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Originally Published: Dec 18, 2020
Originally Published: Dec 18, 2020 Last Updated: Dec 21, 2020 8 min read
Hampshire College announced in January 2019 that it was struggling financially and looking to merge with another institution. So far, the college has managed to remain independent.
Hampshire College announced in January 2019 that it was struggling financially and looking to merge with another institution. So far, the college has managed to remain independent.
Courtesy of Hampshire College

This winter, the excitement — and anxiety — of selecting a college has been overwhelmed by questions about when (and whether) campus life will return to normal. But questions about how freshman year will look for the Class of 2021 belies a far more troubling concern for colleges — and students. Because even if a vaccine is available for this young, generally healthy population and if colleges open in the fall, a growing number of them may not have the economic wherewithal to survive in the not-too-distant future.

This summer, for example, the U.S. Department of Justice began an investigation of the surprise closure of Concordia University in Portland, which shocked students with its sudden announcement in February that it would shutter classrooms at the end of the semester. Dozens of other colleges have met a similar fate in recent years.

Nearly nine years ago, Harvard professor Clayton Christensen predicted that “as many as half of American universities would close or go bankrupt in 10 to 15 years.” His timing was clearly off. But the pandemic is wreaking financial havoc on institutions that entered the current crisis already weakened by years of economic trauma caused by steep enrollment declines.

Even before 2020, Moody’s had downgraded the financial viability of a growing number of American colleges. According to Fitch Ratings, most private colleges could absorb an enrollment decline of 5%. Yet, new data from the National Student Clearinghouse shows that the number of high school seniors matriculating directly into college fell by 21.7% this year. That means that a growing number of colleges will have to cut even more costs in order to preserve their credit ratings, which may very well accelerate the frequency of surprise closures in years to come.