Small, private colleges are a much less profitable business today

And industry insiders expect more of the smaller or lesser-known schools to disappear, while a handful of private universities with massive endowments will continue to thrive.

Two of the country’s major rating agencies reported bleak financial prospects for the year for the higher education sector: Fitch Ratings says conditions in the sector are “worsening” and Moody’s Investors Service says the outlook is “negative”.

The consolidations sweeping through higher education are not dissimilar to those experienced by many other industries as customers went online. But unlike for-profit corporations, there are few motivations among colleges to merge with or be acquired by another school, experts say.

There is no windfall when one college merges with another, and alumni, faculty and students rarely support schemes that would result in the loss of their alma mater. Hampshire College in Amherst is testament to this after alumni rallied and fundraised to keep the school independent after officials said in 2019 they were looking at a merger.

Communities also mourn college closures, as these institutions are typically large employers and provide resources such as sporting and cultural events to their neighborhoods.

Still, experts seem to agree that there are just too many colleges. According to federal data, there are currently about 140 colleges in Massachusetts, about half of which are private, four-year colleges.

“Honestly, it’s the Hunger Games,” said Madeleine Rhyneer, who heads the registration practice at consultancy EAB. “There are fewer students going to college and there are more or less the same number of colleges in the country, so there will be winners [and] there will be losers.”

In Massachusetts, 15 private colleges with at least 250 enrolled students experienced double-digit population declines over a 10-year academic period beginning in 2011, according to the latest US Department of Education data. These include Suffolk University, American International College, Fisher College, Lesley University, Assumption University and Hampshire.

Many of them rely heavily on tuition to fund operations, so even a modest drop in enrollment can be devastating. Experts said colleges with persistent enrollment problems — as well as those with smaller endowments — are under the most pressure to either seek a partner, make drastic cuts, or focus on a hot niche like healthcare.

Fisher College in Boston, for example, ditched satellite locations as student preferences shifted to online instruction, said Robert Melaragni, the school’s chief admissions officer. The college lost about a quarter of its students between 2011 and 2021. Enrollment then increased 4 percent between fall 2021 and 2022 to a total of 1,421 students, he said. About a fifth of Fisher’s students are international and about half are from Boston.

“We’re not going anywhere,” Melaragni said.

John Sullivan, spokesman for Lesley University in Cambridge, which specializes in teacher education, said the 32 percent drop in enrollments between 2011 and 2021 was at least partly due to many school districts relaxing requirements in recent years that teachers must have a master’s degree and a doctorate.

“We remain confident in Lesley’s position as the leading educator of teachers, counselors, expression therapists, artists and others who make a tangible difference in the lives of others,” said Sullivan.

Some private colleges have lowered tuition to attract more students who might be put off by published costs. Lasell University in Newton, for example, recently reduced tuition by 33 percent to $39,500.

Assumption declined to comment.

The American International College in Springfield, which opened in 1885 to educate immigrants, is planning a turnaround after losing 35 percent of its students between 2011 and 2021 and now has about 2,100 total enrollments.

The college, which enrolls many low-income and first-generation students, needs to “reinvent” its brand, academic offering and marketing strategy, said its president Hubert Benitez. This includes considering adding programs in healthcare and business to meet student interests and the needs of local employers, Benitez said. He added that AIC would not charge tuition to increase revenue.

Benitez acknowledged the great odds the school faces trying to recruit the students when the overall pool is shrinking and so many other small colleges are competing for the same applicants.

“That’s the $5 million question,” Benitez said when asked how the school will do it.

Suffolk University was recently given a “negative” outlook by Moody’s due to “challenging revenue conditions” and over-reliance on endowment funds to fund new initiatives. Suffolk President Marisa Kelly said in a statement that she remained “confident in the university’s continued momentum and strong enrollment”. Enrollment in Suffolk fell by nearly a third between 2011 and 2021, but the freshman class rose in 2022, Kelly said.

“We believe the strategic investments we are making — particularly in financial aid to help students navigate the pandemic downturn — are aligned with our mission and will build the long-term strength and success of the university,” said Kelly.

Most failed colleges have had fewer than 1,200 students, said Emily Wadhwani, Fitch’s senior colleges and universities analyst. And students at colleges that are closing are less likely to complete their degrees, according to a recent report by the State Higher Education Executive Officers Association and the National Student Clearinghouse Research Center.

With declining revenues, colleges find it difficult to reduce spending at the same pace, as institutions must continue to provide all of their academic and support services and maintain buildings, dining and living spaces, albeit for a smaller clientele. Small colleges typically do not have other sources of income that larger universities depend on, such as research funding and athletics, which historically have relied on increasing tuition and room and board prices.

“Honestly [colleges that have closed] have relied on an unsustainable business model for too long,” Wadhwani said.

About 20 Bay State colleges that have closed or merged with others in the past decade include Newbury College, Pine Manor College, Mount Ida College, Boston Conservatory and Wheelock College. Bay State College in Boston recently announced that it will be closing later this year after a dramatic drop in enrollment and losing accreditation.

Richard Garrett, chief research officer at college advisory group Eduventures, said the outlook is getting worse.

“The problem is that all of these trends aren’t getting any better anytime soon,” Garrett said. “Demographics will only get worse in the long term.”

Statewide enrollment in undergraduate colleges has declined steadily from a peak of about 18 million in 2010 to about 15.1 million students last fall, according to the National Student Clearinghouse Research Center. Recent enrollment losses have been particularly pronounced in the Northeast and Midwest.

These declines were exacerbated by COVID-19 as more people chose to enter the labor market rather than pursue higher education.

Government aid funding for institutions acted as a back-up for lost revenue as students took a gap year or lived at home rather than pay for room and board costs at the height of the pandemic, experts said. But that relief is largely gone, leaving dozens of private colleges with difficult choices.

In past difficult times, colleges have expanded access, such as For example, all-male schools are accepting women to increase enrollment and revenue, said Marjorie Hass, president of the Council of Independent Colleges. But now struggling schools must “realign their mission” or find other sources of income, Hass said.

“I don’t think you will do that [persist] just by keeping your head down and cutting your spending,” Hass said. “This is definitely a time for creative reinvention for many colleges and not a time for just weathering the storm.”

Hilary Burns can be reached at [email protected]. Follow her on Twitter @Hilarysburns.