Back in July 2014, Corinthian Colleges agreed to close or sell nearly all its campuses. The move left 72,000 students wondering what next.
While Corinthian Colleges Inc. was a special case, and its closure related to fraud, more and more colleges and universities are struggling to operate on ever-shrinking budgets.
Losing your spot in school because it’s closed presents enormous challenges for students: financial aid becomes even more complicated, transferring credits is difficult, and students may be stuck in limbo in mid-semester without time to transfer or apply to a new school before the start of the next term.
Being pro-active is the best solution in the event your school closes. And there are ways to predict whether your school is in trouble.
- The Department of Education Gives It a Poor Financial Rating
The U.S. Department of Education measures the financial strength of American institutions in what is called the financial responsibility composite score.
The score is on a scale of 1.0 to 3.0 where 3.0 is positive. If your school is ranked 1.5 or higher, the school is financially responsible, which means it doesn’t carry too much debt or misspend its money.
If your school is ranked under 1.0, then it is considered to be financially irresponsible.
- The School Is About to Merge
According to a report by the Boston Globe, college mergers that were unthinkable 100 years ago are becoming more and more common as small schools with small budgets struggle to stay afloat.
While elite level institutions or those sitting on valuable urban real estate are considered to be well-positioned to weather the storm, less-elite schools might suffer.
A merger isn’t a sign that your school will close; some mergers benefit students at both schools. However, not all mergers go through, and the failure of a merger can lead to collapse.
- The Administration Is Acting Irresponsibly
When Burlington College closed at the end of the school year in 2016, it was the result of the financial difficulties, including debt and the loss of the school’s line of credit, and poor decision-making by the college administration that led to threats to its accreditation and to closing.
Look at what your college president and administration is aiming to do in the next few years; are critics questioning its feasibility? If so, your college may be starting down the path to closure.
As colleges try to deal with a greater number of financial issues and competitiveness, there will likely be more closures in the future. Surviving them may, unfortunately, involve getting out ahead of them. Were you a student at an institution that closed? Share your stories below.
