Why are colleges closing and what can we do?

The recent closure of Mt. Ida College in Newton, Mass., and the purchase of its assets (debt) by the UMass Amherst has dominated the higher education attention of the Boston press. The size of the problem was highlighted when Carlos Santiago, commissioner of the Massachusetts Department of Higher Education, noted that “in the last five years, we’ve had 15 Mt. Idas,” and when the Boston Business Journal editorialized “Mass. must prepare for the next Mt. Ida.” Despite concerns over small, financially vulnerable, colleges in Massachusetts and across the U.S., it is possible that the bigger threat is to regional state universities—especially in New England.

A recent book by Nathan Grawe, economics professor at Carleton College in Northfield, Minnesota, introduces a sophisticated econometric model that traces the effects of declining demographics both regionally and across various types of colleges and universities. According to Grawe, you cannot simply extrapolate from general demographic trends to discern what enrollments will be at various institutions. When economic and sociological factors are taken into account, the effects of demographic trends are both moderated and exacerbated for various types of institutions.

Interestingly, New England contains both ends of the continuum. According to Grawe’s analysis, elite universities (think Harvard, MIT, and Wellesley) will actually experience increased demand in the upcoming years as more highly educated parents seek to send their children to more selective institutions. The brunt of the demographic decline will be experienced by regional state universities.…Read More