Some small colleges are closing their doors for good amid pandemic

Sasha Aslanian Aug 20, 2020
Heard on: Marketplace
Students on a North Carolina college campus. Smaller institutions are having a tougher time financially. Melissa Sue Gerrits/Getty Images

Some small colleges are closing their doors for good amid pandemic

Sasha Aslanian Aug 20, 2020
Students on a North Carolina college campus. Smaller institutions are having a tougher time financially. Melissa Sue Gerrits/Getty Images

MacMurray College, a liberal-arts school with more than 500 students in central Illinois, survived the Civil War, the Great Depression and two world wars. But it could not survive COVID-19.

MacMurray was faltering before the pandemic. Enrollment was dropping, costs were rising and its $15 million endowment was too small to be of much help. MacMurray President Beverly Rodgers said the college initially had a survival plan that involved borrowing money.

“And we found out on a Thursday, that was when COVID had gotten serious, and the banks tightened up money and we found out they were not going to finance it, and on Friday we announced closure,” Rodgers said.

The small-college business model worked for more than a century, but lately, that model has been strained. Even before the pandemic, finances were tough at hundreds of colleges.

Now, small schools with names you might not know, with green quads and brick buildings, are closing.

In New York’s Finger Lakes region, Wells College officials said they would decide over the summer whether there would be a school for more than 400 students to come back to in the fall. President Jonathan Gibralter said in May that Wells could not get by on remote learning.

“If we don’t have room and board revenue, we won’t have enough revenue to operate the campus next year,” Gibralter said.

People who study higher education finance have been warning for years that a shakeout was coming for small colleges and universities.

Robert Zemsky is a professor at the University of Pennsylvania’s graduate school of education. Think of the flow of college students as a river, he said.

“At the moment, the river is flowing towards big, rich institutions and away from small, under-resourced institutions,” he said.

Zemsky and his colleagues estimate that 20% of America’s private liberal-arts colleges — about 200 or more institutions — are on the verge of going under. Among the contributing factors: a kind of financial-aid arms race where everybody gets a scholarship.

“Every institution essentially thinks if we give away a little bit of money, more students will come to us. So this has been going on for about 15 years. So what you have listed in the institution’s catalog is a price almost nobody pays,” Zemsky said.

Zemsky said at a typical small college, the average student only pays 40 to 45% of the sticker price.

Some colleges are trying a “tuition reset.” That’s when a college lowers the price to make it more appealing. It also doesn’t have to offer so much financial aid.

That’s what Wells College did. It cut its tuition by 25%, to $30,000. And that worked. In early July, the college announced better-than-expected enrollment. That, plus generous donations and a bridge loan, will allow Wells to reopen and bring students back to campus this fall.

Stephen Smith contributed to this report. APM Reports explores the fallout from COVID-19 on colleges and universities in its new documentary, Covid on Campus.

COVID-19 Economy FAQs

Are states ready to roll out COVID-19 vaccines?

Claire Hannan, executive director of the nonprofit Association of Immunization Managers, which represents state health officials, said states have been making good progress in their preparations. And we could have several vaccines pretty soon. But states still need more funding, she said. Hannan doesn’t think a lack of additional funding would hold up distribution initially, but it could cause problems down the road. “It’s really worrisome that Congress may not pass funding or that there’s information circulating saying that states don’t need additional funding,” she said.

How is the service industry dealing with the return of coronavirus restrictions?

Without another round of something like the Paycheck Protection Program, which kept a lot of businesses afloat during the pandemic’s early stages, the outlook is bleak for places like restaurants. Some in the San Francisco Bay Area, for example, only got one week of indoor dining back before cases rose and restrictions went back into effect. Restaurant owners are revamping their business models in an effort to survive while waiting to see if they’ll be able to get more aid.

How are hospitals handling the nationwide surge in COVID-19 cases?

As the pandemic surges and more medical professionals themselves are coming down with COVID, nearly 1 in 5 hospitals in the country report having a critical shortage of staff, according to data from the Department of Health and Human Services. One of the knock-on effects of staff shortages is that people who have other medical needs are being asked to wait.

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