The Possible Future for Small, Tuition-Dependent Colleges

Last month, I wrote about a new book, The College Stress Test, authored by my former professor and dissertation chair Dr. Robert Zemsky, Susan Shaman, and Susan Campbell Baldridge. Using data from the Department of Education institutional reports, the authors constructed a stress test that indicated only 10% of educational institutions face substantial market risk but that another 30% will struggle until they find a way to reduce student costs, change curriculum, and experiment with new modes of instruction.

In today’s online issue of The Chronicle of Higher Education, David Wescott interviews Professor Zemsky and asks whether his outlook has changed based on the coronavirus pandemic outlook (note: the article is currently only accessible to subscribers). Dr. Zemsky responds by stating that everything is up in the air.

The admissions process has been disrupted. Accepted applicants are not going to be invited to campus for an event that will sell them on attending. Colleges will not know what to do with their wait list. The normal process is nonexistent and confusion abounds.

Professor Zemsky goes on to say that his research indicated that 10% of colleges and universities were in real trouble before, but that the scale will slide a bit due to the pandemic. Institutions need to monitor their cash flow and in the short term, it’s likely that 20% are in real trouble now. If the crisis continues through the fall, the bottom 20% may never come back.

Mr. Wescott refers to the recent downgrade of the college sector by Moody’s and asks Dr. Zemsky if there are other cues that he is looking for. Dr. Zemsky replied that the key flag will be whether or not campuses are able to reopen for September, how many freshmen show up, and how many upper-class students return.

Based on his research, college completions are not the signal to financial stress but freshman to sophomore retention is crucial. If freshmen are leaving college early, that is a red flag.

Asked about advice he would provide to college presidents, Professor Zemsky replies that:

  • Presidents will need to develop strategies for frank talk that doesn’t cause panic.
  • Ask yourself if this is the moment to rationalize the budget and institutions with a lot of adjunct faculty can do that more easily.
  • This might be the moment to talk about a three-year, 90-credit college degree.

Lastly, when Dr. Zemsky was asked if he thought this was a dislodging event that could change most institutions of higher education simultaneously, Dr. Zemsky said, “The deeper the panic, the less likely that this will be a dislodging event. Institutions in panic make dumb decisions. If it’s just 15 days, it isn’t going to do much dislodging.”

I’ve been privileged to have known Bob Zemsky for many years and was his doctoral student at Penn. His observations about the higher ed sector are usually fairly astute.

All of us will likely watch to see how much money Congress and the states provide to coronavirus-impacted colleges and universities. It remains to be seen whether or not those funds stabilize the situation; if this pandemic continues, up to 20% of at-risk institutions might close their doors in the next year or two.

Subjects of Interest


Higher Education

Independent Schools


Student Persistence