Hampshire College and Anna Maria College have both announced plans to close, joining the list of other colleges that have announced closures this year. Families paying tuition fees now have a real interest in detecting financial distress before a closure announcement is made.
According to the Boston Fed, more than 30 New England colleges have closed or merged over the past decade. Huron Consulting Group projects that more than a quarter of private, four-year schools could close or merge over the next ten years. new from forbes college financial grade report Shows clear balance sheet stress at hundreds of institutions.
With these sobering statistics in mind, how can you be sure your college will survive? What to keep in mind here?
Five warning signs to look for when choosing a college
1. Thin endowment with low enrolment. Higher education consultants characterize schools with fewer than 1,000 students and an endowment of less than $100 million as high risk. Hampshire last enrolled about 750 students with an endowment of $21.9 million. Anna Maria’s endowment was approximately $1.6 million.
2. Shrinkage of unrestricted net assets. Pull the school’s IRS Form 990 ProPublica’s Nonprofit Explorer. If the unrestricted net assets are declining year on year, the school is facing cash crunch. Fundraising bridges the hole in the short term but does not bridge the gap between tuition revenue and operating costs.
3. Program cuts, layoffs, and strange new bets. Mass layoffs and program closures are clear crisis signs. Sports or specific programs are being expanded suddenly to chase tuition revenue. Anna Maria cut back on its concerts in 2022 – three years before the closure was announced.
4. Selling land or building. When a school begins liquidating real estate to cover operating costs, it has a balance sheet under pressure. The vacant buildings on a campus tour are another story: A campus built for 2,000 with an enrollment of 1,000 students looks the part.
5. Unusually generous qualifying aid. Heavy tuition discounts are often a sign that the school is struggling to fill seats. Schools typically need about $30,000 per student to cover costs. When discount rates go up and enrollment doesn’t happen, the math stops working.
What to do if you think your school is in danger?
Check the data yourself. Enrollment trends are public IPEDS. Financial filings are public through ProPublica. Look at the last five years, not just the most recent.
Know your closed school leave rights. If your school closes while you’re enrolled or within 120-180 days of your withdrawal, you may be eligible for full discharge of federal student loans – but accepting a teach-out transfer typically forfeits that discharge. Weigh transactions carefully.
Save transcript now. Request and archive official transcripts each semester. If a school closes suddenly, obtaining records can be a struggle.
Ask tough questions about teach-out partners. If your school announces a partnership with another institution, confirm credit articulation at the program level – specialized credits in nursing, education, or fine arts do not always transfer clearly.
Be skeptical of aggressive transfer recruiting. Some schools seeking transfers from closing colleges are themselves financially stressed. Run the same tests on any new options.
ground level
College Investor tracks colleges closing in 2026 and the closed school discharge process for affected borrowers. The Education Department has repaid nearly $1.9 billion in federal loans from closed schools, an average of $23,000 per borrower, but only if borrowers do not transfer credits elsewhere.
Closers rarely come out of nowhere. Enrollment trends, financial filings and on-campus signals indicate months or years ahead of the official announcement. Families paying tuition should look at the numbers the same way counselors do.
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