Rethinking Strategies for Struggling Colleges (Part I)
First, the don’ts.
Robin Capehart
May 7
This week marked the closure of yet another college: Limestone University in Gaffney, South Carolina, underscoring the ongoing crisis in American higher education.
The trend of college closures has become increasingly alarming, with data from the National Center for Education Statistics (NCES) revealing that over 860 colleges shut down between 2014 and 2021, averaging more than one closure per week. The impact of the COVID-19 pandemic has only intensified these challenges, as the Chronicle of Higher Education reported an additional 50 closures between 2020 and 2022.
This crisis is particularly pronounced among small private colleges, which struggle to adapt to shifting demographics and rising operational costs. The primary driver of these closures is the steep decline in enrollment, leading to significant financial strain. Many institutions have clung to outdated business models that fail to meet the evolving needs of their communities, resulting in a disconnect between educational offerings and local workforce demands.
As competition from larger universities intensifies, it is crucial for colleges to align their fields of study with their foundational purpose to effectively serve their local communities. By offering relevant programs that directly address the educational and economic needs of these populations, colleges can enhance their viability and impact.
The ongoing closure of these institutions not only limits access to education but also threatens local economic growth and development. This troubling trend underscores the inadequacy of traditional strategies and highlights the urgent need for innovative approaches to ensure the future sustainability of higher education in America.
Traditional Strategies
Budget Cuts
One common approach struggling colleges take to address financial problems is to cut budgets and lay off staff. While these actions may provide temporary financial relief, research shows they often cause long-term harm to the institution. For example, reducing faculty and staff leads to larger class sizes, fewer course options, and less personalized attention for students—all of which can decrease the overall quality of education.
According to a 2021 report by the American Council on Education, institutions that made widespread cuts saw a 12% drop in student satisfaction within two years, which negatively impacted retention rates. When students feel they are not receiving the education or support they expected, they are more likely to leave, worsening the enrollment challenges that many colleges already face.
The damage isn’t limited to the campus. Colleges are often major contributors to their local economies, and budget cuts can have a ripple effect throughout the surrounding community. For example, a study by the Brookings Institution (2020) found that for every 100 jobs lost at a college, an additional 45 jobs are lost in the local economy due to reduced spending by faculty, staff, and students. Cuts to programs and facilities can also reduce the number of students and visitors who might otherwise support local businesses, creating further economic strain in the area.
Perhaps most concerning is how these short-term fixes often lead to a downward spiral. As educational quality declines and word spreads about program cuts, fewer students choose to enroll, and those already enrolled may transfer out to institutions that appear more stable.
A report by the National Center for Education Statistics (2022) revealed that colleges experiencing significant budget cuts saw an average enrollment decline of 8% within three years. This drop-in enrollment worsens financial problems, forcing the institution to make even deeper cuts, which perpetuates the cycle of decline.
While budget cuts and layoffs may seem like a quick solution to financial difficulties, the data shows they often do more harm than good. To ensure long-term survival, colleges must focus on finding innovative ways to attract and retain students. Without addressing the root causes of financial strain, reliance on cuts alone risks accelerating the very decline colleges are trying to avoid.
Emergency Funding
Another common strategy struggling colleges turn to is seeking emergency funding through fundraising campaigns or government assistance. On the surface, this approach can seem like a lifeline, as it often provides an immediate influx of money to keep operations afloat.
For example, during the COVID-19 pandemic, federal relief funding provided billions of dollars to higher education institutions through the CARES Act and subsequent stimulus packages. According to the U.S. Department of Education (2022), over $76 billion was distributed to colleges and universities, with smaller institutions benefitting significantly. While this financial support helped many schools avert immediate closures, it also revealed a deeper issue: emergency funding is often a temporary fix that does not address the structural problems causing financial instability in the first place.
Fundraising efforts can also provide a short-term boost, particularly when alumni and community members rally around an institution in crisis. A study by CASE (Council for Advancement and Support of Education) in 2021 found that crisis-driven fundraising campaigns often generate a spike in donations, with some colleges reporting increases of up to 20% in alumni giving during difficult times.
However, these efforts are not sustainable. Donor fatigue can set in, especially if the institution repeatedly turns to the same supporters for help without demonstrating meaningful changes or a clear path to stability. Over time, this reliance on emergency fundraising can erode trust, as donors begin to question whether their contributions are truly making a difference.
The reliance on emergency funding can also create a dangerous cycle. Colleges that repeatedly turn to fundraising or government aid without addressing their structural issues—such as outdated business models, declining enrollment, or misaligned programs—find themselves in a perpetual state of financial instability.
For example, a report by the Hechinger Report (2023) found that colleges dependent on emergency funding were twice as likely to experience closures within five years compared to those that implemented long-term financial strategies. This pattern of dependency delays the tough decisions needed to ensure sustainability, such as restructuring operations, aligning programs with workforce demands, or investing in areas of growth.
Ultimately, while emergency funding can demonstrate strong community support and provide a temporary financial cushion, it is not a viable long-term solution. Without addressing the root causes of financial distress, institutions risk falling into a cycle of dependence, where each new crisis requires yet another infusion of external funds.
