Hundreds of US colleges poised to close in next decade, expert says

WASHINGTON – A dwindling number of prospective students will drive as many as 370 private colleges in the US to shutter or merge with another institution in the next decade, according to a major higher education consulting firm.

Huron Consulting Group’s prediction is more than triple the total amount of private non-profit two- and four-year college closures that the National Centre for Education Statistics calculated in the 10 years leading up to 2020.

The shrinking supply of students stems from a falling national birth rate that started in 2007 and has not recovered.

The Western Interstate Commission for Higher Education estimates that the graduating class of 2041 will be about 13 per cent smaller than the 2025 cohort. 

“Essentially the problem is we have too many seats in too many classrooms and not enough prospective students to fill them,” said Mr Peter Stokes, a managing director at Huron.

“Over the next decade, we’re going through a very painful but necessary re-balancing in supply and demand.” 

Mr Stokes said the firm analysed more than 10 years of financial and enrolment data from since-closed and merged institutions in making its prediction, analysing metrics such as net tuition revenue per student, enrolment, ratings, and the asset-to-liability ratio of closed schools. 

The projected closures and mergers will impact around 600,000 students and affect about US$18 billion (S$23 billion) in endowment funds, according to Mr Stokes.  

“These are schools where we see red flashing lights and warning signs that they’re in significant financial stress,” he said.

Huron declined to disclose the names of schools that it expects will close or merge.

Another 430 institutions with over 1.2 million students and US$134 billion in endowments face moderate existential threats, according to Huron, which serves over 580 education clients annually, a bulk of which are four-year public and private universities, according to a July earnings presentation.

In contrast, 114 private non-profit colleges shuttered from 2010 to 2020, according to National Centre for Education Statistics data, and in the decade prior to that period, 59 schools closed.

Colleges across the country have already shut down in 2025, citing the slowdown of high school graduates.

Among them are Northland College in Wisconsin and Limestone University in South Carolina.

At least 40 schools have announced plans to close since 2020. 

Recent research by the Federal Reserve Bank of Philadelphia found that a one-time 15 per cent drop in prospective students, known as the “demographic cliff”, would cause 80 additional colleges to shutter.

Mr Stokes said that schools need to come up with an early game plan to meet enrolment challenges.

Colleges can consider diversifying their student populations by growing graduate, professional and part-time programmes, for example. 

“If you aren’t thinking five years ahead, you’re at a significant disadvantage,” he said.

“If you have only three years of runway, your chances of survival are less than 50 per cent.

“If you call us when you have nine months of cash, you’re dead in the water and it’s too late.” BLOOMBERG