ECONOMICS Bloomberg Businessweek August 5, 201930
ROBINPLATZER/TWINIMAGES/THELIFEIMAGESCOLLECTION/GETTYIMAGES;ILLUSTRATIONBY
NICHOLESHINN;DATA: WESTERN INTERSTATE COMMISSION FOR HIGHER EDUCATION (LEFT), PEOPLE’S BANK OF CHINATHEBOTTOMLINE High-pricedliberalartscollegesin theU.S.
have demonstrated surprising resilience in the face of adverse
forces, including a shrinking pool of U.S. applicants.Today, Bennington, with its more than 700
undergraduates, stands as a testament to the
staying power of the nation’s small liberal arts col-
leges. “They’ve survived because they’ve been able
to exploit what they’re good at, and that has enabled
them to continue to attract students and retain fac-
ulty,” says David Bergeron, a former deputy assistant
secretary in the U.S. Department of Education. “The
threat of closure has brought a new level of energy.”
No doubt the college business is challenging. In
the U.S., the number of high school graduates has
been declining, especially in the Northeast and
Midwest, by virtue of demographic factors. Fewer
students are applying to college amid a buoyant
job market and concern about the nation’s $1.6
trillion in student loans. Meanwhile, immigration
restrictions threaten to slow the stream of full
tuition-paying students from China and elsewhere.
And Democratic candidates for president have
said they want public colleges to be free, which
would make private institutions less attractive.
Last year one-third of private colleges saw a
decline in revenue from tuition, up from 15% five
years ago, according to Moody’s Investors Service.
The Council of Independent Colleges estimates
that 2% of its roughly 650 members are struggling
financially. A dozen have closed or merged over
the past four academic years. Vermont’s Marlboro
College recently announced it would merge with
the University of Bridgeport in Connecticut.
In 2013, amid the boom in online education,
Harvard Business School professor Clayton
Christensen predicted that half of all U.S. colleges
would go bankrupt in 15 years. The apocalypse
has been slow in coming: The U.S. Department of
Education counts about 750 colleges with 1,000
or fewer students, compared with about 790 a
decade ago.
Today, selective liberal arts colleges such as
Williams and Amherst rank among the nation’s most
sought-out and wealthiest institutions, relative to
their size. But even those with weaker finances have
found ways to keep operating. In 2015, Virginia’s all-
women Sweet Briar College announced it was shut-
ting down. Alumnae immediately mobilized, hiring
a law firm to block the closure and raising tens of
millions of dollars to tide the school over while it
drafted a restructuring plan.
Tuition was slashed almost in half, to $21,000,
and majors winnowed to 18 from 40, with an
emphasis on technology, engineering, math, and
environmental science. Sweet Briar has raised
$64 million since 2015 and now boasts a balanced
operating budget. Enrollment for the coming
school year is up more than 15%, to a total of about○ BenningtonalumEllis,
circa 1990“We have to
look in places
for students
that we may
not have
looked before”380, according to spokeswoman Melissa Richards.
Drawing on its past as a working farm, Sweet
Briar has hit on an unconventional revenue stream:
raising bees and crops on its 3,200 acres near
Lynchburg, Va. “We’re driving interest, driving
agriculture, driving an experience, which is really
selling tuition dollars,” says Nathan Kluger, director
of agricultural enterprise.
In January, Hampshire College in Amherst,
Mass., looked like the latest casualty when it
announced it might not enroll a freshman class
and was dismissing two dozen staffers. Interim
President Ken Rosenthal says the school is getting
the message out about its strengths with the help
of prominent alumni such as filmmaker Ken Burns.
“We have to look in places for students that we may
not have looked before,” he says.
Hampshire, which expects to enroll 600 to
700 students this year, might want to replicate
the Bennington playbook. The Vermont college
has cut costs and instituted unusual interdisci-
plinary “pop-up” classes on current topics such as
gun violence. It will get new revenue from hosting
Middlebury College’s summer language programs.
The endowment has tripled, to $51 million, thanks
to more aggressive fundraising. Applications are up
20% despite the big price tag. (The administration
says that, on average, it awards students $33,000
in annual grants.)
Bennington has been savvy about leveraging its
art heritage. Michael Hecht, a trustee who was the
accountant to influential painter and alumna Helen
Frankenthaler, helped the school create new pro-
grams in partnership with museums in New York
City. He also introduced school officials to the lead-
ership at the foundation of another client, the late
Broadway producer Lucille Lortel. That led to
Bennington students securing paid internships at
off-Broadway theaters. “It was all there. We’re really
connecting the dots,” Hecht says.
River Valadez, of Seattle, picked Bennington
over the Boston Conservatory at Berklee and
schools closer to home in the Pacific Northwest
such as the University of Puget Sound. Valadez, a
rising senior, has a dual concentration in ceramics
and music composition. This summer he’s building
on his experience at a Bennington-related museum
internship by working at a ceramics studio in East
Williamsburg in Brooklyn, N.Y. “The programs [at
Bennington] are awesome,” says the 22-year-old.
The campus “is beautiful, and I could shape what
I wanted to do.” —Janet Lorin2019 20313.6m3.43.2○ Projected size of
graduating U.S. high
school classes