Sweet Briar College, a well-regarded, 114-year-old school in Virginia, is shutting down for good due to financial pressures—including a persistent enrollment decline. The women’s liberal arts college made the decision that some are calling brave, others premature:
Small colleges close or merge from time to time, more frequently since the economic downturn started in 2008. But the move is unusual in that Sweet Briar still has a meaningful endowment, regional accreditation and some well-respected programs. But college officials said that the trend lines were too unfavorable, and that efforts to consider different strategies didn’t yield any viable options. […]The news stunned many in higher education, who assumed that a college like Sweet Briar wouldn’t go under. And the announcement set off debates on whether the Sweet Briar board was courageous — or too quick to give up. Some experts predicted that the demise of Sweet Briar might prompt other boards to take a tougher assessment of their institutions’ own vulnerabilities.
As Inside Higher Ed points out, a lot of small colleges are running into trouble, and many of them are restructuring their programs entirely in order to stay viable. In the current financial climate, that’s not a surprise. Fewer students are willing to take chances on small schools in bucolic but out-of-the-way locations, especially if they come with a high price tag.Looking at the financial figures that Sweet Briar provided, one can see why its operations aren’t sustainable. Private colleges often put a sticker price on tuition that many, if not most, students don’t actually pay. (For Sweet Briar, that’s more than $47,000.) The college’s discount rate for all students in 2013 was an eyebrow-raising 57 percent, up from 40.8 percent in 2009. Meanwhile, its enrollment has been falling off. Yet, as the logic goes, were it not for private colleges’ discount rates, fewer students would be able to attend at all, depriving the schools of even their more limited payments.This “high tuition, high discount” strategy is common for private schools around the country, and the same problems apply. According to a report from last June, colleges are discounting their rates like never before, earning only 54 cents for every dollar of tuition charged. The National Association of College and University Business Officers records the average discount rate for private colleges as 36.1 percent in 2009 and 40.9 in 2013. Sweet Briar’s rate, clearly, was on the high side all along.It’s no surprise that this strategy of charging high tuition and then slashing it selectively (whether for merit- or need-based aid) doesn’t always work. Whatever array of prices you charge, you still need enough customers to keep the doors open. We’d be shocked if Sweet Briar is the last school to pack in the show.