It's Past Time

The pandemic could cause permanent college closures, write Amy Laitinen, Clare McCann, David Tandberg and Dustin Weeden, and institutions should already be planning for the possibility.

August 25, 2020
 
 
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In the chaos of a pandemic, colleges are still planning ahead -- planning how they’ll return to campus or preparing to stay online for the fall semester, as well as perhaps prepping for a series of rolling closures throughout the year as pockets of COVID-19 outbreaks pop up near their institutions. But one thing it doesn’t appear many colleges are doing is planning for a worst-case scenario: permanent closure.

Even before the pandemic took hold, many colleges were operating on razor-thin margins, with the enrollment trends and demographics of many colleges working against them. Thousands of institutions delicately balance their budgets by maintaining a steady supply of students, heavily dependent on their tuition dollars. Over the last five years, a number of college campuses enrolling hundreds of thousands of students in the United States have shuttered completely -- sometimes without warning, so that students have been left with debt, no degree and nowhere to transfer their credits and finish their programs. And with the current turmoil throwing everything from deposit deadlines to fall enrollment to faculty health off-kilter, more of those college closures are, unfortunately, inevitable.

There is no such thing as a harm-free college closure, but they don’t have to be as harmful for students as the precipitous collapses of schools like ITT Tech and Mount Ida College. While colleges and regulators may not be able to stave off closures, they can act to minimize future harm. But that means they have to start planning now for permanent closures that will hopefully never come to pass.

Accrediting agencies and states can kick-start that process by watching for key warning signs. They should begin by requiring much more intensive monitoring of the finances of institutions that were already in financial straits well before the pandemic hit. Now’s the time to check in on colleges that had trouble retaining their students from year to year and may yet see many more of them not return this fall. For colleges that were financially stable in the past, up-to-date reporting on finances and expected enrollment can offer a window into those that are currently facing the biggest cash-flow challenges and forecast potential future problems.

Next, institutions should start contingency academic wind-down planning. Too often, accreditors have been far too late in requiring colleges to get agreements in place with other colleges that can finish their students’ educational programs if necessary. There’s no time to waste now: the highest-risk institutions should be working to establish those contracts immediately -- before the money runs out and the staff members who would normally negotiate those agreements are gone. Such agreements should also be shared with state regulators, who should then monitor their implementation when a college does shut down. With students making commitments for fall enrollment, colleges that aren’t going to survive through a single academic year need to make plans alongside their regulators now to protect those students.

These wind-downs will also require careful planning for the transfer and maintenance of students’ records. Transcripts will need to be available to students -- free of charge and as soon as possible for those who hope to transfer to another institution without interrupting their course of study. States have often stepped in to serve this role, as have the colleges that agree to complete teaching another institution’s students. If forced to close, colleges should also release financial holds for students, easing their path into another institution.

Perhaps most important, though, colleges need to give their students clear information about what is happening, and when. When students enroll in college, it’s often at an astronomical investment of time and money, usually financed with student loan debt they’ll repay into the future. No institution wants to close, or admit to itself or others that it might have to close. But when a college knows it is at risk of closure, it should communicate with students -- to share information about high-risk changes to its structure, to publicize transfer agreements and teach-out arrangements, and to commit to its students that it will ensure that those transfer agreements prioritize their needs and will be offered through quality institutions not suffering under the same financial disaster. The college should also work with states, accreditors and the U.S. Department of Education to ensure that all communications are accurate, fair and well designed to help students plan their next steps.

Included in those communications should be actionable information on how students can get a discharge of their loans if the institution closes. Over half of students whose colleges close before they can complete their program neither transfer credits nor apply for a discharge of their loans -- leaving them stuck with debt for a degree they never had the chance to earn. The Education Department can -- and should -- automatically discharge those borrowers’ debts when they don’t re-enroll to finish their programs. But in the meantime, colleges should provide clear information about borrowers’ options and share the brief form for discharges with students directly.

When we began working on these recommendations last year with a motley crew representing an accrediting agency, state authorizers, public and private institutions, and students, we thought the issue was timely. But the realities forced on us all by a pandemic have magnified the importance of smart -- and early -- planning for permanent college closures. Careful planning doesn’t happen on its own, which is how tens of thousands of students have wound up bearing the burden of college closures over the last several years. Smart, intentional planning for worst-case scenarios, though, can spare students such devastating experiences -- and students must be the first priority of colleges and regulators alike, even and especially now.

Bio

Amy Laitinen is director and Clare McCann is deputy director for federal policy for New America’s higher education program. David Tandberg is vice president for policy research and strategic initiatives and Dustin Weeden is senior policy analyst for the State Higher Education Executive Officers Association. They co-authored Anticipating and Managing Precipitous College Closures along with Jared Colston, Gregory Fowler and Jamienne Studley.

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