THE CHAIRS AND TABLES in the dining hall at Atlantic Union College in South Lancaster are lined up neatly, as if lunch is about to be served. But the doors are locked, the giant clock on the wall has stopped, and the notice on the window is anything but welcoming: “This building has been secured and is off-limits until further notice.”
This 129-year-old campus, just northeast of Worcester, looks like that of any other Massachusetts private college: tidy red-brick buildings with white trim and arched windows behind stone walls overhung by ancient trees. On closer inspection, however, many of the window frames are bent, the paint is peeling, and there’s little sign of life but for the songs of birds.
After years of financial and academic troubles, Atlantic Union unceremoniously closed in 2011. By that point, its enrollment had fallen to just 450 — half its capacity — and attracting even that many students required huge payouts of financial aid. The college eventually ran out of money, almost all of its remaining 120 employees were laid off, and the students were dispersed to other schools around the country.
In May 2012, New Hampshire’s 144-student Chester College closed its doors, joining Atlantic Union and a growing list of shuttered schools in Nebraska, Mississippi, and Tennessee. Now new and persistent warnings from inside and outside higher education suggest that more small private colleges, including some in Massachusetts, could be destined for the same fate.
Heavily dependent on recruiting students from within New England, these colleges collectively face a steep drop in the number of high school graduates, increasing sensitivity to cost, and new competition from online higher education and other cheaper alternatives. Their endowments, already thin, have suffered years of unpredictable returns, and they’re being forced to pay out ever-larger proportions of their income from tuition for financial aid to fill seats. Several have already quietly suffered deficits in at least two of the past five years, financial records show — some at the time of the economic downturn, but several since then, too — including Gordon College, Pine Manor College, Regis College, Simmons College, Wheaton College, and Wheelock College.
“It is absolutely dire. Who it’s dire for, I don’t know, exactly. But there is going to be a contingent of these schools that are going to have a very difficult time surviving,” says Jason Lane, who studies enrollment trends as deputy director for research at the Rockefeller Institute of Government at the State University of New York at Albany.
In an analysis of the financial records of 1,700 US colleges and universities, the Boston-based consulting firm Bain & Company estimated that one-third of them were on an unsustainable financial path, with operating costs increasing faster than endowment returns and other revenues could cover them. This is a problem the colleges can no longer solve, as they once did, by simply increasing tuition.
“For years and years, people were willing and able to pay, so no one ever had to mind the store from a cost perspective,” says Jeff Denneen, who heads Bain’s higher-education practice. “You had families with growing wealth and assets who were willing to take out home-equity loans and do other things to fund their children’s educations. A lot of those factors have changed. Wealth has diminished this decade for the vast majority of families. People don’t have the home equity anymore to fund these costs.”
The Bain study, which Denneen coauthored, was criticized for putting the likes of Harvard University on its list of institutions on the wrong financial path, especially because the years the report covered — 2005 to 2010 — included the financial crisis that ravaged endowments. The Harvards of the world “have such vast resources that they could raise their tuition to whatever level they want and still attract students,” Denneen concedes. But less prestigious schools can’t. “There’s little doubt in my mind,” he says, “that a number of small tuition-dependent private colleges will go out of business in the next 10 years.”
CONCERN OVER THE FINANCIAL STABILITY of colleges and universities is not an abstract issue in Massachusetts. Private colleges and universities spend $15 billion a year in this state , not counting the broader economic impact of their students and employees.
But at the close of the most recent admissions season, 25 Massachusetts colleges and universities, or 1 in 5 of the total, were among the 446 nationwide that still had space available in the current class for freshmen or transfer students, according to the National Association for College Admission Counseling, or NACAC. Among them: the Boston Architectural College, Dean College, Elms College, Gordon, Hampshire College, Lesley University, Newbury College, Nichols College, Regis, Simmons, Wheaton, and Wheelock. Continued...