Key Indications Your College is in Trouble

Key Indications Your College is in Trouble

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Earlier this month SayCampusLife reported that a small college in New Hampshire suddenly canceled classes just before the start of the current academic year. Without warning, hundreds of students were left without an academic home, forced to scramble for a new college when Lebanon College suddenly shut its doors.

Lebanon College is only one of dozens of colleges that have closed in the past five years or have merged with a larger institution. Over reliance on tuition, high defaults on student loans, a crumbling infrastructure and falling enrollment are just some of the reasons why a college may close.

If you have sufficient warning, you can transfer before you are forced to make that decision. The warning signs are not always apparent, although if you keep your ears open and you look at the larger picture, certain indicators may be apparent.

Accreditation Troubles

One sure sign that your school is having problems is when the regional accrediting agency cites it for an infraction. Paine College, a private historically black college in Augusta, Georgia, was put under probation by the Southern Association of Colleges and Schools Commission on Colleges (SACSCOS) in June. SACSCOS said that the college failed to resolve ongoing financial and governance issues, leading to the resignation of Dr. George C. Bradley, president of the college, this month.

Accreditation troubles often precede a college shut down. However, if the school successfully addresses the problem and probation is lifted, then its shut down may be averted. On the other hand, probation may be the sign students should begin to carefully examine their transfer options.

Small Endowment

Few colleges and universities have billion-dollar endowments, what could more than cover student tuitions, faculty salaries and pending building projects if those funds were raided. Harvard University’s $32 billion endowment, for instance, is larger than the gross domestic product (GDP) of Haiti as well as Honduras.

Struggling colleges have small endowments, typically no more than a few million dollars. Interest on endowment money may cover a number of expenses such as: student scholarships, fellowships, research and library support, lectures, special performances, maintenance or upgrades for classrooms, and the purchase of equipment. A small endowment may not be enough to keep the school functioning, let alone open.

Declining Enrollment

More students are enrolled in college today than ever before. Students also have far more education options as classes can be taken online and overseas study can also be pursued.

With strong competition, smaller colleges are struggling to attract and retain students. If the college is private, they’ll need to increase their student aid, further harming the bottom line. Weak aid package offers will send some students looking at colleges that meet their needs.

Declining enrollment may also lead to talk with your college merging with another school. Following Lebanon College’s shut down, another school — the New Hampshire Institute of Art — hinted that it may no longer remain independent reports the Nashua Telegraph. Yet another New Hampshire institution, Franklin & Pierce University, has also had its share of credit woes.

Credit Ratings Plunge

Just as you have your own credit report, colleges and universities are rated too. Indeed, Moody’s Investors Service and Standard & Poor’s Ratings Service have taken to task dozens of institutions, including Alabama A&M, Tulane University and Regent University according to the New York Times and other reports.

If you suspect financial trouble at your school, looking into its money matters could save you a lot of grief. One-third of all colleges and universities in the United States are struggling, with financial statements that are currently weaker than before the recession started. The Times noted that just 500 of the 4,000 or more institutions in the US are considered financially safe.

Looking Ahead

Parents have a vested interest in where their adult children attend college and should uncover the financial position of these institutions before one is selected. Although it isn’t likely that a family would lose money on their investment, the upset of having to switch schools when a transfer was not planned can cause much grief.

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Categories: Campus News