Amid coronavirus pandemic, a growing list of colleges in financial peril

Pine Manor College in Chestnut Hill said a fall opening is in jeopardy.

The number of private colleges and universities in New England at risk of closing or merging has doubled amid the financial shock of the coronavirus pandemic, a new report by an education technology firm has found.

Before COVID-19 ravaged higher education budgets — forcing institutions to temporarily shut down campuses, offer refunds to students, and invest in online teaching tools — 13 institutions in New England were in danger of closing within six years. That number has jumped to 25, according to Edmit, a Boston-based college advising company.

Nationwide, 110 more colleges and universities are now in peril because of the financial impact of the virus, bringing the total number to 345 institutions, Edmit found.

The pandemic has even deteriorated the financial outlook of colleges that have historically been cushioned by substantial endowments and strong enrollments, according to Edmit. Nationwide, the number of private colleges at a low risk of failure slipped from 485 institutions before the virus to 385, Edmit found.

“Higher ed has been one of the more severely impacted sectors by the COVID epidemic,” said Nick Ducoff, the cofounder of Edmit and a former Northeastern University vice president. “The risk of college closures is no longer an academic exercise.”

Edmit defines schools as being in low financial health if their combined revenue and unrestricted assets will no longer cover operating expenses within six years. The New England schools in that category include eight in Massachusetts, five each in New Hampshire and Vermont, and the remaining split between Maine and Connecticut, according to the study. (None are in Rhode Island.)

Many are small institutions, such as Goddard and Marlboro colleges in Vermont. Goddard was placed on probation by the regional accrediting agency in 2018, but brought in new leadership and increased its alumni fund-raising in an effort to stabilize its finances. Marlboro is in the midst of being acquired by Emerson College of Boston.

Others on the list, such as Pine Manor College in Chestnut Hill, have struggled financially before, but are now uncertain whether they can open in the fall.

Edmit, a startup that aims to inform students and families about the cost of higher education and the institutions’ long-term stability, now includes COVID-19-related financial health information on its website for each college.

The company reviewed historic and the most recently available public financial data for nearly 940 private colleges and universities, and then incorporated the virus financial shocks into the model. Edmit estimated that tuition revenue would decline for the next two years because fewer students may attend college due to their families’ financial situation and uncertainty over the virus. The study assumed that investment returns for college endowment funds would fall by about 20 percent with the downturn of the stock market, and that colleges would also cut their budgets and salaries.

Edmit stirred controversy last year when colleges and their trade organizations launched a campaign to block the company from releasing a similar institutional-level financial outlook for consumers. The colleges argued that it was unfair to individual schools and relied on publicly available data that was nearly two years old. But several higher education finance experts have reviewed the company’s methodology, Ducoff said.

Edmit’s study also reinforces warnings from bond ratings agencies and regulators that the higher education industry is likely to see a major shakeup as a result of the pandemic. Declines in the number of college-age students and increasing costs were already straining many institutional budgets and the virus has simply exacerbated those problems.

This week, Wells College, a 400-student institution in upstate New York, warned that it could be forced to close if students can’t return to campus in the fall.

Last month, Pine Manor officials said that the college is trying to find a financial path forward, but that a fall opening was in jeopardy. Pine Manor reduced its tuition deposit to hold seats and urged prospective freshmen to also place a deposit at another institution “as a backup plan,” according to a message from its admissions dean posted on its website.

Massachusetts Attorney General Maura Healey’s office said it has also received an increasing number of inquiries in recent weeks from colleges about tapping into restricted pools of money in their endowments. The office issued guidance in late April about when and how institutions can access money that has been set aside for certain uses, such as scholarships, by the donors.

Federal coronavirus relief has helped colleges and students, but hasn’t been enough to compensate for the losses and costs schools have faced.

Colby-Sawyer College in New Hampshire received about $780,000 in aid through the US Department of Education, about half of which went directly to students. The college also qualified for a $2.65 million loan under the federal government’s Paycheck Protection Program for small businesses, which helped Colby-Sawyer avoid layoffs of its 312 employees, said its president, Sue Stuebner.

“We’re hanging in there,” she said.

Colby-Sawyer is among the colleges that Edmit flagged as being at high financial risk of closing. But Stuebner said the college of 800 undergraduates had been making cuts even before the virus, which should help it remain open. The college has eliminated majors and minors such as English, communications studies, American history, and art history and focused instead on health sciences.

A recent $3.25 million partnership with nearby Dartmouth-Hitchcock Health Systems to increase the enrollment in the college’s nursing programs should also help, Stuebner said.

Colby-Sawyer hopes to bring students back to campus this fall, and declining enrollment over the years has meant the college could house students in single rooms now, she said.

But if students can’t return to campus, the financial cost in the fall could be more severe, Stuebner said.

“While small is not always a strength, when you think about this particular issue it could be,” she said. “I’m cautiously optimistic for the school.”

While the Edmit study focused on private institutions, public institutions are also facing their own financial woes due to the virus. In Vermont, a proposal to close and merge some state university campuses was shelved only after a public outcry.

Last week, the Massachusetts Board of Higher Education announced that it had hired a private company to look at the financial health of the campuses in the state system as a whole in an effort to determine whether there may be ways to save money and share resources in the wake of the pandemic.

More private colleges are considering mergers, and more public institutions are wondering whether all their campuses are needed than a year ago, said Barbara Brittingham, the president of the New England Commission of Higher Education.

But they are also uncertain about what the future may hold. Institutions don’t know whether they’ll be able to reopen their campuses this fall, how bad the spread of the virus may be in the new academic year, and how many students will want to enroll, she said.

“There are so many unknowns now,” Brittingham said.