How to Keep Small Private Colleges from Failing

by Terri E. Givens and Gary Stocker

There are hundreds of small private colleges who are facing an existential crisis. Our CEO Terri Givens and Gary Stocker have been writing about this situation for years, and now the situation has become even more dire. Rather than give up on these small institutions, they believe the time has come to find ways to save them, through collaboration, consolidation and the creation of regional consortia (the three Cs).

In this article, Terri and Gary explain how.

“Higher education is not nimble. We are steeped in tradition, and we are not always able to move as quickly as we need to,” she says. “There needs to be a remake of higher education as a business model, in my opinion.”

Beverly Rodgers, President of MacMurray College
MacMurray is closing at the end of May.

We believe that the survival of these institutions is vital to the future of higher education. These institutions provide important opportunities for students from diverse backgrounds. In many cities and towns, they are providers of local jobs and education for workers who will need to go back to school to pursue new careers. We are entering a time where we need to be offering more opportunities for education, not less.

The intense pressure to discount tuition has resulted in decreased net revenue since 2013 for too many. Yet, many of these small to medium-sized private colleges have found it difficult to focus on the broader picture that is developing in higher education. They have yet to consider the benefits of scale. 

The best approach for financially challenged private colleges is to promptly start the development of alliances with 5-15 additional private colleges. After all, it is the cost component of the financial challenges that is most readily addressed by the scale available in larger organizations.

Our overall strategy is to get small private institutions in a city or region to work together and develop consortia that would allow them to share infrastructure and resources, while allowing them to maintain their individual identities as institutions, lowering costs, and reducing tuition.

In terms of tactics, this means sharing low-enrollment courses, including developing quality online programs, services, e.g., student success programs, career centers, etc. The initial focus will be on consolidating non-academic operations in human resources, marketing, admissions, finance, and IT. Strategic planning will have to shift to the level of the consortium — allowing for financial benchmarking, identifying waste and focusing in on cost reductions. 

Here are five key components to the model.

1. No college loses its identity. The college name remains. The mascot remains.  
2. Endowments stay with the individual colleges.
3. Leave athletics alone. In each of these colleges, a substantive part of the enrollment is from those who compete in one or more sports. The opportunity for them to continue with their college athletic careers is an absolute requirement of the model. Athletic leadership could be consolidated – even across multiple levels of NCAA participation.
4. Target at least 50% of all courses offered by the merged organization to stay online. Merge those common courses to enroll a minimum of 15-20 students per course. This will provide higher margins mostly with lower labor costs. For example, one of the potential by-products of the pandemic reaction is a realization that online course sections with low enrollment could be consolidated into larger sections across different colleges. Teaching an upper level accounting or biology course with 20 students from 5 different colleges is more financially feasible than 5 different college sections with 4 students each.
5. Revenue and costs to each college would be allocated based on financial, enrollment, and outcome ratios.

The proud option for these colleges is to stumble along until it is too late — and run the realistic risk of an abrupt closure announcement. The best option is to move forward with a new business model now, while time provides some semblance of opportunity to save their schools.

Leaders will need to keep faculty, students, staff, and their local communities in the loop as they develop these efforts. In particular, local authorities and businesses may be able to provide support as these institutions look for ways to best expand resources like transportation and connecting students with internships. 

The option to hang on until it is too late is not one that bears ethical consideration — too many lives and livelihoods are at risk.

Join us on May 20 for a special free webinar!

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A special message from the founders

Even before COVID-19 hit and sent the entire world into a pandemic, higher education was facing crises on multiple fronts. Skyrocketing tuition and student loan debt, declining enrollments, changing demographics, and rapidly evolving ed tech are only a few of the challenges that higher ed leaders have been struggling with the past few years.

Now, with the increased pressure from a sudden pivot to managing the emergency that the coronavirus brought — institutions scrambling to move courses online, concerns about student housing and safety, faculty and staff leave, essential workers and telework — we are all facing a truly unprecedented time in higher education, and indeed humanity.

The Center for Higher Education Leadership has pivoted with you, immediately setting up a Coronavirus Resource library and weekly webinars focusing on different issues, with a variety of experts. All of these resources are free and publicly available, and our membership portal and courses are 100% online — an important facet as our world increasingly becomes virtual.

Higher education is an essential part of our future. As our industry continues to deal with the long-term ramifications of the pandemic, including human and economic ones, for many institutions it will be a matter of simply staying alive. We ask you to please support our members and our mission, so that we can continue this work to bring quality, online professional development to higher education leaders. We are funded solely by membership and private giving, and we urge you to become a member or donate to our fund today, for the future of education.

Thank you,
Terri Givens and Shelley Seale, Co-founders of CHEL