The Culling of Higher Ed Begins

The number of colleges and universities eligible to award federal financial aid dropped by 5.6 percent in 2016-17. The vast majority of disappearing institutions were for-profit colleges, but more than 30 private nonprofits were among them.

July 19, 2017
(Wikimedia Commons)

It has become trendy to predict that higher education is on the verge of a major collapse, what with enrollments falling as loan debt and rising tuition cause students and families to ask harder questions about the value of a college credential.

The most extreme predictions envision hundreds and even thousands of colleges and universities closing over a decade or so. But more even-keeled analysts also have foreseen increases in the number of failing institutions: Moody’s Investors Service in 2015, for instance, said closures and mergers of small institutions would triple and double, respectively, in the coming years.

New federal data suggest the increasing financial pressures may be starting to take a toll on institutions. An annual report from the Education Department’s National Center for Education Statistics shows that the number of colleges and universities eligible to award federal financial aid to their students fell by 5.6 percent from 2015-16 to 2016-17. That’s the fourth straight decline since a peak of 7,416 institutions in 2012-13. It is also by far the largest (the others were 0.3, 1.2 and 2.0 percent, in order).

Graph: The Number of Aid-Eligible Colleges, 2009 to 2017. Starts with 6,896 in 2009-10 academic year, rises to 7,416 in 2012-13, and drops to 6,760 in 2016-17.

There’s a giant asterisk on the data for those predicting the decline and fall of traditional higher education: as in the past, the vast majority of the vanishing institutions are for-profit colleges. Some of that sector’s problems are shared with nonprofit institutions (declines in the number of traditional college-age students, concerns about debt and price), but for-profit institutions also have encountered aggressive regulation from the federal government and self-inflicted wounds from misbehavior and poor performance.

That combination of factors contributed to a one-year drop of 11.2 percent (from 3,265 to 2,899) in the number of Title IV-eligible for-profit institutions, according to the federal data, and a sharp decline of 17.8 percent since the 2012-13 academic year. (Note: The latter percentage has been lowered because of an error in the table below.)

While for-profit colleges’ woes may be driving the numbers, public and private nonprofit colleges have not been immune.

The number of public colleges edged down to 1,985 in 2016-17, from 1,990 in 2015-16 and 2,009 in 2012-13.

These are likely to include the several institutions in Georgia that were part of mergers.

The number of private nonprofit institutions, meanwhile, fell by 33, or 1.7 percent, from 2015-16 to 2016-17, from 1,909 to 1,876. But the 2015-16 number had risen by almost that amount the year before, so it’s not entirely clear how significant that drop is, or how representative it is of what is to come.

Academic Year All Institutions Public Private Nonprofit For-Profit
2009-10 6,896 2,015 1,865 3,016
2010-11 7,178 2,043 1,869 3,266
2011-12 7,234 n/a n/a n/a
2012-13 7,416 2,009 1,880 3,527
2013-14 7,397 2,008 1,892 3,497
2014-15 7,310 1,991 1,883 3,436
2015-16 7,164 1,990 1,909 3,265
2016-17 6,760 1,985 1,876 2,899
Data for 2011-12 not available from National Center for Education Statistics

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Doug Lederman

Doug Lederman is editor and co-founder of Inside Higher Ed. He helps lead the news organization's editorial operations, overseeing news content, opinion pieces, career advice, blogs and other features. Doug speaks widely about higher education, including on C-Span and National Public Radio and at meetings and on campuses around the country, and his work has appeared in The New York Times and USA Today, among other publications. Doug was managing editor of The Chronicle of Higher Education from 1999 to 2003. Before that, Doug had worked at The Chronicle since 1986 in a variety of roles, first as an athletics reporter and editor. He has won three National Awards for Education Reporting from the Education Writers Association, including one in 2009 for a series of Inside Higher Ed articles he co-wrote on college rankings. He began his career as a news clerk at The New York Times. He grew up in Shaker Heights, Ohio, and graduated in 1984 from Princeton University. Doug lives with his wife, Kate Scharff, in Bethesda, Md.

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