Why Are Colleges Closing — and What If Yours Does?

Elin JohnsonMark J. Drozdowski, Ed.D.
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Updated on February 14, 2025
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Learn about the causes of college closures, whether your own school is at risk of shutting down, and what you can do if it closes permanently.
  • Over 73 colleges have closed or merged in the past five years. Financial stress due to the COVID-19 pandemic drove some college closures.
  • There are some signs a college might close, such as budget cuts and low enrollment.
  • If your college closes, know your options, such as transferring to another school.

The higher education landscape across the country has been tumultuous recently, with many schools making headlines for all but disappearing. Since March 2020, over 73 colleges and universities have closed or merged.

The pandemic exacerbated financial problems at schools by shrinking enrollments, limiting room and board revenue, and restricting full-pay international students. But some schools are more likely than others to close.

Small, private and for-profit schools are particularly vulnerable. One study showed that from 2014 to 2019, 88% of the schools that closed operated as for-profit institutions, and while just 1 in 10 students were enrolled at a for-profit institution, these institutions accounted for nearly 85% of students affected by colleges closing.

The telltale signs that a college or university might be at risk include lacking a national reputation, relying heavily on tuition income for its budget, having a small endowment and high debt, and lacking online programs to produce revenue.

What if the worst-case scenario materializes and your school announces it’s closing? Consider the following tips.

How to Tell Whether Your College Is at Risk of Closing

You can explore the following tools to research the financial health of a college:

To determine financial viability or instability, here’s what experts say to look for:

  • check-circleEnrollment Trends: Has the college consistently achieved its enrollment goals, or have student numbers declined recently? Colleges need a critical mass of students to survive.
  • check-circleTuition Discounting: If a school already struggling with finances or enrollment starts offering tuition discounts, it may be a play for publicity and boosting enrollment numbers. This differs from financially safe, more elite schools offering free tuition to low-income or first-generation students.
  • check-circleEndowment Size: Endowments fuel all aspects of the college experience, including financial aid. Schools with larger endowments — particularly those with high endowment-per-student ratios — tend to be more financially stable.
  • check-circleState Funding Patterns: If the college is public, look for trends in that state’s funding for higher education. Continued cuts in state support can affect facilities, student aid, faculty quality, and student services.
  • check-circleNew Programs: Rolling out new programs — online or on campus — is typically a good sign.

4 Steps to Take If Your College Closes

If your school announces it’s closing, take these steps.

user Evaluate Your Options

Pay attention to the resources your school offers and its communications. Your school might offer a teach-out agreement, which means you can finish your program at another college or university. You can accept or deny this agreement. If you choose the teach-out option, your credits will likely all transfer to the new program automatically.

You can also transfer elsewhere. Before you begin the transfer process, ensure your new institution offers your academic program or something similar. The new school might not accept all your earned credits, which could mean you lose ground toward completing your degree. You can also consider completing an online program.

Whatever option you choose, be sure to contact the admissions office at the school you are considering to explain your situation and learn the next steps.

office-building Determine Whether You Can Discharge Your Loans

You might be eligible for a federal closed school loan discharge, depending on how your school closed down. This means you won’t have to repay your loan. You may qualify for a loan discharge if your school shuts down entirely while enrolled or offers a teach-out option.

However, if your school merges or is purchased by another institution, you likely won’t be able to discharge your loans. Similarly, if you transfer elsewhere, you can’t discharge your loans. Review your options carefully, and contact your financial aid office for more information.

document Get Copies of Your Documents

You should document your academic progress for other schools and future employers. Some institutions will establish a document repository at another institution, while others will use a transcript service. Order several copies to have on hand, and save a digital copy just in case.

You’ll also want to keep your school’s academic catalog and copies of the syllabi from all the classes you took for future reference. These documents will be important if you encounter any problems transferring to another institution.

If there are any other important documents, you’ll want to get copies, as it’ll be harder to get them after the school closes. Additionally, be sure to exchange contact information with professors and other students to use in your professional network.

user If You’re an Alumni

If your alma mater closes, this doesn’t mean your degree loses value or isn’t valid. You still earned the education and degree you received. If your school has merged with another, it could introduce new opportunities for continued learning and provide a new alumni network to connect with. When one door closes, many more could open.


Feature Image: Bloomberg / Contributor / Getty Images