Presentation College, a private Catholic institution in South Dakota, recently announced its imminent closure, becoming the latest casualty in a higher education sector struggling with declining enrollment and increasing costs.
In a statement released on Tuesday, campus officials stated that the college had conducted a thorough evaluation of the sustainability of its academic programs and explored various alternatives before making the difficult decision to close. As a result, Presentation College will no longer accept new students and will gradually wind down its operations after the summer semester.
Sister Mary Thomas, the president of the Presentation Sisters Corporate Board, expressed her understanding of the heartbreak felt by students, faculty, staff, alumni, and the local Aberdeen community. She assured them that the college would work closely with them to support their success during this challenging transition.
Presentation College joins a growing list of institutions that have announced closures in recent months, including Cazenovia College, Holy Names University, and Living Arts College. Cazenovia College, unable to sustain enrollment numbers, missed a bond payment and subsequently closed. Holy Names University cited rising operational costs and the impact of the coronavirus pandemic in its closure announcement. Living Arts College, a for-profit institution, shut down after its accrediting council was disbanded, with the blame placed on the federal government.
While many closed colleges have cited the pandemic as a contributing factor, experts point out that federal relief funding has helped buoy struggling institutions. With the flow of federal funds now halted, higher education observers anticipate that more embattled colleges may succumb to closure—many of which were already on the brink prior to the pandemic.
In an increasingly divided higher education landscape, nonselective private nonprofit institutions and underfunded regional public universities are expected to face particularly challenging times ahead.
The Future of Presentation College
Situated in the small town of Aberdeen, South Dakota, Presentation College has been a prominent institution since its establishment in 1951. Named after its sponsors, the Sisters of the Presentation of the Blessed Virgin Mary, the college has been an integral part of the community for over half a century.
According to recent federal data, Presentation College enrolled a total of 577 students in the fall of 2021. A decade earlier, in 2011, the student count stood at 718. Officials at the college had been assessing its financial health and developing plans to increase enrollment when the pandemic struck, ultimately leading to its closure.
The college acknowledged that the impact of COVID-19 exacerbated its existing challenges. Despite exploring numerous partnership possibilities, Presentation College was unable to find a viable solution to continue its operations fully. However, a partnership with St. Ambrose University in Iowa will enable the Nano Nagle Online School of Nursing, the college’s online nursing program, to continue. Additionally, teach-out agreements have been made with the University of Mary in North Dakota and Olivet College in Michigan to support Presentation students in completing their degrees. Other teach-out agreements may be established in the future.
It is important to note that the Presentation Sisters organization owns the college campus.
Challenges Ahead for the Higher Education Sector?
With ongoing enrollment challenges and the conclusion of federal COVID-19 relief funding, some experts predict that 2023 may witness the long-anticipated closure of vulnerable institutions that were temporarily sustained by government funds.
Rachel Burns, a senior policy analyst for the State Higher Education Executive Officers Association, explained that the timing and types of closures depend on how institutions allocated federal funds. The financial decisions made by colleges during this period will determine whether they are able to weather the storm or succumb to closure.
Burns also highlighted the negative outcomes experienced by students affected by college closures. A recent study conducted by the State Higher Education Executive Officers Association revealed that only 47% of students re-enroll after their college shuts down. Among those who do re-enroll, only about one-third successfully earn a degree. These figures underscore the challenges faced by students caught off guard by abrupt closures, without sufficient time to plan their educational future or secure a place in a teach-out program.
Last year, EY-Parthenon projected, based on 2020 IPEDS data, that 20% of four-year colleges in the United States faced operational risks. However, when 2021 IPEDS figures became available, an updated analysis by EY-Parthenon revealed that only 10% of colleges were deemed at risk. This seemingly positive shift is largely attributed to the impact of federal relief funds rather than a significant improvement in the financial outlook of struggling institutions.
Kasia Lundy, a principal at EY-Parthenon, cautions against viewing this temporary reprieve as a long-term solution. She emphasized that financial challenges persist and institutions, both large and small, are confronting their long-term viability by considering comprehensive changes in revenue generation and cost management.
While some colleges have opted for closures, others have pursued merger partnerships to ensure their survival. Struggling institutions, such as Bloomfield College in New Jersey, have openly sought merger opportunities. Bloomfield’s efforts paid off with a merger agreement currently underway with Montclair State University. Similarly, St. Joseph’s University recently announced a merger with Pennsylvania College for Health Sciences, marking the second merger for St. Joseph’s in less than a year after absorbing the University of the Sciences.
As higher education leaders grapple with difficult decisions, their choices are influenced by the serious challenges facing the sector. The end of federal relief funds, combined with rising costs, declining enrollment, and volatile financial markets, has put pressure on colleges’ operating budgets and endowments. According to Fitch Ratings, the outlook for the sector is deteriorating, reflecting the strain imposed by these factors. On the other hand, S&P Global Ratings’ analysis characterizes the 2023 outlook for the U.S. nonprofit higher education sector as mixed. The report projects increasing difficulties for less selective regional institutions due to competition, higher expenses, and margin pressure, which could ultimately weaken their credit quality.
Jessica Wood, a credit analyst at S&P Global Ratings, pointed out that higher education benefited from federal emergency relief funds, but as these funds have been depleted, many schools will face significant operational challenges. Enrollment recovery has been uneven across the sector, and institutions must also contend with inflationary expense growth. While tuition hikes may help generate additional revenue, they are unlikely to fully offset expense growth.