More than a Quarter of Private Nonprofit Colleges Face Potential Closure as Enrollment Trends and Financial Pressures Mount

The idyllic landscape of Craftsbury Common, Vermont, currently serves as the backdrop for a poignant juxtaposition of new life and institutional conclusion. At Sterling College, a tiny but renowned institution situated on a 130-acre farm in the state’s isolated Northeast Kingdom, more than a dozen newborn lambs recently cavorted in a fenced yard. Under the watchful eyes of their mothers and a rotating shift of students, these births represent a rare moment of celebration. However, for the students tending to them, the joy is tempered by the reality that they are among the final cohorts to ever walk this campus. Sterling College, a pioneer in environmental stewardship and rural education, has officially announced it will cease operations at the conclusion of the current semester.

The impending closure of Sterling College is not an isolated incident but rather a harbinger of a massive structural shift in American higher education. According to a new and sobering estimate by the Huron Consulting Group, the crisis facing private, nonprofit four-year colleges has reached a critical threshold. The group’s analysis projects that 442 of the nation’s approximately 1,700 private, nonprofit institutions—representing a combined enrollment of 670,000 students—are at significant risk of closing or being forced into mergers within the next decade.

The Metrics of Institutional Instability

The forecast by Huron Consulting Group is the result of an exhaustive analysis of several key financial and operational health indicators. Analysts examined long-term enrollment trends, net tuition revenue, institutional assets, debt-to-income ratios, and liquid cash reserves. The findings suggest that more than 120 institutions are currently categorized as being at the "very highest risk," meaning their financial runways are dangerously short.

Peter Stokes, a managing director at Huron, notes that the fundamental issue is one of overcapacity. "We have too many seats. We have too many classrooms," Stokes observed. He describes the current period as a necessary but painful "shakeout" driven by the simple laws of supply and demand. After decades of expansion, the number of Americans pursuing traditional four-year degrees has entered a period of sustained decline, leaving many institutions with overhead costs they can no longer support.

Sterling College offers a rare, humanized glimpse into this trend. Unlike many institutions that have shuttered their doors abruptly—sometimes giving students only a few days’ notice—Sterling leadership opted for a transparent wind-down. By announcing the closure months in advance, the college allowed students a final semester to either complete their degrees or arrange for transfers. Despite this professional handling, the human impact remains profound.

The Human Cost of Educational Disruption

For senior LillyAnne Keeley, the remoteness of Sterling was its primary draw. Standing in the barn where she performs her lamb-checking duties, she reflected on the loss of choice for future students. "I just really worry about some students out there that are going to have less and less choices," Keeley said, gesturing toward the sunsets and mountain views she admits she once took for granted. She is among a group of seniors currently "cramming" credits to ensure they graduate before the college’s legal existence terminates in May.

The disruption is even more jarring for younger students like 20-year-old Izzy Johnson. For Johnson, the Sterling closure represents a recurring trauma; the college he originally intended to attend closed just one month before his high school graduation. After enrolling at Sterling as a freshman, he found himself facing the same situation within a year. "Having to pick up everything and find a new place to settle down is really miserable," Johnson said.

Data from the State Higher Education Executive Officers Association (SHEEO) underscores the severity of these disruptions. Their research indicates that fewer than half of students displaced by a college closure actually continue their education. Among those who do attempt to transfer, many lose a significant portion of their earned credits, and fewer than half of that group eventually earn a degree. This "attrition of ambition" represents a significant loss of human capital and a waste of the tuition dollars already invested by families.

A Chronology of Attrition in Vermont

Sterling College is the seventh private college in Vermont to close since 2016, following a path set by institutions such as Green Mountain College, Southern Vermont College, and Burlington College. The state’s demographic profile makes it an early casualty of the national trend. Vermont possesses the third-oldest population in the United States, and its pool of high school graduates has been shrinking for years.

Founded in 1958 as a boys’ preparatory school, Sterling transitioned into a "work college," one of only a handful in the country where students are required to participate in the daily operations of the campus—from farm labor to kitchen duties—to offset costs. At its peak, enrollment reached approximately 120 students. By the current academic year, that number had plummeted to 40.

Sterling President Scott Thomas explained that while the college had been breaking even in recent years, the margins were too thin to withstand future volatility. "Losing colleges like Sterling leaves craters in the small rural communities that they have been a part of for, in some instances, decades or a century," Thomas said.

