Colleges keep closing. Are regulators doing enough to warn students?
During college, many young people meet friends they’ll have for the rest of their lives. They play sports together. They’re in bands. They take similar classes for their majors.
But a university has to stay open long enough for students to create those bonds. In less than two years, two colleges shut their doors on Victoria Hebert. Thankfully, the rising junior has a small circle of friends who’ve also been caught up in sudden closures at the same pair of New York campuses. After Wells College said it would cease operations this year, the group of young women plans to transfer to a third school – hopefully their last – in Michigan in the fall.
“These girls are amazing,” said Victoria’s mom, Mia Mazza. Between the pandemic and hopscotching campuses, “they haven’t had a normal school year since their freshman year of high school.”
When the mother and daughter learned in April that Victoria would have to find a third new college, they were completely caught off guard. So were the students and faculty members at the University of the Arts, a private college in Philadelphia that abruptly announced in May that it would shutter in June, not long after Wells said it was dissolving. Two University of the Arts students told USA TODAY they first learned about the news not from the school, but from a news story in the Philadelphia Inquirer.
In a class action lawsuit against the school, students said college administrators violated consumer protection law and failed to notify regulators that the institution was financially unstable. (The university and a lawyer for the school did not respond to USA TODAY’s emailed requests for comment.) Such litigation typically accompanies unexpected college closures.
Colleges fold all the time. But metrics show they have been dissolving at a faster pace in recent decades, especially after the 2008 financial crisis. There are indications the trend may accelerate: Over the first half of this year, roughly one higher education institution per week announced it would close or merge, per one estimate. A crisis in college financial aid this year – which will have downstream effects on enrollment, especially at smaller schools – could make things worse.
In the past few years, the Biden administration has taken an aggressive approach to college oversight, picking up on work Trump administration officials paused or undid. Though Biden has made student loan forgiveness a hallmark of his agenda, the president has also been adamant about fixing the root causes of massive student debt. A key piece of that puzzle is preventing colleges from closing with little or no warning.
That task is challenging, regardless of who’s in the White House because the federal government’s metrics for identifying at-risk private colleges have long been flawed. The most recent flutter of high-profile closures underscores how necessary federal intervention may be to protect the lives of students and faculty from getting derailed in the coming years. Tragic stories from students like Hebert are bringing new urgency to efforts to improve the government’s warning signs that a campus is flailing.
“It’s hard to see a world where colleges stop closing,” said Robert Kelchen, a higher education professor at the University of Tennessee, Knoxville, and a renowned policy expert. “So the challenge becomes: When do people know that their college is at risk?”
‘We’re not going through this again’
Hebert's frustrating college journey started about two Christmases ago, when her mom received an email from the president of Cazenovia College, a small private school in New York state with a legacy stretching back nearly 200 years.
“I regret to inform you that after much deliberation, the Cazenovia College Board of Trustees has determined that due to financial concerns, the College will not be enrolling students for the 2023-2024 academic year,” the president wrote to parents in early December 2022.
Though they’d read some troubling news stories about the school defaulting on a multimillion-dollar municipal bond, they didn’t expect things to escalate so quickly. On the bright side, Victoria still had a semester to make a game plan.
She transferred to Wells College, a similar school about 90 minutes away. Her mom, Mia, said she sat down with the president of the school in January 2023, and he assured her that the school’s finances were in good shape. (The school did not respond to a request for comment about the closure or the meeting.)
Mia was frank: “We’re not going through this again,” she said. But after her daughter had been at the new school for about a year, an eerily familiar message landed in their inboxes.
“I am devastated to have to write that our beloved Wells College is closing its doors,” said an April 29 email from the school’s president.
Victoria was getting ready to go to her 8 a.m. Spanish class when she found out. It was the Monday before the last week of the term. Her class was quickly canceled. So Victoria met up with her two friends, the ones who had also transferred with her from Cazenovia.
“We all got together and just yelled,” she said. Her mom called in tears.
University of the Arts stuns students with sudden closure
About a month later and a few hundred miles away from Wells, Isabel Rose Catalan was sitting in bed reading when she got similar news. She was having a “great little summer evening” in Philadelphia after an excursion to a museum with her grandmother, when her phone lit up with text messages.
The Philadelphia Inquirer was reporting her school, the University of the Arts, was closing. As with the startling announcement at Wells, students and faculty at Catalan’s college were shocked. Catalan had just a year left before she was set to complete her creative writing degree.
