The College Merger Explosion

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The College Merger Explosion

Between 2018 and 2022, 95 college mergers took place, 21% more than the previous 18-year period. This infographic, which is a follow up to our earlier graphic about colleges going out of business, explores why colleges are merging and why so many colleges are failing in the current environment.


Why Are Colleges Failing?

Financial Strain

  • In 2020, the COVID-19 pandemic closed colleges and created a short-term crisis
  • The US government invested $76 billion to help colleges survive
  • But the financial crisis for US colleges and universities continues
  • In the near future, as many as 500 4-year colleges and universities are at risk of closure

Shrinking Enrollment

  • Since the start of the pandemic, undergraduate enrollment dropped by 9.4%* —
  • That’s nearly 1.4 million students
  • The drop in enrollment continues to grow, despite pandemic effects ebbing
  • Immediate college enrollment for high school graduates fell
  • 2-year colleges: 16% decline
  • 4-year college: 6% decline
  • Up to 40% of prospective students are delaying college plans due to financial strain or preference for in-person instruction

Shifting Sentiment

  • Fewer US adults consider a college degree “very important”
  • 2013: 70%
  • 2019: 51%
  • The value of a college degree is falling
  • After 10 years in the workforce, more than half of students who graduated from a third of US colleges earn less than high school graduates
  • From 2020 to 2022, more than 10% of Americans employed in low-wage, hourly positions shifted to highly-skilled tech jobs
  • Most made the transition without a college degree
  • Instead, many relied on affordable, highly-specific online certification

Hiring Woes

  • The Great Resignation impacted college staffing as universities were forced to furlough employees amid pandemic shutdowns
  • Many found new positions or took early retirement offers
  • More than half (56%) of US colleges and universities are concerned about their ability to adequately serve students with current staffing levels
  • Chronic understaffing puts institutions at risk of noncompliance with federal and state rules and reducing student access to services

While many colleges close altogether, others opt to merge with other institutions to preserve
their legacy and continue serving students

How College Mergers Work


The Process

  • Proposed mergers must be approved by
  • Each institution’s board of trustees
  • The college’s accrediting bodies must approve the merger plan
  • Other stakeholders have a strong influence
  • Formal and informal business partnerships create a valuable resource for colleges (collaborations, networking, and research)
  • Faculty support isn’t required, but high turnover could erase much of the financial benefit from a merger
  • 79% of higher education funding comes from private sources — including alumni and others
  • After Northeastern and Mills College announced merger plans, Mills College alumnae filed a lawsuit to stop it

Types Of Mergers

While mergers are nearly always prompted by financial strain, institutions can gain different benefits from different types of mergers

Local:

  • Mergers with nearby institutions bring economies of scale and help urban universities expand their campuses and program offerings
  • In 2022, Philadelphia’s Saint Joseph’s University acquired the University of the Science, located just across town

Cross-country:

  • Universities looking to expand their campuses to new regions acquire struggling colleges across the country
  • In 2021, Boston’s Northeastern University acquire Mills College, a historic women’s college near Oakland, CA

International:

  • Universities establishing joint-ventures with foreign universities abroad to serve international students and expand study abroad opportunities
  • In 2012, NYU Shanghai became the first Sino-US research university, formed by parent schools New York University and East China Normal University

Online:

  • Universities looking to expand their online offerings may acquire smaller online institutions to quickly establish online programs
  • In 2018, Purdue University took over Kaplan University in order to expand its online offerings

Consolidation:

  • Restructuring of public colleges and universities can help streamline operations and reduce competition for students
  • 2-year colleges: In 2022, Connecticut’s community colleges plan to merge into a single college with a dozen campuses
  • 4-year colleges: In 2022, 6 of Pennsylvania’s institutions will merge into 2 new universities

Dual mission:

  • In 2018, the University of Wisconsin system restructured its 2-year colleges to better serve students planning to eventually transfer to one of its universities
  • In 2021, Delaware State University announced plans to acquire neighboring Wesley College, the first time ever that a historically black college has taken over another institution

The Future Of College Mergers

Which Schools Are Most At-Risk?

  • In Spring 2022, public colleges and universities faced the highest enrollment declines
  • Community colleges: 7.8% decline
  • Public, 4-year: 5% decline
  • Overall: 4.7%
  • Smaller, less prestigious private schools are seeing higher than average declines in enrollment
  • 40% of mergers were private and non-profits schools
  • Most deals involve same-state schools with less than 5,000 students
  • From 2016 to 2021, about 43% of closing or merging institutions were Christian-affiliated schools

Long-Term Effects

Mergers can save small colleges from permanent closure, but many still have concerns

Loss of identity: Smaller schools are at greater risk of closure, but many also offer a unique student experience not found anywhere else

Loss of voice: Many worry merging into larger universities will take away the voices of students and faculty leaders

Loss of support: Minority students struggle to find their place in larger universities and equity is easily overlooked when planning a merger

Increased costs: College mergers and acquisitions lead to an average tuition and fee increase of between 5 and 7%

People You Should Know in Higher Education

According to the Influence Ranking Engine at AcademicInfluence.com here are some of the most influential people in Higher Education:

Dr. Shaun R. Harper– Expert on diversity, equity, and inclusion in business and education

Miguel Cardona – 12th U.S. Secretary of Education, 9th U.S. Secretary of Education

Lauro Cavazos – Secretary of Education & First hispanic member of US Cabinet

Suniya S. Luthar, Ph.D. – Expert in child development and fostering resilience among children, families, and adults in high-achieving, high-pressured communities

Colleges must adapt to the times. Being leaner and meaner may mean it’s time for a college
merger. Is your college next?


Sources:

college mergers