Higher Education

The other victims when colleges decline or close: their hometowns

Growing financial woes in higher education threaten surrounding economies

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Goddard College in Plainfield, Vermont, which has been placed on probation by its accreditor, is a big customer for Justin Cote, co-owner of Flywheel Farm.

Goddard College in Plainfield, Vermont, which has been placed on probation by its accreditor, is a big customer for Justin Cote, co-owner of Flywheel Farm.

PLAINFIELD, Vermont — When Justin Cote and his partner started a vegetable farm six years ago, they landed an important and presumably reliable early client: Nearby Goddard College said it would buy all the Chinese cabbage they could grow.

Goddard remains a significant customer for the two-acre Flywheel Farm in Woodbury. But there has been high turnover in the kitchen at the college, which was put on probation by accreditors in the fall because of financial challenges.

“It always feels like it could just evaporate at any instant,” Cote said, softly snapping his fingers.

The financial problems or wholesale shutdowns affecting an escalating number of colleges and universities are affecting not only students, faculty and staff but also local economies — often in rural places where they are among the most important employers and consumers. Vermont, for instance, has the greatest number of higher education institutions per capita of any state, according to the Vermont Higher Education Council.

“It’s going to be a rebalancing of economic prosperity,” Gallup senior economist Jonathan Rothwell said, noting the trend of colleges closing and the resulting effects on their communities could parallel the impact the declining manufacturing sector has had on some areas.

“Places that are heavily dependent on small private colleges, or even large private colleges, could face substantial pressure and decline,” said Rothwell.

Higher education in the United States is a $364 billion-a-year industry, according to the U.S. Department of Education, with nearly 4 million employees. The sector further contributes in rural areas by not just bolstering the local job market and spending money, but by attracting people to settle in places they likely would not otherwise go, Rothwell said.

Related: Rural colleges aren’t supplying the workers rural businesses and agriculture need

But many private colleges are under financial pressure as expenses rise and overall enrollments decline amid shifting demographics, rising tuition and changing student tastes. At least 22 private, nonprofit four-year institutions have closed since 2013, and 16 have merged, according to the National Association of Independent Colleges and Universities.

The bond-rating agency Moody’s says the closure rate of two- and four-year private, nonprofit institutions reached 11 per year between 2015 and 2017. Moody’s projects the number of closures will continue to rise. Private colleges are most at risk, analyst Dennis Gephardt said — “not just the small, but the tiny.”

 

So far this year alone, another Vermont institution, Green Mountain College, announced that it will close. Hampshire College in rural central Massachusetts is looking for a merger partner. The University of Providence in Great Falls, Montana — which was also placed on probation by its accreditor, though that warning has been lifted — is planning to cut 12 majors, six minors, a graduate program and several sports teams.

Mount Ida College in Newton, Massachusetts closed last year, leaving 280 faculty and staff and 77 contract employees without jobs. Newbury College in Brookline, Massachusetts will cease operations at the end of this semester after it, too, was placed on probation by accreditors because of financial problems.

Related: Some colleges start using their long winter breaks to help students plan for jobs

The admissions building at Goddard College, which has been placed on probation by its accreditor.

The admissions building at Goddard College, which has been placed on probation by its accreditor.

Goddard shut down its traditional residential program in 2002, also amid financial difficulties, and enrollment in its remaining on-campus programs has declined from 804 in 2010 to 409 this year, the college says. The school was put on probation by its accrediting agency in the fall because of concerns over its financial resources, organization and governance; if it were to lose its accreditation, students would no longer be able to use federal financial aid there.

Related: 10 years later, goal of getting more Americans through college is way behind schedule

Even now, however, the college remains an important local business, with 60 employees on its Plainfield campus, according to a spokesperson. That makes it one of the largest employers in the town, whose population is less than 1,300. Though it pays only a small amount in property taxes — like other nonprofit colleges that can’t be taxed — it contributes in other ways, such as by paying one-fifth of the municipal wastewater bill.