“Who transfers for their senior year?” she asked herself.
She had chosen UArts in part because it was close to home. Her mom died suddenly just before the pandemic, when she was a junior in high school. The college’s location made it possible for her to stay in a place that was familiar at a time when the world felt disorienting.
“In the past four years, I feel like I’ve had a lot taken away from me,” she said.
Catalan transferred to Drexel University, another private university in Philadelphia, and is set to start in the fall. She still doesn't know for sure what her financial aid package will look like.
The closures at Wells and UArts didn’t just surprise folks on campus – they also seemed to startle college watchdogs. The Middle States Commission on Higher Education – an accreditor responsible for ensuring that colleges in its purview are operating above board – yanked both schools’ accreditation statuses around the time of their respective closures.
Nicole Biever, the chief of staff at Middle States, said in an interview the organization is committed to transparency and is always reflecting on its procedures. But accreditors expect colleges to provide them with accurate and honest information, she said, especially when they’re on shaky ground.
“Institutions close; it happens,” she said. “We expect that institutions will plan for that closure.”
A ‘resource-constrained’ agency
For decades, the U.S. Department of Education has assigned private colleges a “financial responsibility composite score.” As the name implies, the rating is an assessment of whether a nonprofit or for-profit college or university is balancing its budget appropriately, as a condition of participating in federal financial aid programs. Though it’s not the only measurement the agency uses to eyeball schools’ finances, it’s a significant part of the equation.
But critics, including experts and independent groups, have said much of the math underlying the score is outdated. And using it to determine whether a school is about to close isn’t very predictive, especially because the measurement is based on years-old tax data. Even the federal government has acknowledged that schools are aware of ways to manipulate it.
The latest publicly available composite score for the University of the Arts on the Education Department’s standard webpage used to store them is from the fiscal year ending in June 2020. At the time, the agency gave the school a passing grade. Wells’ most recent publicly available score on the same webpage, from the fiscal year ending in June 2019, also deemed it financially responsible.
Since the score was established in the 1990s, it hasn’t changed significantly, said Justin Monk, who oversees student and institutional aid policy at the National Association of Independent Colleges & Universities. That has long been a problem, he said.
“For a variety of reasons, the score itself isn’t really good at doing what it’s purported to do,” Monk said. “There’s been a longstanding need, I mean decadeslong need, to make some substantive changes to it.”
Yet overhauling the scoring system for colleges would be a massive undertaking, according to Blake Harden, a former Education Department official who served under President Barack Obama.
“Hiring a big firm to go in and evaluate a lot of data is going to be expensive,” he said. And “ the department has been resource-constrained.”
Congressional Republicans, meanwhile, are pushing to cut hundreds of millions of dollars from the budget of the office that oversees college financial aid. At a time when the GOP opposes funding the federal Education Department even at its current levels, taking on another massive project would require tons of money. Comprehensively improving the safeguards that are supposed to protect students like Hebert and Catalan from having their college experiences turned upside down would be no easy task.
New oversight rules in the early stages
In July, the Education Department enacted a slate of fresh regulations meant to address some of the limitations of the composite score for colleges. Under the revised rules, schools that try to game their rankings will be punished. They’ll also be disciplined if other warning signs crop up. Those “triggering events” include accreditation problems, worrisome changes to financial aid or abruptly shutting down programs that enroll lots of students.
“College closures and institutional financial instability create significant costs for students and taxpayers,” the agency said in a news release about the new rules.
The department has had a lot on its to-do list lately. Amid massive reforms to student loan programs, officials screwed up the rollout of upgrades to the college financial aid process – creating a mess that has consumed time and energy, lowered morale in one of the agency’s most important offices and caused families of college students nationwide to lose faith in the government.
In recent months, Kelchen, the education professor in Tennessee, has noticed that the Education Department is also months late in releasing another longstanding list of schools on shaky financial footing. The agency typically publishes a record of colleges on a type of oversight called “heightened cash monitoring” every few months.
Department spokespeople did not respond to an inquiry about why that index has been delayed. Kelchen said other, more pressing priorities may be getting in the way.
“I think it’s an issue of bandwidth,” he said.
Contributing: USA TODAY data and graphics reporter Carlie Procell
Zachary Schermele covers education and breaking news for USA TODAY. You can reach him by email at zschermele@usatoday.com. Follow him on X at @ZachSchermele.
This article originally appeared on USA TODAY: Colleges keep closing. Who's supposed to be warn students?
