Schools are shutting down throughout the country.
Some of the conditions contributing to this perfect storm are of the institutions’ own making, such as their exorbitant sticker price (close to $37,000 on average nationally, which is about the same as Newbury’s tuition and fees, not including housing and other costs), their lackluster educational outcomes (like low graduation rates and gainful-employment results), and a resistance to change on the part of faculty and administrative officials. But most at-risk colleges do seek to remedy their problems; it’s just that they do so too late. By then, many are already losing students, and the accompanying revenue. Meanwhile, they struggle to compete with bigger institutions on offerings such as low faculty-to-student ratios, high-end facilities, and the provision of mental-health services, because these resources cost a lot more per student at smaller colleges, which don’t enjoy the economies of scale of their larger peers.
Newbury College notified its students months before it closed.
It had become clear that Newbury was struggling. Its audit for the year ending in June 2017 noted that the college’s net assets had dropped by roughly $2.4 million, it ran a working capital deficit of about $825,000 and it recorded negative cash flow from operations of $442,000. In response, Newbury was marketing real estate with an estimated value of $2.8 million and discussing the terms of its line of credit with its lender.
The campus is now for sale.
More school closings are due.
Small private colleges are struggling across the country. Moody’s Investors Service projected last July that the typically slow closure rate for nonprofit, private colleges—about five a year between 2004 and 2014—would triple in the next few years. More schools will likely merge with other institutions, Moody’s said.
Colleges nationwide are fighting over a shrinking pool of high-school seniors. Students are also increasingly seeking schools in big cities, school officials say. Nonelite liberal-arts programs are suffering the most as students question the value of degrees that can require taking on a lot of debt, especially in a strong job market.
Post by Marcelino Pantoja