As rising high school seniors plan their targeted college searches in the coming months, families should be alert for red flags that may indicate that a college is in trouble. While college closings have been rare in the past, those small colleges that have been relying primarily on student tuition and other fees, may be at risk. Most of the recent college closings demonstrate a pattern across several years, and by doing the research and asking the right questions, families and students may be able to determine a college's financial footing. Here are a few things to consider:
- Is the college very small and privately run? Those smaller private schools that have not distinguished themselves with a strong brand or market position may be in a precarious financial position.
- Has the number of students remained steady or gradually increased over the past 5-10 years? If there has been a consistent pattern of decreased enrollment, ask questions and do some digging. This may indicate a college that is in financial trouble.
- Ask questions about the college’s debt and where they spend their money. Has debt markedly increased over the past 5-10 years? Is the college investing in the areas that you think are most important?
- While tuition has been on the rise at nearly all colleges, look at the pattern over the past 5-10 years of tuition and student charges. Has the college consistently been making cuts to services or has it been unable to make needed improvements, all while increasing tuition and costs?
- How much support does the college receive through annual giving and endowment? Has the college been dipping into that pool of money while the support has decreased? While some of this information about donations may be available on the college website (sometimes in the form of urgent pleas for needed donations), those interested in more in-depth information may need to contact an administrative office, such as institutional advancement or institutional giving.