Nonprofit Resources


Private Higher Education Pandemic Update: Part 2

We recently looked at key trends and factors affecting private institutions, from operating plans to volatility in the financial markets. Now let’s discuss more trends private higher education institutions need to be aware of and planning for.

Donor Support

Private nonprofit institutions generally rely on donors for 5% to 10% of their operating revenues. These funds typically come from a large pool of small, annual donations from donors who are relational and give out of their income. A prolonged recession and protracted rates of significant unemployment are likely to impact these donors.

The rebound in the financial markets may revive hope for fundraising budgets. Higher education institutions generally rely on key donors to fund non-revenue-generating capital projects and for seed money to start new programs. These donors typically give out of their wealth, and the financial markets are often a barometer of the potential future support from these donors.

COVID-19 will impact donor priorities. Donors of all types may have less money when it is over.

Enrollment and Revenue

Many private nonprofit institutions are tuition-dependent and enrollment-driven. Tuition increases have barely kept pace with the increase in institutional aid funded from operations (discounts), putting more pressure on enrollment management to recruit and retain students.

National trends in four-year private nonprofit institutions obtained from the National Student Clearinghouse indicate that before the pandemic, enrollments grew, on average, less than 1.3% during the last four academic years.

While the fall 2020 decline is pandemic-related, it is far less than had been predicted by industry experts who were anticipating 10% to 15% declines.

TimeframePercent Change Enrollment
Fall 2016+0.6%
Spring 2017-0.2%
Fall 2017+0.4%
Spring 2018-0.4%
Fall 2018+2.4%
Spring 2019+3.2%
Fall 2019-0.6%
Spring 2020-0.7%
Fall 2020-3.8%

Net tuition and fees at four-year private nonprofit institutions have risen an accumulative 7.7% during the past four years, as illustrated by this data from the 2019 NACUBO Tuition Discount Study:

TimeframeChange Net Tuition Revenue
2019-20 (estimated) +1.2%

Tuition rates rose more dramatically but have been absorbed by larger amounts of institutional aid, as seen in this data from the NACUBO study reported by Inside Higher Education:

TimeframeAverage Inst. Aid
% of Tuition and Fees
First-time Full-time
Freshman Discount
All Undergraduates
Discount Rate
2019-20 (estimated)54.7%52.6%47.6%

To look at it another way, average institutional aid grew at a slightly higher rate than net tuition and fees from academic year 2016 through academic year 2020.


The Commonfund Institute has maintained the Higher Education Price Index (HEPI) since 1961. This inflation index is designed specifically for use by institutions of higher education to project future budget increases required to preserve purchasing power.

Released on June 26, 2020, the HEPI for the 2019 – 2020 fiscal year was projected to be 2.2%.

2019-20 (estimated)2.2%

The 2020 HEPI does not take into account the additional costs of opening a campus during the pandemic, such as testing, protective gear, cleaning supplies, and additional staff. It is too early in the term to find an exhaustive study on the costs related to opening. Anecdotal evidence indicates those costs vary per institution in ways similar to the approach taken for instruction varies. Needless to say, it will be more painful for institutions that are undercapitalized and electing primarily in-person instruction.

Operating Deficits

As mentioned in Part 1, Moody’s Investors Service believed pre-pandemic that 30% of private institutions would have “weak operating results” in 2020, up from 25% in 2017. Moody’s sample is approximately 260 private universities.

The November 2019 Forbes’ College Financial Grades ranking report rated private nonprofit colleges and universities with enrollments of at least 500 students that had posted sufficient data to the Education Department’s Integrated Postsecondary Education Data System (IPEDS) database. The 2019 study incorporated the average data for each institution from 2016 and 2017.

The financial core operating margin from higher education activities was measured for 933 institutions, and 384 had negative margins. The number of institutions receiving a D grade (which is the lowest in the study) rose from 110 in 2013 to 177 in 2019.


