Are We Really That Surprised About More College Closings?

Spotting the red flags of college closings before it’s too late

Over the last month, two more private schools have announced their closures.  St. Andrews University in Laurinburg, NC, and Limestone University in Gaffney, SC.  In both cases, as with any college closings, the result is disheartening to the current state of higher education. It is also never something those enrolled students expected or signed up for. Peer institutions have readily come forward to offer transfer-friendly options for those students.

What has also struck me about college closings like these is how the media portrays these closings as “sudden” or “abrupt.” I have been in higher education for over 20 years, both on a campus as a chief enrollment officer and now at RNL in an executive role. College closings are not sudden or abrupt. The warnings and red flags show themselves years before such a dire decision is made by a board of trustees.

Key metrics for institutional health and viability

For any institution, but especially private ones, there are key metrics that impact their health and viability. They include, but are certainly not limited to:

• Net tuition revenue as a cohort class and per student
• The long-term health of your lead/prospect pool
• The cost of recruiting a prospective student
• The cost to educate and operate an academic program
• Student retention rates dropping yearly and hovering under national/regional benchmarks
• An increase in discount rates while headcount/net tuition revenue stays flat or down

Metrics diagnose the problem. They do not solve it.

The majority of these metrics are probably not surprising for most institutions. However, the ability to understand why a campus lags behind in these critical areas is key to rectifying such challenges. There lies half the problem usually. Too often, metrics serve as a perceived solution for a problem. Here are two examples I have seen:

Example 1: A campus throws more money to students to hopefully increase their headcount and gain revenue. That is a short-term solution that then saddles the institution with a bigger problem—a high discount rate that will likely increase another 3-5% during the student’s time on campus. That is not a sustainable model.

Example 2: An institution introduces new programs without conducting viable external research and setting realistic student enrollment goals. The tuition revenue needed has to offset the cost of starting a new program, hiring faculty, and supporting marketing efforts. If new programs are not hitting targeted goals, the institution has to quickly pivot and determine if there is a tangible market of students to recruit for such a program over the next 3-4 years.

The examples could go on and on.

Fixing issues before they become insurmountable

Most institutions are not blind to their current situation regarding the above metrics. They strive to maintain a healthy enrollment, financial stability, and a quality experience for students. They also know when those metrics become red flags. The massive challenge right now in higher education is trying to solve for those red flags in real time and with very “real” budgets. We should not be surprised at unfortunate closures in our industry. Most campuses certainly are not. The real objective is to win the “race” of addressing and fixing the problems 3-4 years before they become insurmountable.

How do you do that in a systematic, data-reliant way that helps you make the right read and identify the right strategies to hit the brakes and reverse course before you hit the cliff? That’s something my colleagues and I partner with institutions on all of the time. We do evaluations or “scans” for key items such as the admissions/recruitment strategies and organization, the fiscal health of the institution, alignment of academic programs with market demand, and similar areas that are critical for institutional viability.

I welcome the opportunity to connect and talk about strategies for your institution. Feel free to email me to discuss your challenges and what can be done to put your campus on the track to sustainable success. We have helped many institutions come back from the brink and keep even more from reaching that point.