Why are so many colleges merging and failing? Multiple factors are contributing to the struggle, including the short-term crisis created by the COVID-19 pandemic. The U.S. government invested almost $80 billion to help colleges stay afloat but the financial crisis for U.S. colleges and universities continues.
Since the start of the pandemic, the undergraduate enrollment rate also dropped by almost 10%–that’s nearly 1.4 million students! Less students are heading straight to college after graduating high school, and that could be partly attributed to the shifting view of the importance of a college degree. In fact, more than 10% of Americans employed in low-wage, hourly positions moved to highly-skilled tech jobs between 2020 and 2022. Furthermore, the Great Resignation had a significant impact on college staffing as universities were forced to let go of employees during pandemic shutdowns.
Although getting a merger approved is a rigorous process, institutions can gain various benefits from the type of merger they choose. For instance, local mergers with nearby institutions can bring in economies of scale while helping urban universities spread their program offerings. On the other hand, online mergers can allow universities to expand their online offerings.
Data shows that public colleges and universities faced the highest enrollment declines in spring 2022. However, small private universities, non-profit schools, and Christian-affiliated schools also saw higher declines in enrollment, causing many of them to depend on mergers in order to continue existing. Even with the benefits mergers can provide to small colleges, the long-term effects of these mergers, such as the loss of identity, voice, and support for particular students, raise concerns.
Institutions across the U.S. are struggling to remain open, but mergers can help these schools continue with providing support and education to the students who need them most.