The Shifting Landscape of Higher Ed: Understanding The Rise in Non-Profit College Closures

New research from Higher Education Publications, Inc. shows a steady increase in the number of two and four-year non-profit universities being forced to close. Several key factors have contributed to the increase of non-profits closures such as financial challenges, declining enrollment, perceived ROI, and increased competition.  

According to Higher Education Publications data, since 2004, approximately approximately 221 non-profit colleges and universities have been shut down. Our split analysis shows a significant uptick of closures since 2014, especially with private, liberal arts colleges. In the period between 2004 and 2013, only 33 private four-year universities closed.  From 2014 until 2023, the number of closings skyrocketed to 143, which averages 15 closings per year. 

Previously for-profit closures such as ITT Tech and Corinthian colleges made up the bulk of institutional closings. However, since 2020, the numbers dropped heavily, after ACICS (Accrediting Council for Independent Colleges) — a for-profit’s main accreditor — was shut down by the US Department of Education.

To add, finances have always been challenging in higher education. The most common expenditures of colleges and universities include facilities maintenance, administrator/faculty pay, technology/research funding, and financial aid. Certainly, each school’s budget is unique, however additional costs have taken a toll on non-profits.   

Colleges and universities with larger endowments and recognition are in a different position than smaller, less competitive schools. “For brand-name colleges, the demand is off the charts,” says Hafeez Lakani founder and president of Lahaina Coaching in New York. “It has never been harder to get in.”  On the other hand, private colleges that are less prestigious (but equally expensive) are struggling to attract applicants, he said. “The majority of people are going to say, ‘Is that worth my while.” 

As technology has advanced, the higher education landscape has become more competitive with an increase in online learning platforms and alternative education options. Additionally, there has been an increase in the number of adult learners and non-traditional students who seek flexible learning options. Certain non-profit universities, which often have more rigid structures and traditional classroom-based approaches, have struggled to adapt to this evolving demand.                                                                                                                                                                                                                                  

As a result, many institutions have lost out on non-traditional enrollments and faced difficulties sustaining operations. On the other hand, the numbers show certain universities have been able to successfully pivot in providing online degree programs. According to edsmart.org, a nationally recognized publisher of college resources and rankings, the top ten best non-profit online accredited universities for 2023 include: Johns Hopkins University, Florida State University, Purdue University, University of Delaware, Georgetown University, Villanova University, Arizona State University, George Mason University, and New York University.   

Shifting demographics have also played a role in declining enrollment. Falling birth rates have resulted in a smaller pool of college-age students, making it difficult for non-profit universities to maintain enrollment levels. According to Robert Franek, editor in chief of the Princeton Review, “We’ll be graduating our lowest high school classes by 2025.  most enrollment professionals have been wringing their hands about this date of 2025, but many schools have seen those enrollment declines already.” Moreover, for the young adults who were affected by Covid during their secondary school years, many are foregoing college for work. According to the National Student Clearinghouse, there was an 8% enrollment drop from 2019 to 2022. According to a recent Forbes article, “If I would have gone to college after school, I would be dead broke, says 19-year-old Daniel Moody. “There were a lot of us with the pandemic, we had a do-it-yourself kind of attitude of like, ‘Oh, I can figure this out,” he said. “Why do I want to put in all the money for a piece of paper that isn’t going to help me with what I’m doing right now?” 

Unfortunately for the young adults who opt out of attending college, their lifelong earning potential is significantly less than their peers with college degrees. Georgetown University’s Center on Education and the Workforce notes that for those individuals who opt out of attending college, their earning potential is 75% less than those with bachelor’s degree.  

The increasing closure of non-profit universities can be attributed to a combination of financial challenges, declining enrollment, changing demographics, and increased competition. Said factors have collectively placed significant pressure on non-profit institutions, forcing many to shutter their doors. As the higher education landscape continues to evolve, it is imperative for non-profit universities to adapt and innovate to remain relevant and sustainable for the future.