The Indicator from Planet Money - The College Buyout Boom

Small liberal arts colleges across the US have been struggling for years. COVID has made things worse. Now many are facing the prospect of closing down. Or being gobbled up in a merger.

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on the morning of April 6th 2018 McKenzie Bumpus was on a mission. So it was Friday morning. I had walked into the office which is called the Mustang involvement Center. Mckenzie was student body president at Mount Ida small liberal arts college in Newton, Massachusetts, and she prepared a presentation for the business faculty about the school's athletes on how we can help them make themselves more successful on campus then she felt this Telltale buzz on her wrist. An email from the president kind of a rare thing Mackenzie got this weird feeling. She actually just stopped working mid presentation and the email off of OverWatch and I read that email saw that school is closing Mount Ida was closing.

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It wasn't closing exactly. It was being acquired by the much larger much wealthier University of Massachusetts. I close my laptop and I had just walked out of the room because I was like, I don't even know how to process my own emotions at this point cuz his head was spinning the school that she loved that. You've been attending for 3 years the student body that elected her president what was going to happen to it? Would it be transferring with their credits count for they have a job all across the country students are getting a college acceptance letters in deciding where they want to go in the fall and college is all across the country desperately. Hoping to get chosen. This isn't just some beauty contest for bragging rights in many cases their existence depends on it.

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This is the indicator from Planet Money. I'm Patty Hirsch University mergers and Acquisitions. The business model of college is changing fast pandemic speed that up with a lot of colleges under a lot of strain and in some cases has made them a target for a buyout.

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Universities institutions of Higher Learning the Ivory Tower kind of feel like sacred places, right definitely not in the same category as say an oil company or a steel mill because their nonprofit We tend to forget about colleges and universities being businesses, but they are Julie Fulton is a college consultant and the owner of Mosaic College Prep. They have direct competitors and they are trying to learn customers who are the students and parents with their offering for one thing. The pool of students is shrinking between 2025 and 2029. The number of college applicants is expected to decline by 15% That means that colleges are scrambling to compete for dwindling customer base over the past several decades colleges had engaged in something like an arms race has to offer all of the services and amenities that really wealthy schools like Harvard and Stanford can afford.

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Sing from Mental Health Services to fancy dorms to bring football tickets. For example, I've I've had students were big climbers that were really attracted to a school because of it a rock wall. Remember these These are 17 year old kid. You know when you think that like I think that's why I made a choice about a college and it was not coming from the perspective of a ninja pulse rate is about where you know, I would end up in my life. It was like I had a great day on the campus you do for my open house. The average cost of one year of college in the u.s. Is now more than $20,000 a year for public schools in about $50,000 a year for private schools and many run close to $80,000 a year in spite of a really expensive tuition. A lot of schools across the country are having trouble balancing their books and the Cove in crisis has pushed me over the edge with so much of college life online a lot of students of taking a gap year and many of opted for less expensive options.

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One of the top colleges in the country nearly closed because of money problems Penn state fish of the bunch of its Regional campuses and Julie says something is becoming more common is schools going to make themselves attractive for a bias. They use their best assets, which is their land and sometimes they're established programs to attract colleges to either partner with them or absorb them. This has been happening all over the place. So New England College bite of the New Hampshire Institute of Art New England College was able to open up a new campus complete with dorms in classroom. It was able to sell some of its newly acquired land which brought in a bunch of money and it was able to suddenly offer its own ready-made art school, which made it attractive to students Boston University Wheelock. A small liberal arts college in Boston weed Oaks Campus was just a mile away from bu which might it was an easy way for pay you to expect in the Willamette University in Oregon snapped up the Pacific Northwest College of Art and Claremont School of Theology.

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Portions are bigger in the West Eddy 2018 University of Massachusetts Port might either which was conveniently located right next to UMass Amherst. I just like you'd expect with a corporate merger UMass sent a team of people in suits to My Thai does compass to talk to panicking students and faculty fair-style thing where you can go around like different tables and you can figure out what courses you need to take. You could talk people from financial aid and you could even get your housing assignments because it says most of the faculty lost their jobs most of the students were invited to transfer to one of the UMass campuses, but it wasn't an entirely clean switch McKenzie saw her financial aid get cut and ended up owing $5,000 more intuition still she calls herself lucky some of her fellow students so their degrees disappear altogether and their credits were suddenly worthless might I had some specialty Majors that the UMass call adjust didn't offer.

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Like Battery Technology in dental hygiene a funeral home management major but very hard to find degree and they were basically forced to transfer to a college in Connecticut that offered that major and then that school closed actually a group of my tidal student sued UMass claiming breach of contract and fraud judge 3. K sight Mount Ida students transfer to UMass. She says it was kind of sad the small closed. It's cool that they had loved and been so attached to with just a few hundred people per class and vanished under their feet and they were the only part of this giant University system with tens of thousands of students supposed to be at the top of the totem pole and there she was all the way down at the bottom because he says she mostly spent her senior year with a little insular group of Mount Ida students who all hung out together. It was really nice to have my support system of all my friends from Oneida because I knew I wasn't actually

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Even though we all felt like we were alone when we knew that we could all kind of commiserate together. The big drawers of these small private colleges offer individual attention. And when that becomes more rare, it's going to make it much harder for a lot of students accepted the most elite institutions struggling are community colleges and some of the more Regional campuses of large colleges and those often allow students with families or students with full-time jobs or limited finances to get a college degree and Julie worries. A lot of those students could be left behind that means less access for people who are not able to go in a Ford a residential experience, right? Because if you are local branch of your state college is shutting down then you might not really have a four-year option in your neighborhood. There's a silver lining here Julie expects to see a lot of innovation.

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Happening in education in the next few years especially around remote learning and online offerings and I could open up some very affordable top quality options. That might not exist right now. I did finish her degree in Business. She is in grad school now, but she says it still makes her kind of sad to think about her experience at Mount Ida. I mean it was this place have been so much to her and it was just kind of erased off the mat like it never even existed. There are just so many artifacts that I had from Oneida like t-shirts and stuff that they're so sentimental to me. So I made them into a blanket now. It's one of those things were like, I look back and I smile and I think about all the good times I had

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This episode of the indicator was produced by Dave Blanchard and fact-checked by Samuel Sai. The indicator is a production of NPR.

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