College Closures Could Increase Sharply in the Face of the Demographic Cliff

Researchers with the Federal Reserve Bank of Philadelphia unveiled a new model that can predict college closures and the most at-risk institutions with a relatively high degree of accuracy, according to a recently released paper. The team forecast that in a worst-case scenario for the higher education sector — an abrupt 15% decline overall in enrollment from a 2019 baseline — as many as 80 additional colleges could close each year. That would more than double the average annual closure rate. A more gradual enrollment decrease of 15% would translate to an 8.1% increase in annual college closures from the average, representing about roughly five institutions each year.