3 charts that should terrify America’s small colleges

Small colleges may have good reason to be worried, according to a recent report from Moody’s Investors Service.

While four-year public and private not-for-profit colleges saw, on average, five closures and two to three mergers per year from 2004-2014, Moody’s estimates that the closure rate will likely triple and the merger rate will more than double over the next few years.

Part of this is due to students flocking to larger universities, which are increasingly more opportunities and better facilities.

“Revenue softness at small colleges leads to a reduced ability to invest in academic programs, student life and facilities,” Moody’s notes. “These investments influence demand and prospective students are increasingly choosing larger colleges.”

The plight of America’s small colleges gained national attention this year due in part to the announced closing of Sweet Briar College, a small all-women’s school in rural Virginia. Sweet Briar eventually stayed alive due to a court ruling after significant alumni support, but it remains to be seen if it can sustain itself past this year or if other small schools in trouble could pull off the same revival.

Below, Moody’s lays out how small colleges may see more closures over the next few years:

Moody's Chart Small College Closures Rate

Via Moody’s

This may be due to decreasing revenue growth at an increasing number of small colleges:

Moody's Chart Small Colleges Revenue Growth

Via Moody’s

More and more, students seem to be flocking to larger schools:

Moody's Chart Small College Market Share

Via Moody’s

For their report, Moody’s looked at not-for-profit private colleges with an operating revenue below $100 million, and public colleges below $200 million.

You can read the full report here, via The Chronicle of Higher Education.