Tag: closures

College closures are getting quite a bit of attention right now—and for good reason. When a college closes suddenly, students are much less likely to complete their studies and employees have a difficult time finding comparable jobs. And the uptick in the number of college closures in the last year or two has been obvious to nearly everyone in higher education.

But how many colleges really close each year? The Wall Street Journal recently led off a story with a statement that more than 500 four-year private nonprofit colleges closed in the last decade, and Inside Higher Ed covered a National Center for Education Statistics report that highlighted that nearly 100 colleges closed in the 2023-24 academic year.

While I greatly appreciate Higher Ed Dive’s running list of college closures, the two more definitive sources for college closures come from the U.S. Department of Education’s Integrated Postsecondary Education Data System (IPEDS) and Postsecondary Education Participants System (PEPS). However, both of these sources need to be interpreted with caution due to how data are reported. I discuss my recommendation for using IPEDS and PEPS below, and see this spreadsheet for the data that I refer to throughout the piece.

IPEDS

IPEDS has a rough measure of college closures in its Directory Information data collection, which is updated annually. The relevant variable is whether an institution is active in the current year, with the possible answers of “yes” or “no: closed, combined, or out-of-scope.” The challenge here is that a substantial number of colleges included under “no” fall under the combined and out-of-scope categories without any disruption to students. Combined institutions can be the result of one college acquiring another, but it can also be an administrative consolidation for reporting purposes that does not change anything for students. An out-of-scope college may choose to opt out of federal Title IV financial aid programs while remaining open; this is primarily the case among for-profit colleges.

In the 2023-24 academic year, I count 70 primarily postsecondary institutions (IPEDS also includes some vocational training programs that are mainly secondary schools, but I exclude them here) that left the IPEDS universe. A complete list of these apparent closures can be found in the first tab of this spreadsheet.

Some of the institutions are clearly closures (such as Finlandia University in Michigan and Medaille University in New York), but others are administrative consolidations. For example, 11 of the 70 “closures” are community colleges in Connecticut, which recently moved to a single-institution model with 12 branch campuses (no campuses were closed).

Similar examples of administrative consolidations are visible at public colleges in Tennessee and Vermont. The private nonprofit closures are primarily freestanding institutions, while quite a few for-profit college closures include multiple branches closing at the same time. Overall, it appears that roughly 40 unique institutions (excluding branches) actually closed in 2023-24, and they are divided between for-profit and nonprofit colleges.

On the other hand, 56 colleges joined the IPEDS universe in the 2023-24 academic year (the second tab of the spreadsheet). They are primarily small, vocationally focused for-profit colleges that frequently cycle in and out of operation. But I did notice Northeastern University Oakland on the list of newly opened colleges using the same IPEDS UnitID as Mills College. It is relatively uncommon for private nonprofit colleges to open and receive federal financial aid, but it occasionally happens in special-focus fields such as health sciences and technical education.

PEPS

If you have read to this point in a pretty technical blog post, you have some pep in your step. Federal Student Aid updates the PEPS data page weekly with a list of every college that closes. That sounds great—until you go and download the spreadsheet. This behemoth (accessible by downloading the closed school search file) includes more than 20,000 college closures since the mid-1980s.

That number of closures seems a bit high since there are only about 6,000 colleges receiving federal financial aid in the United States at this point. The reason is that PEPS tracks the closure of every single physical campus location in the United States, as well as foreign locations of American-based or Title IV-eligible institutions. Let’s look at 2024 PEPS data, which I included in the third tab of the spreadsheet.  

PEPS lists 81 closures in 2024, with the most recent closure being on August 9. But as the below picture shows, many of these closures are of small branch campuses. For example, Saint Louis University closed small sites in Jefferson City, Dallas, and Houston. Johns Hopkins University closed seven sites in Texas, for crying out loud! Other closures are real and meaningful, such as Goddard College and UW-Oshkosh’s Fond du Lac campus (which was a freestanding institution until several years ago).

The way to identify a main campus closure is through examining the Office of Postsecondary Education ID (OPEID) number. If the number starts with a zero and ends in 00, that is a main campus. Any OPEID that ends in something other than 00 (or starts with a number other than zero) is a branch campus. Many of these branches often enroll a small number of students and come and go regularly, although a few are more notable. Thirty-two of the 81 closures to this point in 2024 have been main campuses, while the rest were branch campuses.

So how many colleges really close each year? It depends a lot on what you consider to be a college. But I would contend that quite a few of the colleges listed in federal data as closing either did not actually close or served a minuscule number of students at offsite locations. This does not make the closure of main campuses less concerning, but it’s important to have a clear sense of the numbers before engaging in policy discussions.

I write this piece with the sounds of excavators and dump trucks in the background, as we are getting the 30-year-old pool at our house replaced this month. Pools should last a lot longer than that, but the original owner of the house decided to save money by installing the pool on top of a pile of logs and stumps left over from clearing the land. As those logs settled and decayed, the pool began to leak and we are left with a sizable bill to dig everything out and do things right. Even though we budgeted for this, it is still painful to see every load of junk exit and every load of gravel enter what I am calling the money pit.

On the higher education front, it has been a week with several announced or threatened closures. On Monday, the University of Wisconsin-Milwaukee announced that it would close its Waukesha branch campus, marking at least the fourth of the 13 former University of Wisconsin Colleges to close in the last several years. Fontbonne University in St. Louis also announced its closure on Monday, although they get a lot of credit from me for giving students and at least some employees more than a year to adjust. Today, Northland College in Wisconsin announced that it will close at the end of this academic year unless they can raise $12 million—one-third of their annual budget—in the next three weeks. Closures just keep dripping out, and I am really concerned about a late wave of closures this spring once colleges finally get FAFSA information from the U.S. Department of Education.

The two topics blended together for me (along with my students’ budget analyses being due on Friday) on my run this morning, and I quickly jotted down the gist of this post. The coverage of both Fontbonne and Northland focused on the number of years that they had lost money, so I used IPEDS data to take a look at the operating margins (revenues minus expenses) private nonprofit colleges for the past ten years (2012-13 to 2021-22). This analysis included 924 institutions in the 50 states and Washington, DC and excluded colleges with any missing data or special-focus institutions based on the most recent Carnegie classifications.

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

The first thing is that the share of colleges with losses varied considerably across years, and a high share of losses is driven by investment losses. But with the exception of the pandemic-aided 2020-21 year, the next lowest year of operating losses was 2013-14 (9%). 2021-22 saw two-thirds of colleges post an operating loss as pandemic aid began to fade and investments had a rough year.

Below is the distribution of the number of years that each college posted an operating loss. Seventy-nine colleges never lost money, and most of these institutions have small endowments but growing enrollment. The modal college had an operating loss in three years, and 90% of colleges at least broke even in five years out of the last decade.

On the other hand, 19 colleges posted losses in eight or more years. Notably, nine of these colleges have closed in the last year or so, compared to nine of the other 905 colleges. (Let me know if I’m missing any obvious closures!) The list of colleges with eight or more closures is below, and closed/closing colleges are bolded.

On a related note, I wrote a piece for the Chronicle of Higher Education that reviews a new book that makes the case for more colleges declaring financial exigency in order to cut academic programs. I think that it is more important than ever for faculty, staff, and students to have a sense of the financial health of their college by being equipped to read budget documents and enrollment projections. That is crucial in order for shared governance to have a chance of working in difficult situations and to help avoid money pit situations like the one in my own backyard.