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Why the business of small colleges no longer adds up

Hampshire College is among 15 private colleges in Massachusetts with at least 250 enrolled students that posted double-digit declines in population over a 10-year academic period beginning in 2011, according to the US Department of Education.David L. Ryan

For much of recent history, intimate private colleges and universities have thrived here, as much a part of the region’s identity as tumbledown stone walls and scenic coastlines, the local highways bristling with signs signaling that another quintessential New England campus is just an exit away.

But the business model for the small liberal arts school is much less viable these days, as the population of high school graduates continues to decline and more young people are skeptical of, or unable to bear, the hefty cost of a college degree. Already in Massachusetts, more than 20 colleges closed completely or merged into larger institutions since 2014, according to the state Department of Higher Education.


And industry insiders expect more of the smaller or lesser-known schools to fade away, while a handful of private universities boasting massive endowments will continue to flourish.

Two of the nation’s big credit rating agencies reported dire financial outlooks for the year for the higher education sector: Fitch Ratings says conditions in the sector are “deteriorating,” and Moody’s Investors Service says the outlook is “negative.”

The consolidations rippling through higher education are not unlike what many other industries have experienced as customers shift online. But unlike for-profit companies, there are few motivations among institutions of higher education to merge with or be taken over by another school, experts said.

There is no windfall of cash when one college merges into another, and alumni, faculty, and students are rarely supportive of plans that would result in the loss of their alma maters. Hampshire College in Amherst is proof of that after alumni rallied and raised funds to keep the school independent after officials in 2019 said they were exploring a merger.

Communities also mourn shuttered colleges as these institutions are typically big employers and offer resources such as sporting and cultural events to their neighborhoods.


Still, experts seem to agree that there are just too many colleges. There are currently about 140 institutions of higher learning in Massachusetts, about half of which are private, four-year colleges, according to federal data.

“Honestly, it’s the hunger games,” said Madeleine Rhyneer, who leads the enrollment practice at consulting firm EAB. “There are fewer students going to college and there are more or less the same number of colleges in the country, so there will be winners [and] there will be losers.”

In Massachusetts, 15 private colleges with at least 250 enrolled students posted double-digit declines in population over a 10-year academic period beginning in 2011, according to the most recent data from the US Department of Education. Those include Suffolk University, American International College, Fisher College, Lesley University, Assumption University, and Hampshire.

Many of these rely heavily on tuition to fund operations, so even modest drops in enrollment can be devastating. Experts said that colleges experiencing ongoing enrollment woes — as well as those with smaller endowments — are under the most pressure to either seek a partner, make drastic cuts, or focus on an in-demand niche such as health care.

Fisher College in Boston, for instance, cut satellite locations as student preferences shifted to online classes, the school’s chief admissions officer, Robert Melaragni, said. The college lost about one-quarter of its students between 2011 and 2021. Enrollment then grew 4 percent between fall 2021 and 2022, to 1,421 total students, he said. About one-fifth of Fisher’s students are international and roughly half are Boston natives.


“We’re not going anywhere,” Melaragni said.

John Sullivan, spokesperson for Lesley University in Cambridge, which specializes in educating teachers, said its 32 percent enrollment drop between 2011 and 2021 is at least in part due to many school districts in recent years relaxing requirements that teachers must have master’s degrees and doctorates.

“We remain confident in Lesley’s position as the leading educator of teachers, counselors, expressive therapists, artists, and others making a tangible difference in the lives of others,” Sullivan said.

Some private colleges have cut tuition prices to attract more students who might be turned off by published costs. Lasell University in Newton, for example, recently dropped tuition by 33 percent to $39,500.

Assumption declined to comment.

American International College in Springfield, which opened in 1885 to educate immigrants, is plotting a turnaround, after losing 35 percent of its students between 2011 and 2021, with total enrollment now at about 2,100.

The college, which enrolls many low-income and first-generation students, needs to “reimagine” its brand, academic offerings, and marketing strategy, its president, Hubert Benitez, said. That includes considering adding programs in health professions and business to meet student interests and local employers’ needs, Benitez said. He added that AIC would not raise tuition to increase revenue.

Benitez acknowledged the steep odds the school faces as it tries to recruit the students when the overall pool is shrinking and so many other small colleges are competing for the same applicants.


“That’s the $5 million question,” Benitez said when asked how the school will do it.

Suffolk University recently received a “negative” outlook from Moody’s due to “challenging revenue conditions,” as well as overly relying on endowment funds to finance new initiatives. Suffolk President Marisa Kelly said in a statement that she remains “confident in the university’s continued momentum and strong enrollment numbers.” Suffolk’s enrollment dropped by almost one-third between 2011 and 2021, but its class of first-year students increased in 2022, Kelly said.

“We believe the strategic investments we are making — particularly in financial aid to support students as we emerge from the pandemic downturn — are aligned with our mission and will build the long-term strength and success of the university,” Kelly said.

Most failed colleges to date had fewer than 1,200 students, said Emily Wadhwani, Fitch’s lead analyst for colleges and universities. And students at colleges that close are less likely to finish their degrees, a recent report from the State Higher Education Executive Officers Association and National Student Clearinghouse Research Center found.

With declining revenue, it’s hard for colleges to reduce expenses at the same pace because institutions still need to offer all their academic and support services as well as maintain buildings and dining and living spaces, though for a smaller pool of customers. Small colleges typically don’t have other revenue sources that larger universities rely on, such as research funding and athletics, historically relying on raising tuition and the price of room and board.


“Quite frankly [colleges that have closed] have relied on an unsustainable business model for too long,” Wadhwani said.

The 20 or so Bay State colleges that have closed or merged with others in the past decade include Newbury College, Pine Manor College, Mount Ida College, the Boston Conservatory, and Wheelock College. Bay State College in Boston recently said it would close later this year following dramatic enrollment declines and loss of accreditation.

Richard Garrett, chief research officer at the higher education consulting group Eduventures, expects the outlook to only worsen.

“The problem is that all these trends aren’t going to get any better anytime soon,” Garrett said. “The demographics are only going to get worse over the long term.”

Undergraduate college enrollment nationwide has been steadily declining since peaking at about 18 million in 2010, down to about 15.1 million students last fall, according to the National Student Clearinghouse Research Center. The recent enrollment losses have been particularly pronounced in the Northeast and Midwest.

Those declines were exacerbated by COVID-19 as more people opted to enter the workforce rather than pursuing higher education.

Federal relief funding for institutions acted as a backstop to revenue losses as students took a gap year or lived at home rather than paying room and board costs at the height of the pandemic, experts said. But that relief has largely ended, leaving dozens of private colleges with hard decisions ahead.

In past hard times, colleges expanded access, such as all-male schools admitting women, in order to boost enrollment and revenue, said Marjorie Hass, president of the Council of Independent Colleges. But now, struggling schools need to “refocus their mission” or find other sources of revenue, Hass said.

“I don’t think you’re going to [persist] by simply keeping your head down and making cuts to your expenses,” Hass said. “This is definitely a time for creative reinvention for many colleges, and not a time to just weather the storm.”

Hilary Burns can be reached at Follow her @Hilarysburns.