| The world of higher education is chaotic. At one end of the spectrum, the most selective colleges are becoming even harder to get into; on the other, smaller nonprofit institutions are struggling. As Nic Querolo writes, one school has become an unusual thing: a buyer of other colleges. Plus: Some fuel for your vacation daydreams. If this email was forwarded to you, click here to sign up. You've heard of a chain of restaurants. Now, a chain of accredited colleges? In May, Northeastern University in Boston agreed to merge with Marymount Manhattan College. The deal allows Northeastern to essentially absorb the tiny school on New York City's Upper East Side, which was operating at a loss. No cash will change hands, Northeastern will inherit all assets and liabilities (including teaching space and two dormitories), and the school will be renamed and function like a satellite campus. Northeastern's acquisition is the latest in a string of deals snapping up smaller schools and rebranding them. If approved by regulators, it would become Northeastern's 14th campus, joining a small empire with outposts in places such as London, Miami and Silicon Valley. The strategy proved useful during Covid-19 lockdowns, when students vacated campuses and Northeastern was fielding calls from struggling schools in search of a savior. That's how it came to acquire Mills College, a small liberal arts school in Oakland, California, back in 2022.  Students and alumni at Mills College in Oakland protested the announced takeover in 2021. Photographer: MediaNews Group/The Mercury News/Getty Images M&A is becoming increasingly common in the shrinking landscape of US higher education, and at the current rate, Northeastern should have no shortage of schools to absorb if it chooses to continue its spree. Squeezed by demographics and higher costs, more schools are folding or looking for lifelines, particularly ones that lack the cushion of a large endowment. Some state university systems, including those in Georgia and Texas, have taken a similar tack by merging regional schools, but the chain-buying strategy is somewhat new, especially among private schools. "We're seeing schools like Northeastern start to make bigger inroads in the private college world of mergers. It makes sense in a lot of different ways," says Jeff Denneen, senior partner and global head of the higher ed practice at Bain & Co. "If this were a for-profit industry, this would have happened at a much greater scale many years ago." So far, there are signs the strategy is working in Northeastern's favor. Its credit rater recently cited the school's "excellent brand and strategic positioning" and called the Marymount Manhattan deal a credit positive. Applications have surged since the 2019-20 school year, and the school has slashed its acceptance rate to 5% while climbing college rankings. In some cases, efforts to secure a buyer have fallen through. Notre Dame College, a 102-year-old Roman Catholic school in Ohio (not the football powerhouse Notre Dame University in Indiana), shut its doors at the end of the spring semester after a failed effort to tie up with nearby Cleveland State University. When the end comes, it can be sudden. The University of the Arts in Philadelphia gave students barely a week's notice when it announced it was closing in June. The school has about $50 million of municipal debt outstanding and doesn't even have enough cash to pay staff what they're owed, according to the Philadelphia Inquirer. Across higher ed, fall 2024 enrollment projections are "particularly challenging" because of regional demographic trends and a bungled revamp of the Free Application for Federal Student Aid, or FAFSA, which prevented some students from applying for aid, according to a report by S&P Global Ratings. That spells trouble for scores of smaller, rural and tuition-dependent schools. Fitch Ratings predicts more school closures annually in the immediate future. And while some schools suffer, some of the biggest names are thriving, reinforcing the haves and have-nots of higher ed. It's also breeding innovation around what post-secondary education might look like in the future, and who the target customer is. As adults live and work longer, the traditional model, whereby most employees finish their education in their 20s, is showing some cracks. Programs aimed toward adult learners with more flexibility could thrive, especially as technological changes necessitate more frequent skills development. "The models will have to look different in terms of how they're delivered, but the fundamental principles will be the same—that we need to teach people skills," Denneen says. "It's not just at the entry or lower levels of the workforce, it's going to be up through the executive suite as well." | 
No comments:
Post a Comment