How to avoid committing to an at risk College

Early in my meetings with my individual clients I warn all of them to be aware of the lure of applying to too many small colleges especially those with an on campus enrollment of 1000 or less or those that have to bolster their enrollment numbers with an excessive number online enrollees. In 2024 alone, seven colleges with athletics programs closed and three more stopped offering athletics altogether.

For each of the colleges mentioned above there are many more on the brink of closure and families need to be aware the warning signs during the recruiting process and do some additional research to prevent from making a bad decision.  In nearly twenty years of helping families and seeing colleges close here are some of the warning signs I tell my families to look for in addition to conducting their own research. Conducting a simple google search on any college you are considering using search terms like:

• Financial Exigency
• Low retention rates
• Loss of accreditation
• Online Enrollment: Excessive amount of online enrollment compared to traditional on campus enrollment
• Mergers/Partnerships: Any merger language is a huge red flag. Be alert for phrases such  program realignment or strategic partnerships. These arrangements are partnerships where third parties enter into a tuition split with a college or university as a last ditch effort to generate net tuition revenue to help keep the  institutions doors open.

While not always signs of trouble more times than not a college that is overly invested in athletics,  has a student enrollment where more that 50% of their students participate in sports, or has a high number of international students Is reason for concern. This is a college I advise my clients to remove from their list.

A tuition-dependent college is one that relies heavily on student tuition and fees as its primary source of revenue, rather than from endowments, government funding, research grants, or major donations. These institutions are typically small, private, and nonprofit, and are especially vulnerable to changes in enrollment. This matters because a drop in student numbers due to demographic shifts, economic downturns, or increased competition can quickly lead to significant financial shortfalls. As a result, tuition-dependent colleges often struggle to offer competitive financial aid, maintain academic programs, or invest in campus resources. They may be forced to lower admissions standards, increase tuition, or enroll large numbers of athletes and international students to make up for budget gaps. In severe cases, the lack of financial cushion can lead to program cuts, faculty layoffs, accreditation risks, or even closure. Without diverse revenue streams or a strong endowment, these colleges operate on a financial tightrope, making long-term stability more difficult to sustain.

Declining enrollment at a college or university refers to a sustained decrease in the number of students enrolled over time, typically across multiple academic years. More specifically, this can include a drop in total student headcount, fewer new students such as freshmen or transfers, lower retention rates where students do not return after their first year, or a reduction in the number of credit hours students are taking. Common benchmarks for concern include a 5% or greater enrollment drop over several years, or more severe declines 10% or more, over shorter periods, which may trigger scrutiny from accreditors or state agencies. Declining enrollment is a serious issue because it directly impacts tuition revenue, especially for colleges that rely heavily on student payments to fund operations. Prolonged enrollment losses can lead to individual athletic team cuts, athletics programs closures,  budget shortfalls, staff layoffs, academic program cuts, and in extreme cases, institutional closure. If a college has lost 20-30% of its enrollment in the last 5 years this is a sign to move on and take this institution off of your list.

Financial instability, as it relates to a college or university, refers to the institution’s inability to consistently meet its financial obligations or sustain its operations over the long term. This condition often results from a combination of inadequate revenue, rising expenses, and weak financial planning. Key indicators of financial instability include persistent operating deficits, where the institution spends more than it earns, along with declining enrollment and tuition revenue. Colleges that are overly dependent on tuition, with little to no endowment or alternative funding sources, are especially vulnerable. Other warning signs include rising debt levels, difficulty making loan or bond payments, and poor liquidity, meaning the college lacks enough cash to cover short-term obligations. Additional red flags include accreditation warnings, being placed on Heightened Cash Monitoring by the U.S. Department of Education, or receiving credit rating downgrades from financial agencies like Moody’s or S&P. Financial instability matters because it threatens a college’s ability to provide academic programs, retain staff, and support students. Left unaddressed, it can lead to severe consequences such as program eliminations, campus downsizing, or even institutional closure.

I counsel my clients to research the endowments of Colleges and Universities they are considering anytime the enrollment is around 1000 traditional on campus students. Having a limited endowment means a college or university doesn’t have a large financial safety net to support its operations, students, or future growth. Endowments are pools of invested funds, usually built through donations, that generate income to help pay for things like some athletics scholarships, merit/need scholarships, faculty salaries, and campus improvements. When that fund is small, the institution must rely heavily on tuition and other short-term revenue to stay afloat. This lack of financial flexibility makes it harder to respond to unexpected challenges, offer generous financial aid, or invest in long-term improvements. Colleges with limited endowments are especially vulnerable during enrollment declines or economic downturns, increasing the risk of budget cuts, reduced services, or even closure. For parents and students, this raises important concerns about the stability and quality of education the school can provide. Limited resources may lead to fewer course offerings, larger class sizes, diminished student support services, and uncertainty about the college’s future, factors that can directly impact a student’s experience and long-term value of their degree. This is particularly concerning for small, private, tuition-dependent schools with few other resources to fall back on.

I suggest several free resources and tools for my clients to use to check the financial health of Colleges and Universities they are considering. To evaluate the financial health and long-term viability of colleges, students and families can use a range of publicly available tools and data sources. 

The U.S. Department of Education’s College Scorecard (collegescorecard.ed.gov) is a user-friendly platform that provides information on tuition costs, graduation rates, student loan repayment, and post-graduation earnings. For more detailed institutional data, the Integrated Postsecondary Education Data System (IPEDS) (nces.ed.gov/ipeds) offers comprehensive statistics on college finances, enrollment, staffing, and financial aid. To assess a school’s financial reserves, the NACUBO-TIAA Study of Endowments (nacubo.org) lists endowment sizes and performance for hundreds of colleges and universities. For nonprofit institutions, financial filings such as IRS Form 990s are available through ProPublica’s Nonprofit Explorer (projects.propublica.org/nonprofits), which reveal details about revenue, expenses, debt, and executive compensation.

In addition, the State Higher Education Executive Officers Association (SHEEO) (sheeo.org) publishes annual reports that highlight trends in public funding and financial pressures across state systems. The U.S. Department of Education’s Heightened Cash Monitoring (HCM) List, available via search on ed.gov, flags institutions under financial scrutiny. 

For broader context, resources like The Hechinger Report’s Financial Fitness Tracker and news outlets such as Inside Higher Ed and The Chronicle of Higher Education frequently investigate colleges at risk of closure or financial instability. While the platform Edmit (now part of Vemo Education) previously assigned letter grades to colleges based on financial health and value, some of its tools may still be accessible through Vemo. Altogether, these sources help students and families make informed decisions based on transparency and financial sustainability.

To learn more about PrepSearch and how I’ve helped over 1,700 students attend college through sports since 2007, please explore the rest of my website. For more information about my seminars for high schools and clubs, or to inquire about my recruiting advisory services, feel free to complete the contact form on my website at www.prepsearch.net.

If you know a prospective student-athlete in grades 8-12 who could benefit from additional free exposure to college coaches, have them download the new PrepSearch app today! It’s available in both the Apple App Store and Google Play Stores.

https://play.google.com/store/apps/details?id=com.prepssearchappsapp

https://apps.apple.com/app/prepsearch-app/id6738037970

EM