Private colleges, especially smaller regional schools, are in for a tough decade. Moody’s Corporation, a financial analysis and credit rating company based in New York City, predicts that 15 private colleges will close each year beginning in 2019.
This represents a drastic increase in closures. According to Moody’s, from 2002 – 2011, only 47 private colleges closed — less than five per year. Since then, rising costs, diminishing endowments, and disappearing student interest have pressured many colleges financially. In contrast to a grim prognosis, however, Hillsdale has enjoyed a surge of interest and a healthy growth of its endowment.
In 2018, the college’s acceptance rate was 37 percent, down from 55 percent in 2014, 64 percent in 2007, and 85 percent in 2000, while maintaining similar class sizes, Senior Director of Admissions Zach Miller ’11 said. Its endowment virtually doubled from $295 million in 2011 to $574 million in 2017. Hillsdale’s endowment per student of $386,000 beats that of several ivy league universities like Cornell, Columbia, and Brown, according to data from College Raptor.
In general, fewer students have enrolled in both public and private higher education institutions since the Great Recession, according to data from the National Center for Education Statistics. Peaking just above 21 million students in 2010, the number of students enrolled in colleges fell to 19.8 million in 2016, the last year with available data. NCES projects a reversal in the current downward trend, but rising college costs and low birth rates around the country may continue to deter potential students.
Changing demographics, especially in the Midwest, could produce further hardships for private colleges that draw from the region. Since the Great Recession, birth rates in the U.S. have diminished from a healthy 2.12 births per woman in 2007 to 1.8 in 2016. Additionally, the Midwest lost nearly one million people to domestic emigration alone from 2010 – 2015, according to the U.S. Census Bureau.
Miller said about one-third of Hillsdale students come from the Midwest and, in the future, the college will have to find ways to recruit more students from around the country.
Another problem facing private colleges is cost disparity. The College Board reported the average tuition of a private college for the 2018 – 19 school year as $25,600 more than public colleges, compared to $20,880 more in 2008. As this number grows, young adults trying to avoid debt may find public colleges more appealing than their private counterparts.
Liberal arts colleges, which constitute most of the closures, have a few options when facing what seems like their demise: consolidate with other colleges, retool to focus on technical job training, or imitate larger schools by adding modern study programs.
Some schools simply can’t handle the pressure. St. Joseph’s College, an Indiana liberal arts institution founded in 1889, closed its doors in the fall 2017, according to the Chicago Tribune. St. Joseph’s accumulated $27 million of debt before closing, and 900 active students transferred to surrounding schools like Purdue and Marian universities.
The cost of education influences every aspect of the private college crisis. As financial burdens force colleges to cut important programs and raise tuition, fewer students apply and donations move elsewhere. The quality of accepted students plummets, leading to a death spiral of application numbers.
Hillsdale has seen just the opposite. The average high school GPA for the freshman class of 2000 was 3.56 with an average ACT score just under 24. This year’s freshman class boasts an average GPA of 3.81, scoring 30 on the ACT.
Provost David Whalen attributed Hillsdale’s perseverance to its growing nationwide support base, citing financial backing as the key element to its success.
“We are able to charge a very modest tuition, at least compared to many other schools of this caliber and quality,” he said. “In comparison to our peers, Hillsdale is a bargain.”
Most colleges use tuition to cover a portion of the total price tag, using endowments to cover the rest. Hillsdale is no exception.
“The cost per student is above two times the cost of tuition,” Whalen said, adding that donors from across the country make up the difference.
College Board reported the average private college tuition for the 2018 – 19 school year was nearly $36,000. Hillsdale’s tuition the same year was $27,578, and for a better education than most private colleges, Whalen said.
Institutions can recover from closures, but it’s rare. Last year, The Indianapolis Star reported that St. Joseph’s successfully restructured its debt while keeping most of its campus. This summer, St. Joseph’s will reopen as a part of Marian, another liberal arts college, and hopes to relocate back to its original campus as soon as 2020.
Other private colleges avoid consolidation and try to solve their issues by emphasizing technical skills and direct employment, often through a STEM-focused education.
Frameworks like this can work. Merrimack College, a private institution in Massachusetts, shifted its education program to concentrate on STEM and business training rather than the liberal arts it previously offered.
Over the last several years, Merrimack has grown its student population, expanded its campus, and stabilized its finances, which were dire until the recent changes. But in the process, the college lost its liberal arts identity.
“With more than 100 career-focused undergraduate, professional and graduate programs,” Merrimack’s homepage reads, “Merrimack offers you a wide variety of academic options to choose from.”
According to the Boston Globe, “the college uses an outside consultant and computer algorithms to dole out financial aid.”
Pranav Sharma, an analyst from Moody’s, added that Merrimack is now “run as a business.”
“Most schools are going in a different direction,” Miller said, speaking on colleges focusing on employment training like Merrimack. “I think those who are truly seeking a liberal arts education are going to find places like Hillsdale.”
What makes Hillsdale different? Other universities and colleges think of themselves as “chained to the currents of the day” whereas Hillsdale tries to maintain its founding mission, Whalen said. “Our fidelity to that makes our curriculum and faculty stand out as exemplary of human excellence,” he added. “That moves people, and that’s what college education ought to be about.”
“There are a lot of liberal arts schools getting away from their core and historical missions,” Miller said. “Hillsdale bucks that trend because we are unabashedly mission-centric.”