On August 18, Lebanon College announced via email and its website that fall classes, scheduled to begin today, were cancelled. The college, $2.2 million in debt, ran out of money. Given that its full-time enrollment was only fifty-three students, this is not surprising. But it borrowed heavily at the peak of the pre-recession real estate bubble to purchase retail space in a local shopping mall for a planned new school in allied health professions. Turns out this was a dumb move — the grants needed to get the school up and running never materialized, and it’s doubtful that the local demand for such programs was strong enough to make them viable over the long term.
Lebanon College is part of a growing list of debt-ridden higher education institutions, from the relatively large PASSHE campuses to small Iowa Wesleyan College and Wilberforce University, that are at risk because of years of bad financial management.
Another member of the club is Burlington College, which last year made three department head positions part-time and increased teaching loads for remaining full-time faculty. The college has only about one hundred and eighty full-time students, zero cash reserves, no endowment, and debt amounting to more than $10 million. The New England Association of Schools and Colleges placed Burlington’s accreditation on probation in June because of concerns about its financial condition.
Burlington College’s debt comes from a shady 2010 purchase of lakefront property involving Jane Sanders, the college’s then-president and wife of U.S. Senator Bernie Sanders, a Catholic diocese in desperate need of cash to pay legal bills arising from sex abuse litigation, local real estate developers, and others. Burlington’s plans to pay for the land purchase included fantastical projections of twenty percent annual enrollment growth and capital campaign contributions of $1 million to $2 million per year through 2014. Neither the enrollment growth nor the donations materialized, and currently the college is in default to at least one of its creditors.
I predict Burlington College will suffer the same fate as Lebanon College within the next two years, possibly sooner.