Every year it seems there is at least one high-profile closure in American higher education. And every year, academics around the country proclaim the end is nigh. College of Saint Rose in Albany closed in 2024, and Hampshire College will shut its doors this December. Sometimes it doesn’t even take an actual closure to prompt the handwringing. Sweet Briar College made waves in 2015 when it announced it would close, especially given its relatively large endowment and wealthy alumni base. Happily for the Vixens, that announcement was premature, and Sweet Briar is still trundling along more than a decade later (you can read my article on the attempted closure of Sweet Briar College, one of the more bizarre tales to come out of American higher ed, here).
This time, it isn’t even a possible closure that’s making waves. Instead, it’s a Wall Street Journal article about the deteriorating finances of Syracuse University. Syracuse finds itself in a unique and unenviable position. Enrollment is dropping. It just took out a near-half-billion-dollar loan to build new dorms closer to the main campus. Worst of all, how do you attract students to Syracuse, New York, the snowiest metropolitan area in the entire United States? At least if you go to school in Anchorage, you get to live among the mountains and moose. In Syracuse, you get a city formerly known for having one of the biggest General Electric campuses. Now, like Buffalo and Rochester, empty factories and office buildings are the norm.
Syracuse University definitely has its work cut out for it. Recruiting against schools located in Boston or even Philadelphia is going to be an uphill battle. Diving into the details, however, gives a much more nuanced picture. Despite the scary WSJ headline “Why Syracuse Can’t Attract the Students It Needs to Pay the Bills,” things aren’t going that poorly. Just five years ago, the school had so many students they were putting freshmen up in a nearby Sheraton Hotel after the dorms reached capacity. The school has a $2.5 billion endowment. Yes, they missed their enrollment target this year, but it resulted in a manageable 1.5% budget deficit. The school decided that running a modest deficit while maintaining its standards was preferable to admitting students from the wait list. This is not the behavior of an institution that is having trouble paying its bills.
The reality is Syracuse screwed up the last admissions cycle. They didn’t admit students and give scholarships until after most other schools. Unless you are Yale or Williams College, this will lead to disaster. Sure, Syracuse is the dream school for some students. But for many, it’s going to be one good option among several. If an alternative, especially one in a better location, has admitted you and given you a decent aid package, why wait around for Syracuse to extend an offer? This is one of the most common sources of financial difficulty for otherwise solid schools - not a bad location or poor student outcomes, but simply being too late.
Syracuse administrators are likely quite peeved about the Wall Street Journal article. Here they are, just a few years removed from record-breaking enrollments, and now a reporter comes around predicting gloom and doom after a single down year. The headline blows the trouble way out of proportion. Given the size of Syracuse’s endowment, the school could likely run a 1.5% deficit forever, drawing solely from the gains on its investments. The WSJ article will probably do real damage, as a non-trivial number of students will avoid enrolling there, fearing the school is going to collapse within the next four years. That is absolutely not going to happen.
American higher education does face significant challenges. The number of graduating high school seniors, an 18-year consequence of the Great Recession, is falling. The Trump Administration’s decision to reject student visas at an unprecedented rate has cut off an important income stream. And academia’s leftward bias has led many to question the value of spending six figures on a college degree.
Undoubtedly, some schools will close over the coming decade. That’s not new, though. There are over 1,500 four-year colleges and universities in the United States. Even if a mere 1% closed every year, that would still be a good survival rate for any industry, especially a competitive one with extremely limited geographic mobility.
Moreover, the schools that have closed over the last decade aren’t anywhere close to Syracuse University’s level. Syracuse, while not a top school in the United States, would be a point of national pride in just about any other country. It enrolls over 20,000 students, receives hundreds of millions of dollars in research funding every year, and has a historically strong (if currently struggling) men’s basketball program.
The schools that actually close are a different breed entirely. Some of the biggest recent examples include Clarion University, Medaille University, and Limestone University. Readers will, of course, recognize those famous institutions from Pennsylvania, New York, and South Carolina, respectively. Or, more likely, they won’t, because no one outside the immediate area or the alumni base even knows they exist. In reality, only a few dozen schools with enrollments over 1,000 students have shut down since Covid. Their endowments are generally under $30 million, and these are schools that have been in decline for decades.
Consider my own employer, the University of New Haven. Even people in Connecticut are often unaware the University of New Haven exists. We don’t have a national brand or a national championship sports team. Athletics only moved up to Division I last year. New England is facing the steepest demographic cliff of any region in the country, and the Trump Administration’s student visa policy has caused major headaches: our international enrollment dropped from the thousands to the hundreds. But we have strong academic programs. I’m consistently amazed by the research my colleagues produce, often without the resources of a research-first institution. Our students, especially the top ones, compete for and land top jobs in the private sector and in government. We just welcomed our largest freshman class. So yes, some schools are in trouble. Most are doing just fine.
Even more heartening: American higher education is currently facing a perfect storm of bad circumstances, and it’s still doing alright. Along with government hostility, the U.S. economy has had an unprecedented bull run. Other than in 2020, the U.S. hasn’t had a year-on-year economic contraction since 2008. That’s great for the economy, but higher education is countercyclical. When the economy does well, universities see enrollment drop; during recessions, everyone wants a degree. Especially over the last five years, as wages have risen and unemployment has stayed low, the payoff from spending four years in college has looked increasingly shaky. Eventually, though, there will be another recession. The next time unemployment hits six percent and wages flatline, college graduates will start pushing everyone else out of the job market entirely, and the industry will rebound. Undergraduates finish their degrees more often when there isn’t a robust labor market ready to snatch up college dropouts.
Higher education has its challenges. Along with everything already discussed, AI is rapidly changing the landscape and causing headaches for professors everywhere. But the fact that one good-not-great university’s 1.5% budget deficit merits an entire article in America’s premier business newspaper, far from being an indicator of DEFCON 1, is itself a sign of a healthy industry.