Economic and Community Implications

The closure of a college in a rural town like Craftsbury Common, with its population of 1,300, is an economic earthquake. The loss extends beyond the immediate reduction in jobs and student spending at local general stores and cafes. Sterling served as a vital pipeline for a state desperate for young residents.

Liz Chadwick, a faculty member and alumna who moved from New Jersey to attend Sterling, noted that "Sterling kids stick around." Graduates often stay in the area to start businesses, particularly in sustainable agriculture. One such example is Paul Lisai, who founded Sweet Rowen Farmstead in nearby West Glover. His creamery, which produces milk, yogurt, and 17 types of cheese sold across New England, relies on the "like-minded people" the college attracted to the region. With Vermont’s unemployment rate sitting at a low 2.6 percent, local business owners like Lisai fear that the loss of the college will make it nearly impossible to find qualified labor.

The Convergence of Financial Pressures

The crisis in higher education is fueled by a "perfect storm" of converging factors. The most significant is the "demographic cliff"—a sharp decline in the U.S. birthrate that began during the Great Recession of 2008. This has resulted in 2.3 million fewer students in the system compared to 2010, with a further downward slide in the number of 18-year-olds projected through at least 2041.

Furthermore, the "college-going rate" is declining. In 2016, 70 percent of high school graduates enrolled in college; by 2023, that figure dropped to 61 percent. Other revenue streams are also drying up:

• International Enrollment: The number of visas issued for new international students dropped by 36 percent this year, a loss of nearly 100,000 full-tuition-paying students.
• Federal Loan Caps: Looming caps on federal loans for graduate study, set to take effect in July, are expected to further depress demand for advanced degrees.
• Operating Costs: Higher education consulting firm EAB reports that every major expense category—from labor to utilities—is under inflationary pressure simultaneously.

Financial Strain at Elite and Public Institutions

While small rural colleges are the most vulnerable, the financial contagion is spreading to larger, more prestigious institutions. Even universities with multi-billion-dollar endowments are initiating aggressive cost-cutting measures:

• University of Southern California (USC): Recently issued layoff notices to more than 900 employees.
• Stanford University: Cut at least 363 staff positions following budget shortfalls.
• Northwestern University: Eliminated 425 positions citing a "funding freeze."
• The New School: Announced plans to reduce its workforce by 20 percent.
• George Washington University: Recently sold its Virginia science and technology campus for $427 million to bolster its long-term financial health.

Public universities are not immune. The Fitch bond-rating agency has issued warnings regarding the "deepening financial problems" facing state schools. As states face pressure to fund Medicaid and other social services, higher education often becomes the primary target for budget cuts. Emily Wadhwani, a senior director at Fitch, noted that both state and federal funding pressures are reaching levels not seen in previous decades.

Analysis: The End of an Era?

The struggle of institutions like Sterling College highlights a growing skepticism toward the value of traditional higher education. For twenty-five years, tuition costs have risen 40 percent faster than inflation. Public sentiment has shifted, with a growing number of Americans questioning whether the return on investment justifies the debt.

This economic reality has been further complicated by political and culture-war attacks. On social media, news of Sterling’s closure was met with a mix of sadness and vitriol. Some commenters dismissed the institution’s "work college" model and environmental focus as "woke" ideology, suggesting the "free market" was simply correcting a mistake.

However, for the students in the dining hall at Craftsbury Common, the reality is far more nuanced. At a recent weekly community meeting, the discussion was not about politics, but about practical survival: warnings about bears emerging from hibernation and reminders to exchange contact information before the community scatters forever.

As the semester winds down, the mood remains surprisingly upbeat, a testament to the resilient spirit the college sought to instill. Students like Jack Beatson, who is transferring to a school in upstate New York, believe the "Sterling experience" will endure even after the buildings are sold. "Just feeling like you’re really part of something, and other people depend on you—that’s very important," Beatson said.

The "shakeout" predicted by analysts is far from over. As more than a quarter of the nation’s private colleges face a similar fate, the American educational landscape is being permanently redrawn. For the residents of Craftsbury Common and the students of Sterling College, the loss of their institution marks the end of a unique educational experiment and the beginning of a more homogenized, and perhaps more precarious, future for higher learning in America.