Mergers and Acquisitions
Mergers and acquisitions are another strategy that struggling colleges often consider in an effort to address financial instability and declining enrollment. On paper, this approach can seem like a logical solution: combining resources, consolidating programs, and sharing administrative costs with another institution can reduce overhead and create efficiencies.
For example, between 2010 and 2020, over 100 mergers occurred in higher education, with notable examples such as the merger of Boston University and Wheelock College in 2018, which aimed to preserve Wheelock’s education programs while integrating them into BU’s larger infrastructure.
However, while mergers may provide short-term financial stability, they often come at a significant cost, including the potential loss of an institution’s identity, purpose, and connection to its community.
One of the primary risks of mergers is the erosion of institutional identity. Many colleges are rooted in a specific purpose—whether serving a local population, promoting a religious affiliation, or offering niche academic programs—and these characteristics often differentiate them from larger, more generalized institutions.
A merger frequently forces smaller colleges to sacrifice these unique qualities in favor of broader, more standardized offerings dictated by the larger partner. This loss of identity can alienate alumni, donors, and prospective students who were drawn to the institution for its distinctiveness.
For example, a 2021 study by the American Council on Education found that alumni donations decreased by an average of 15% in the five years following a merger, as alumni felt less connected to the new, merged institution.
Another challenge of mergers is the potential loss of programs or services that are not prioritized by the larger institution. For example, in many mergers, smaller colleges are forced to cut programs that are unique but not highly profitable, such as specialized liberal arts majors or community-focused initiatives.
According to a study by the Association of Governing Boards (2023), 40% of merged institutions eliminated at least five academic programs within the first three years of consolidation. These cuts can result in fewer options for students and a diminished ability to meet the needs of the local community, further weakening the institution’s impact and appeal.
Moreover, mergers do not always guarantee financial success. While some institutions achieve stability through consolidation, others find that the costs of the merger—such as integrating systems, reorganizing staff, and managing legal and accreditation processes—are higher than anticipated.
A report by EY-Parthenon (2021) found that 30% of mergers in higher education failed to achieve their intended financial goals, leaving the merged institution in a precarious position. Additionally, the complexities of merging accreditation, aligning curricula, and managing competing administrative structures can delay progress and create significant operational challenges.
While mergers and acquisitions may provide a temporary solution for struggling colleges, they are rarely a panacea. The loss of institutional identity, cultural clashes, program cuts, and the risk of financial underperformance highlight the potential downsides of this approach.
For a merger to succeed, institutions must approach the process strategically—carefully balancing financial sustainability with the preservation of their unique purpose and values. Transparency, stakeholder engagement, and a clear vision for the merged institution’s future are critical to ensuring that the merger strengthens, rather than dilutes, the institution’s ability to serve its students and community.
Lowering Academic Standards
Some institutions resort to lowering their academic standards in an attempt to maintain or boost enrollment numbers, hoping that easier admission criteria or less rigorous coursework will attract a broader pool of students. While this approach may provide a short-term increase in enrollment, it is ultimately shortsighted and can have significant long-term consequences.
Compromising academic quality often damages an institution’s reputation, making it less appealing not only to high-achieving students but also to faculty, donors, and employers. This strategy can create a perception that the institution values quantity over quality, which can erode the trust of stakeholders and diminish an institution’s overall credibility.
The effects of lowering standards can ripple across many areas of campus life. For instance, a study by the National Center for Education Statistics (2022) found that institutions with reduced academic requirements experienced higher rates of attrition, as students admitted under relaxed criteria were often unprepared for the demands of college-level work, even if those demands were scaled back. This led to a 15% drop in retention rates over three years.
Lowering academic standards can also have significant consequences for a college’s post-graduation outcomes. Employers may begin to perceive graduates from these institutions as less qualified, which can harm the school’s reputation in the job market. According to a survey conducted by the National Association of Colleges and Employers (NACE, 2022), 40% of employers reported a decline in their willingness to hire graduates from institutions that had publicly or visibly compromised their academic rigor. This further diminishes the value of the institution’s degree, making it even harder to attract prospective students in the future.
Furthermore, prospective students and their families are increasingly attuned to rankings, accreditation statuses, and measures of academic quality when choosing a college. Institutions that lower their academic standards may see their rankings decline, as metrics such as selectivity and graduation rates are often factored into evaluations. A decline in rankings can, in turn, lead to a drop-in applications and enrollment.
For example, a report by U.S. News & World Report (2023) found that colleges that dropped in rank due to perceived declines in academic quality saw an average 11% decrease in applications within two years.
Ultimately, while lowering academic standards may seem like an easy solution to enrollment challenges, it is a dangerous gamble that can jeopardize an institution’s reputation, financial health, and overall mission.
And, it’s just not right.
Instead of sacrificing academic quality, colleges should focus on strategies that enhance student preparation and support, such as offering robust academic advising, expanding tutoring services, or building partnerships with local high schools to better prepare incoming students.
By maintaining rigorous academic standards and investing in student success, institutions can protect their long-term reputation and ensure they remain competitive in an increasingly challenging higher education landscape.
So, what strategies should struggling institutions pursue instead? We will review these strategies in Part II.
At a Slight Angle | Robin Capehart | Substack