Liquidity is the first benchmark of financial health. Leaders of institutions of higher education found themselves facing a stark and rapidly changing reality in March 2020. Traditional measures of liquidity would prove inadequate in the face of the pandemic and the resulting economic shutdown.

The federal government quickly stepped in by passing the CARES Act, which allocated $12.5 billion to higher education, including $2.5 billion for private four-year nonprofit institutions based on their proportion of Pell Grant-eligible students (75%) and total students (25%). These numbers included $170 million that went to 536 private minority-serving institutions. These funds were not considered federal student aid but were administered by the Education Department and are subject to audit under the Uniform Guidance.

Only a portion of funds (50% of Higher Education Emergency Relief Fund money) was available to the institutions. This funding was particularly helpful to undercapitalized institutions that needed help with refunds issued to students after the Act passed and to those that had under-invested in remote learning.

Additional funding was made available by the Act through the Paycheck Protection Program administered by the Small Business Administration. Nonprofit and for-profit institutions with 500 or fewer employees were eligible for the loans. The total amount of loans made to higher education was in the range of $1 billion to $2.5 billion. More than 700 nonprofit private institutions received loans of at least $150,000. Of these, 33 institutions received loans in excess of $5 million. These loans will be converted to grants if the institutions meet certain criteria.

The proportion of institutions that are undercapitalized is likely similar to the proportion of institutions that struggle to produce an operating margin. As a result, predicting college closures has become a “media parlor game that helps neither students nor institutions.”*


If we follow the numbers, somewhere between 200 and 300 four-year private nonprofit colleges and universities are undercapitalized and underperforming. Are those institutions at risk of closure?

Robert Witt and Kevin P. Coyne examined every college closure, merger, and acquisition from 2016 through the end of the academic year 2019. There were 163 in total, including all types of institutions, and 55 private nonprofits. Of these, 41 actually closed and 14 were consolidated through mergers.

Inside Higher Education puts the number of private college closures during the same period (excluding mergers) at 20. That list includes:


  • Burlington College
  • Dowling College
  • St. Catharine College (KY)
  • Trinity Lutheran College


  • Crossroads College
  • Memphis College of Art
  • Grace University
  • Saint Joseph’s College (IN)
  • St. Gregory’s University


  • Atlantic University
  • Concordia College (AL)
  • Marylhurst University
  • Morthland College
  • Mount Ida College
  • Newbury College


  • College of New Rochelle
  • Green Mountain College
  • Marygrove College
  • Oregon College Art & Craft
  • Southern Vermont College

Education Dive reports the following closures for the academic year ending in 2020. Again, this list excludes mergers or consolidations: Holy Family College (WI), Nebraska Christian College, MacMurray College (IL), Concordia University of Portland (OR), and Marlboro College (MA).

The pandemic will likely have the final word. The length of the crisis, the depth of the recession, and spring 2021 enrollments will be telling, but the data does not indicate a sector apocalypse and careful planning will help institutions navigate the challenges.

Please contact us with any questions or if you would like to discuss how our team of dedicated higher education specialists can help you assess situations, identify opportunities, and maximize outcomes.

This was first published in the October 2020 Association of Business Administrators of Christian Colleges (ABACC) newsletter.


*Robert Zemsky, Susan Shaman, and Susan Campbell Baldridge, The College Stress Test (Baltimore: John Hopkins University Press, 2020), pg. 116.

Dan Campbell

Dan serves as Partner and Higher Education Services Director at CapinCrouse. Dan has more than 35 years of public accounting experience leading audit engagements of nonprofit organizations and for-profit industries. He leads the firm’s higher education practice segment, which includes more than 80 client relationships, and commits a significant portion of his professional time to board training, strategic planning initiatives, and accreditation support. He served on the Board of Trustees of Davis College for 25 years. Prior to joining the firm in 2006, Dan managed audits of financial institutions, construction contractors, and manufacturers.

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