Before Covid-19, scores of the nation’s private colleges were already facing a financial health pandemic. Things are worse but don’t expect a rash of school closures.
You don’t think Harvard is running a deficit? Or Stanford? Everybody is running a deficit!” Those emphatic words are from Fred Prager, of Prager & Co., dean among Wall Street financiers specializing in higher education. He is speaking about the effects of the pandemic on colleges and universities.
“Top colleges [like Harvard] can hold their breath. . . . If you can hold your breath for 10 or 20 years, you’re going to make it through this. But there are institutions that can’t hold their breath for a year.”
Prager is talking about an ugly reality facing many dozens of colleges now effectively on ventilators, gasping for air. With enrollment down for the 2020-21 academic year, and room, board and other revenues greatly reduced, Covid-19 delivered a gut punch to college finances and in many cases accelerated the financial effects of negative trends—including declining enrollment tied to demographics—already in place. Tiny Pine Manor College in Chestnut Hill, Massachusetts, may have been the first pandemic casualty. Last May, the 109-year-old former women’s college, with a meager $9.6 million endowment and 416 students, threw in the towel and announced that it would merge with well-endowed Boston College.
More mergers are coming, but don’t expect private colleges to start closing en masse. According to Richard Ekman, president of the Council of Independent Colleges, whose 700 members range from Middlebury College in Vermont to Gonzaga University in Washington, most colleges—even those seemingly on life support—will survive the Covid-19 pandemic.