Is Your College Going Out of Business

In 2022, there are a million fewer students enrolled in college than before the pandemic began. Reasons for the decline include rising education costs, lower returns on investment, and simple demographics. Fewer people in America are of the traditional college age, and those who are either can’t afford to go or want to pursue other options. The pandemic accelerated declining enrollment, but it didn’t start the trend; 53 colleges closed permanently during the 2019-20 school year.

With declining enrollment, schools must compete for students to maintain revenue. Despite rising costs, many universities operate with a tiny margin. Selective schools can rely on their massive endowments to get through hard times, but that is a privileged position to be in. Only 106 universities have endowments above $1 billion.

Higher education is a big investment. Make sure you spend your money at a financially viable institution. Determine the financial health of your college before enrolling. Check their endowment reports; colleges spending more than 5% of their endowments are in trouble. The US Department of Education also publishes Financial Responsibility Composite scores on all schools accepting federal aid. If your college closes, you’ll likely be pushed to transfer elsewhere. Make sure credits transfer.