Other expenditures directly support nearby businesses. The college buys $100,000 a year worth of food, according to its executive chef, Jon Hilyard; much of that, he said, he tries to find locally.

Ben Koenig, owner and operator of the Country Bookshop near Goddard College in Plainfield, Vermont. “I would hate to see them close, and it would have an effect,” says Koenig.

Ben Koenig, owner and operator of the Country Bookshop near Goddard College in Plainfield, Vermont. “I would hate to see them close, and it would have an effect,” says Koenig.

The Country Bookshop, one of a handful of businesses in Plainfield, sees more foot traffic when Goddard students are on campus, said Ben Koenig, owner of the store, whose immense collection is crammed floor-to-ceiling into the labyrinthine ground floor of an old clapboard house.

A Goddard alumnus himself, Koenig doesn’t track the portion of his sales directly linked to the college, but said the school’s presence helps his business.

“I would hate to see them close, and it would have an effect,” said Koenig.

Diana Batzel sees the benefits of the school, too. Co-owner of the Marshfield Inn & Motel, a few miles up the road from Goddard, she said the loss of the college would be a hit, and one that would send ripples into the economy. For example, fewer guests would mean the inn buys fewer ingredients from local farms for its breakfasts, such as eggs and maple syrup.

Related: Some colleges extend scholarships and other help to rural high school grads

“It kind of has a web out to a lot of other little things that you wouldn’t even think about,” Batzel said.

Immediately after Green Mountain announced that it would close at the end of the academic year, the chair of the local select board in Poultney, Jeff King, wondered what the impact would be to area businesses and college staff who own homes in town. He said he expects it will take time to understand the implications.

It’s “a big blow,” King said. “But we’ll just have to get over that hump.”

In Springfield, Kentucky, St. Catharine College closed in 2016, taking with it between 500 and 600 students and 118 full-time jobs. A large portion of town’s population was “suddenly gone,” according to Daniel Carney, executive director of the Springfield-Washington County Economic Development Authority.

“You’re talking about a trickle-down effect to all kinds of small businesses, to restaurants, to housing,” he said.

Rental housing took a particular hit from the closure, Carney said. Another blow was to the workforce. The small-town college was a local pipeline for health care and education professionals, who can be difficult to recruit in rural areas, he said.

St. Joseph’s College, which closed in 2017, brought nearly 1,000 students annually to the small city of Rensselaer, Indiana, which has fewer than 6,000 residents. The closing cost the community somewhere between 180 and 200 jobs, said Mayor Stephen Wood. It also took an immediate toll on the revenues of city-owned utilities, Wood said.

Private, nonprofit colleges in smaller communities especially are often major employers, and can drive economic activity by bringing in students who shop and eat locally, said Hal Hartley, senior vice president of the Council of Independent Colleges.

“For a small college in a small community, that can really make a big difference,” Hartley said.

The town hall and opera house in Plainfield Vermont, one of whose largest businesses is Goddard College. The college has been placed on probation by its accreditor.

The town hall and opera house in Plainfield Vermont, one of whose largest businesses is Goddard College. The college has been placed on probation by its accreditor.

Where colleges don’t survive, communities are left with job losses, empty campuses, and questions about long-term economic prospects.

In Vermont, many locals said they were unfazed by Goddard’s recent problems, confident that the small college will rally, as it has done in the past.

Goddard President Bernard Bull, who took the job after the school had been put on probation, is optimistic it can stay in business by maintaining the enrollment needed to meet tuition revenue targets. He said he also hopes to increase Goddard’s endowment, which he said would provide stability.

“There would be far less concern about financial ups and downs,” Bull said.

But some, like Cote, the farmer, still are worried.

“It’s like something going extinct,” Cote said. “You wouldn’t want to just sit there and have something like this just vanish, because you could never rebuild it.”

This story about college closings was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for our higher education newsletter.

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