More Colleges Will Shut Down As Enrollment Drops: Report

More U.S. colleges will be forced to close or merge due to shrinking enrollment numbers and the accompanying drop tuition revenue, according to a report by Fitch Ratings.

At least 48 colleges have closed or merged since 2016, according to Higher Ed Dive. And this year more colleges have closed or announced plans to do so in 2024

Manhattan's Alliance University and Buffalo, N.Y.'s Medaille University ceased operations on Aug. 31. Florida's Hodges University will close its doors by August 2024. And when St. Augustine College and Lewis University, both Roman Catholic institutions in Illinois, complete their merger in 2024, they will simply be Lewis University.

Each of those colleges had fewer than 3,000 students, according to the college rankings website Best Colleges. "Institutions without strong brands that are located in markets with the steepest drop in college-aged population are the most vulnerable to enrollment declines," wrote Emily Wadhwani, a senior director at Fitch Ratings, in the report.

"Meaningful and persistent declines in student fee revenue, usually the result of unexpected enrollment drops, are common precursors to consolidation or closure," she added. The median tuition dependence for Fitch's rated portfolio was 76% in fiscal year 2022.

In its report, the credit ratings agency said it expects to see further college closures and consolidations as tuition-dependent institutions compete for a shrinking pool of students.

Smaller colleges are most likely to be impacted by declining enrollment. Between 2015 and 2019, colleges with a student body of 6,000 to 9,999 students saw their enrollment drop by 1.8%, according to McKinsey. Enrollment at colleges with fewer than 3,000 students dropped 4.8%, during the same period.

"Institutions without strong brands that are located in markets with the steepest drop in college-aged population are the most vulnerable to enrollment declines," wrote Wadhwani.