Which Colleges Always Lose Money?

It is safe to say that there is a lot of concern right now about the financial viability of higher education. And while I think fewer colleges are going to close than pundits predict (and check out my recent NBER working paper on factors associated with college closures), it is still going to be a bumpy ride as colleges try to cut costs after efforts to increase revenue are unsuccessful.

By far, the most popular piece on my blog in 2024 (representing nearly one-fourth of all traffic to my website) was a fairly quick look at which private colleges consistently lost money over the last decade. Now that a new year of data on institutional finances (through Fiscal Year 2023) came out through the Integrated Postsecondary Education Data System, I am revisiting this and also including public universities.

I looked at the operating margins (revenues minus expenses) private nonprofit colleges and public universities for the past ten years (Fiscal Years 2014 through 2023). This analysis included 938 private and 525 public institutions in the 50 states and Washington, DC and excluded colleges with any missing data, two-year institutions, or special-focus institutions based on the most recent Carnegie classifications.

You can download the dataset here, with highlighted private colleges having closed since IPEDS data were collected.

The first takeaway is that the share of private colleges with losses varies much more than the share of public institutions, and this is driven by a combination of investment returns at private institutions and the backstop that state funding provides for public universities. More than four in ten private colleges posted a loss in Fiscal Year 2023—twice the rate of public universities. Since the beginning of the pandemic, the percentage of public universities with revenues failing to match expenditures has been cut in half. Federal covid relief funds are now gone, however, and state budgets look wobbly.

The two figures below show the number of years in the last decade that both private and public universities posted losses. Most private colleges saw surpluses more often than deficits, with only 14 percent of institutions losing money in more than five years. Seventy-one private colleges never posted a loss during this period, and they are generally less-selective institutions such as Miles College in Alabama, Dordt University in Iowa, and the University of Northwestern in Minnesota (the better-known Northwestern in Illinois posted losses in three years when the stock market went down). A few better-known private universities that managed to stay in the black every year included Southern Methodist University, Liberty University, Southern New Hampshire University, and the University of Pennsylvania.

On the other hand, 27 colleges posted losses in eight or more years. Notably, five of these colleges (bolded) have closed or announced closures in the last year or so, and another one (Bacone College in Oklahoma) is not currently offering classes. While some institutions can withstand consistent losses through one-time donations or activities that are not well captured on balance sheets, it is difficult for most colleges. Take for example Judson Universitty in Illinois, which has lost money in eight of the last ten years. Their IRS Form 990 filings show that net assets have declined from more than $44 million in the early 2010s to just under $27 million today—not a good trend.

Name	State	Losses
Polytechnic University of Puerto Rico-Orlando	FL	10
Roberts Wesleyan University	NY	10
Trinity International University-Florida	FL	9
Cambridge College	MA	9
Fontbonne University	MO	9
Bethany College	WV	9
Golden Gate University	CA	8
Pacific Union College	CA	8
Polytechnic University of Puerto Rico-Miami	FL	8
Hawaii Pacific University	HI	8
Judson University	IL	8
Southwestern College	KS	8
Webster University	MO	8
University of Providence	MT	8
Drew University	NJ	8
Elmira College	NY	8
Hilbert College	NY	8
St. Francis College	NY	8
The College of Saint Rose	NY	8
Yeshiva University	NY	8
Antioch College	OH	8
Lourdes University	OH	8
Bacone College (on hiatus)	OK	8
Warner Pacific University	OR	8
Cabrini University	PA	8
University of Valley Forge	PA	8
Waynesburg University	PA	8

While a larger share of public universities than private colleges never posted a loss, more public universities (16 percent) lost money in at least five of the last ten years. In general, most flagship public universities did exceedingly well and many never lost money. But 22 institutions lost money in eight out of ten years, with 15 of them being located in New York. It is indeed a tough time for many regional public universities, even though they are at very low risk of closure.

Name	State	Losses
University of New Hampshire at Manchester	NH	10
SUNY College of Environmental Science and Forestry	NY	10
SUNY College of Technology at Delhi	NY	10
SUNY at Fredonia	NY	10
SUNY at Purchase College	NY	10
Rutgers University-Camden	NJ	9
SUNY Buffalo State University	NY	9
SUNY College at Geneseo	NY	9
SUNY College at Potsdam	NY	9
SUNY College of Agriculture and Technology at Cobleskill	NY	9
SUNY Maritime College	NY	9
SUNY Old Westbury	NY	9
University of Hawaii-West Oahu	HI	8
Northern Illinois University	IL	8
University of Illinois Springfield	IL	8
Northern Kentucky University	KY	8
CUNY Graduate School and University Center	NY	8
College of Staten Island CUNY	NY	8
SUNY Brockport	NY	8
SUNY College of Technology at Canton	NY	8
State University of New York at Oswego	NY	8
Shippensburg University of Pennsylvania	PA	8

In addition to new finance data, there are also new data on fall enrollments and staffing levels. I encourage researchers, policymakers, and practitioners to take a look through the data to learn more about the current (well, as current as possible given data lags) state of higher education.