We recently published an article exploring the possibility that colleges might soon go bankrupt as a consequence of the coronavirus crisis — but many financial analysts were quick to remind us that this is a problem that has been brewing for years. Coronavirus might be the final nail in the coffin, but it certainly wasn’t the first. As of late 2019, one in five colleges were already on track to face bankruptcy in 10 to 25 years.
A traditional debt settlement law firm might help college personnel avoid bankruptcy, but won’t necessarily prevent a college from “going out of business” in the traditional sense. This is especially true when you consider the reasons for the financial stress: fewer students wish to continue onto higher education because of rapidly climbing costs, and others don’t feel like they have the financial capabilities to enroll in the first place.
Moody Investor Services Associate Managing Director Susan Fitzgerald commented on the financial pressure colleges are experiencing: “It’s here to stay. 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.”
Another reason that schools are shuttering their doors forever is based on demographics in certain geographic locations like the Northeast, where much of the population is aging and the younger generations simply don’t have as many kids. In 2019, Green Mountain College closed in Vermont. It had been offering higher education to students for 185 years when officials made the decision to close up shop. Newbury College in Massachusetts also closed in 2019.
Former Newbury College President Joseph Chillo, “It is no secret that weighty financial challenges are pressing on liberal arts colleges throughout the country. Newbury College is no exception.”
Massachusetts Mount Ida College closed in 2018 without much lip service, which left around 1,500 students wondering how they would transfer credits or complete their education. This particular closure resulted in a new state law to force state education officials to make private college financial woes known to the public.
Many of the most vulnerable liberal arts schools rely on sports programs to keep them afloat — and we, in turn, love covering those programs. But sports won’t be enough to repair the recent damage done by the COVID-19 crisis. That means many schools are rethinking how they approach revenue. What that means for sports programs in general is anyone’s guess. It could go either way: there might be unprecedented growth in the number of programs, or the school closures might result in the unprecedented decline of sports programs.
Hiram College President Lori Varlotta said, “We’ve added new majors to our conventional liberal arts programs; majors that we call market-driven; majors that pave a very concrete pathway to various types of 21st-century careers.”
Because liberal arts colleges are experiencing this period of financial turmoil, many more are trying to make the transition to business or science to prop up the reduction in revenue.