composite Score can give one a window into a university’s inner workings. Some colleges close slowly over years, but others shut down immediately.

Why Colleges Go Out of Business