Home News The other college debt crisis: Schools are going broke – CNBC

The other college debt crisis: Schools are going broke – CNBC


Key Points

  • As many as 1 in 5 small private colleges is facing serious financial stress, according to a Moody’s analysis.
  • Enrollments are declining, particularly in the Northeast and Midwest, due to changing demographics, tuition price wars and greater emphasis on career training.
  • Schools that have survived are making tough choices, including mergers, curriculum changes and budget cuts.
  • There are few options for students and parents to check out a school’s financial condition.

Small, private liberal arts colleges — a staple of American academia since before the founding of the republic — are colliding with new realities including changing demographics, ever-increasing demand for technical skills and competition with bigger and richer schools.

The result, in many cases, is not pretty.

Moody’s Investor Services estimates 1 in 5 small private colleges faces “fundamental stress” due to declining revenues, rising expenses and little pricing power when it comes to tuition. Analysts project 15 of the colleges will have closed in 2019 — the largest number in recent memory, and three times the rate just 10 years ago.

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