America’s Colleges Are in Trouble

Small colleges in America are in trouble. Articles published daily remind us of how the Covid-19 pandemic has forced hundreds of colleges to question their futures. But Covid-19 did not cause this looming crisis in higher education; it simply amplified structural flaws that have plagued America’s colleges for the last decade.

Before the pandemic, U3 Advisors and brightspot strategy began a long-term research project to track risk factors for 2,300 four-year private not-for-profit and public institutions and to synthesize best practices from colleges working to mitigate these risks. From each institution, we used longitudinal data from IPEDS to grade each school’s competitive advantage and financial health. For competitive advantage we evaluated short and long-term enrollment changes, investment in online programming, reliance on international students, admission and enrollment rates, and the relationship between demographic changes and geographies of recruitment. For financial health we evaluated overall solvency, strength of assets (primary reserve ratio, endowment coverage), debt reliance (viability ratio, leverage), tuition dependency, and, for public institutions, short- and long-term changes in appropriations.

Context and Findings

According to our research, between 2014 and 2019 approximately 55% of four-year public and private not-for-profit colleges declined in enrollment and 35% declined in enrollment by more than 1% annually.  This decline is partially a reflection of macro demographic shifts that are occurring in this country; since 2010 the population of traditional college-aged students (18-24) has fallen by a little over 1% nationally, and declining birthrates following the recession of 2008 (and potentially that of 2020) will likely push this decline as high as 15% past 2025.

Increasing competition for students has pushed schools to make riskier financial and programmatic decisions, such as tuition discounting or debt-driven amenity creation, that have further weakened their already shaky financial structures. Consider three salient financial observations that emerged from our research, all of which were true before the Covid-19 pandemic hit:

  • Over the last five years, debt taken on by colleges has increased by 57%, while tuition revenues and new assets grew by 37% and 32%, respectively.
  • Over 40% of private not-for-profit schools depend on tuition and student services for over 75% of their revenues, leaving them sensitive to sudden shifts.
  • At least 38% of colleges have operated at a deficit at least once in the last three years; 18% for three years straight.

Percent of 4-Year Public & Not-For-Profit Schools by Risk CategoryEstimated percentage of students within key cohorts who may soon experience a school's closure



The Geographic Inequity of Risk

When we synthesized the data from all institutions, we found that as many as 560 schools (~25%) were at serious risk for potential closure or consolidation in the next few years, even before Covid-19 introduced new uncertainty into the equation. These schools experienced declining enrollment for multiple years, faced intense geographic competition in demographically shifting markets, and fell below industry-recommended metrics in at least four of the seven financial ratios referenced above. This cohort will likely require transformative strategies to remain operational, but even schools with emerging risk factors will need to re-evaluate their long-term strategic decisions.

While the overall impact has confirmed other research on this topic, we found the geographic inequity of risk factors to be the most disquieting trend. For example, ~40% of schools that we classified as having the greatest risk for closure or consolidation are located in just six states: Michigan, Pennsylvania, Ohio, New York, Illinois, and Massachusetts (yet those states represent only 25% of all schools). In those six states, the “highest risk schools” enroll ~22% of undergraduates, yet they enroll 40% of low-income undergraduates, and 50% of non-traditional learners (undergraduates over 25). While these cohorts do not correlate perfectly to family history, they remain strong barometers of first generation college participation.

The geographic inequity of risk is even starker when comparing different metropolitan areas. All cities will have to content with college closures, but some cities will experience these trends more acutely and experience more pronounced linkages to issues of racial and economic equity. A good example of this fact is a comparison between the Metropolitan Statistical Areas (MSA) for Atlanta and Detroit. While the overall risk for closure/consolidation is almost double in Detroit (47% of schools vs. 22% in Atlanta), the potential impact to certain cohorts of students is far more acute. In Atlanta’s MSA, students of color and low-income students represent 52% and 44% of all students (respectively), yet only 4% of these respective populations attend schools with the most serious risk factors. In Detroit’s MSA, students of color and low-income students represent 33% and 43% of all students (respectively), yet over 50% of each cohort attend schools with the most serious risk factors.

% Schools with Serious Risk for Closure or Consolidation
% Students of Color (SOC) Overall
% SOC at Highest Risk Schools
% Students Low Income (LIS) Overall
% LIS at Highest Risk Schools
Atlanta  MSA
22% 52% 4% 44% 4%
Detroit  MSA
47% 33% 54% 43% 60%


Looking to the Future

 Some institutions may be able to control and mitigate their risk factors. Other institutions may soon be forced to merge or close their doors. The problem is that the decisions that will push colleges in one direction or another will often be made in isolation or in panic. But the outcomes of these decisions affect not just students and staff, but communities, cities, and broader campaigns for racial and economic justice. Every institution will need to take an unflattering look at enrollment and financial projections. But given the tight relationships between supply and demand — especially for smaller, regional colleges — policymakers, educational consortia, and foundations also have the opportunity to engage from a collective standpoint. To further support this work, U3 Advisors and brightspot strategy have translated our research into several resources that we hope will offer guidance. These include:

  • A formal report on our research that chronicles trends in greater detail and highlights nine potential strategies that institutions can apply, individually or collectively, to ensure sustainable outcomes before they reach a crisis point.
  • An interactive dashboard where users can identify financial health of higher education for all 50 states and over 120 metropolitan areas.

To engage more, please contact Shea O’Neill ( or Elliot Felix (


Read our full report.

See the states ranked by overall risk.

See MSAs ranked by overall risk. 

Use Our Interactive Dashboard
Explore the geography of campus closures