According to a report released on Wednesday by Fitch Ratings, the future for colleges facing enrollment declines and other market pressures appears bleak, with more institutions expected to either shutter, merge, or undergo significant operational overhauls.
The report anticipates that colleges already grappling with financial difficulties will continue to face such challenges.
It highlights the stark divide in the higher education landscape, with institutions lacking strong reputations and situated in regions experiencing steep declines in the college-aged population deemed the most susceptible to enrollment drops.
Regions face enrollment challenges
Such regions often have numerous competing public and private institutions vying for a diminishing pool of students, as stated in the report.
Fitch emphasizes that small, nonselective private colleges and some regional public universities face limited revenue growth prospects due to ongoing enrollment struggles and the impending demographic decline.
Tuition-dependent colleges are identified as being particularly vulnerable.
The report also underscores other operational pressures, including rising labor costs and increased energy expenses, which are eroding revenue margins at colleges.
Consequently, many institutions are resorting to cost-cutting measures such as program and staff reductions, drawing from financial reserves, or divesting assets to bolster their finances.
It’s important to note that the report refrains from specifying the number of closures or mergers that may occur in the coming years.
Nevertheless, this year has already witnessed several closures, including Alderson Broaddus University, Alliance University, Cabrini University, Cardinal Stritch University, Finlandia University, Hodges University, Holy Names University, Iowa Wesleyan University, Medaille University, and Presentation College.