Small Private Colleges: Can they Survive?

Recent Closures

According to a CIC report, colleges with fewer than 1000 students are most likely to have financial problems.

Recent closures include:

• Grace University (Nebraska)
• Memphis College of Art
• St. Gregory’s University (Oklahoma)

Several others have chosen to merge or sell off land or assets to help survive a bit longer.

Understanding the Challenges

Financial Pressures

Colleges are expensive to keep running. There are a myriad of costs that go into running an institution of any size including:

• Land and building fees
• Technology infrastructure
• Staffing costs
• Administrative overhead

Although many colleges receive donations from alumni and funds from their state, many institutions earn most of their revenue from the students who attend.

The Sweet Spot

According to a report by the Council of Independent Colleges (CIC) entitled “The Financial Resilience of Independent Colleges and Universities”, colleges with fewer than 1000 students are amongst those most likely to have financial issues. The apparent sweet spot for healthy organizations is in the 2000-3000 student range.

This can be explained through economies of scale. For example:

• Building a single bedroom home might cost $100,000
• Adding a second bedroom might only add $15,000
• Adding a third bedroom might add another small increment
• But adding 20 bedrooms would require significant additional infrastructure

Warning Signs to Watch For

Key Indicators

1. Enrollment Trends

   • Look at enrollment figures over the last 4-5 years
   • Drastic year-over-year declines are concerning

2. Endowment Size

   • Check the school’s endowment through NACUBO
   • Shrinking endowments may indicate financial stress

3. Asset Sales

   • Watch for large property or asset sales
   • May indicate financial difficulties

What If Your School Closes?

Immediate Actions

1. Get an official copy of your transcript
2. Talk to school counselors or mentors
3. Research transfer options

Current Trends

• Average of five colleges close per year
• Moody’s predicts this number may triple in coming years

Finding the Right Fit

Small colleges offer unique benefits:

• Close-knit communities
• Personalized instruction
• Individual attention

Don’t be afraid to enroll in a small college - just be sure to do your research ahead of time.

Related Resources

• College Match
• Financial Aid Guide
• Transfer Guide
• Student Success