Worried About College Closures? How to Tell Before Applying

Lesser-known colleges can be smart choices, as they help keep tuition manageable while providing a top-tier education. But you're worried about college closures? That’s fair. Closures and mergers nearly doubled from 2023 to 2024, and most shutdowns come with little warning to enrolled students. 

But you don't have to be a student caught off guard by the bad news. The key is to confirm a school’s stability before you apply. Next up, we’ll show you how to research any college’s financial footing so you can spot risk early and feel confident about your decision.

Look at enrollment numbers

About one in three U.S. colleges enrolls fewer than 1,000 students annually. Size alone isn’t a red flag, but it does make smaller schools more sensitive to even small dips in enrollment. Smaller, tuition-dependent colleges have thin margins, and credit analysts have repeatedly flagged them as most vulnerable to enrollment shocks. 

How to check a school’s enrollment trend:

• Open the school’s Common Data Set and read Section B (Enrollment and persistence) for the last 3–5 years. You’re looking for total headcount and full-time undergrad trends.
• Cross-check with IPEDS College Navigator for a quick, public view and the IPEDS Trend Generator to see multi-year charts.
• If the line is drifting down while peers are flat or up, ask why. A one-year dip can be noise, but a multiyear slide is a signal.

Questions to ask the admissions team:

• How has total undergraduate headcount changed over the last 3–5 years? What about first-year class size and retention?
• What share of revenue comes from net tuition, and how would a 5–10% first-year shortfall affect the budget?
• Are your trends similar to national patterns (recent uptick), or moving the other way? 

Bottom line: a small college isn’t automatically risky. But at very small campuses, even a shortfall of a few dozen freshmen can sting. Look for a steady or improving enrollment trend, solid retention rates, and a clear plan in place if a class falls short of its goal. 

Check for deferred campus maintenance

Deferred maintenance, also known as capital renewal, is a significant issue for colleges and universities. The latest reports indicate that for many schools, there is a backlog of maintenance that needs to be addressed, along with funding gaps that hold up completion. Translation: many colleges are struggling to keep buildings in top shape even as inflation cools. 

What to look for on your tour:

• Exterior signs of neglect, like peeling paint, cracked sidewalks, damaged steps, or unkempt landscaping.
• Classroom and residence hall issues such as stained or cracked ceiling tiles, water spots, flickering lights, or inconsistent heating and cooling.
• Technology gaps in learning spaces, for example, outdated projectors, limited power access, or spotty Wi-Fi.

Who to ask:

• Current students about dorm repairs, HVAC reliability, hot water, and Wi-Fi stability.
• Faculty or TAs about classroom tech refreshes and whether repairs get done quickly.
• Admissions or facilities staff whether the school has a campus renewal plan and how they prioritize projects when budgets are tight.

Ask about excessive tuition discounting

Most private colleges use “tuition discounting,” which looks like institutional grants that lower the sticker price. Current estimates show record-high discount rates again this year. About 56.3% for first-time, full-time freshmen and 51.4% for all undergrads in 2024–25. More than nine in ten first-year students now receive institutional aid, and colleges estimate that those grants cover roughly 63% of tuition and fees for freshmen this year.

What that means for you: 
Discounting isn’t automatically bad. It can help keep net prices manageable. The red flag is when a college’s discount rate continues to rise while net tuition revenue per student stagnates or declines. 

Smart questions to ask the financial aid office:

• What are your average tuition discount rates for the past three years, and what share of students receive institutional grants?
• Is most aid need-based or merit-based, and how much of it is funded by endowment vs. from operating dollars?
• What happened to your net tuition revenue per student over the last few years? If it’s flat or down while discounting rises, why?
• Have you announced a tuition reset or changed pricing strategy recently? If yes, how did that affect net price and enrollment? 

Tour-day tip: 
Compare the school’s “net price” (after aid) across a few peer colleges, not just the sticker price. If two schools look pricey upfront but one offers stronger need-based grants, the actual cost can be very different.

Full-price payers: a quick demand check

A fast way to gauge market demand and breathing room is the share of first-year students who pay the full sticker price (no institutional grant or scholarship). You can find it on each school’s College Navigator page under Financial Aid. Subtract “% receiving institutional grants” from 100 to estimate the full-pay share.

What the numbers typically show:

• At the most selective privates, a sizable minority pays full price. For example, about 45% of Harvard’s Class of 2028 receives no need-based aid.
• Nationally, discounting in the mid-50s means many non-elite schools have a smaller full-pay base. If discount rates rise faster than enrollment, net tuition revenue per student can stall, putting pressure on operations.

Questions to ask admissions:

• What share of your latest first-year class received institutional grants, and how has that changed over the last three years?
• How does your full-pay share compare with peer colleges?
• If discounting rises, what happens to net tuition revenue per student? If revenue isn’t keeping up, why not?

Investigate a college's financial stability

Each source below provides a different perspective on the risk of closure. Work through this list one at a time, and you should end up with a complete picture of a school's financial health and stability. 

Hechinger’s Financial Fitness Tracker

This tool flags stress indicators for four-year private colleges. Treat any red flags as a “check deeper” signal, not a prediction. 

Forbes’ College Financial Grades (private nonprofits only)

Forbes assigns A-to-F style grades to more than 900 private, nonprofit colleges using NCES data. A low grade doesn’t mean a school will close, but it often correlates with weak margins, limited endowment per student, and enrollment pressure. Use it as context alongside more current data. 

Financial Responsibility Composite Score

The U.S. Department of Education publishes composite scores for private nonprofit and for-profit colleges using a scale from 1.0 to 3.0. 

Heightened Cash Monitoring (HCM)

The Department of Education’s HCM lists identify institutions under extra cash-flow oversight for reasons ranging from audit or compliance issues to financial concerns. HCM is a warning sign, but not proof of imminent closure. Use it as just one of many data points. 

Accreditor public notices

Regional accreditors publish sanctions, show-cause orders, probation, teach-out plans, and adverse actions. These are among the clearest early warnings that an institution must fix problems quickly to keep accreditation (and aid eligibility). 

Basic operating trends

Use IPEDS tools (or a school’s Common Data Set) to confirm multi-year enrollment, retention, and net tuition revenue trends. Sustained declines, especially at small, tuition-dependent colleges, can quickly stress budgets. 

Will this college close? Read the signs & protect yourself 

Many colleges are operating on tighter budgets now that pandemic relief has ended. Add in softer demand in some regions, tuition discounting, choppy markets for endowments, and uneven state support for public universities, and you get real pressure on operating margins. None of this guarantees a shutdown, but it does mean you should verify before making a commitment.

Before you enroll 

• Scan recent enrollment, retention, and net price trends. Look for steady or improving numbers, not multi-year slides.
• Check independent indicators to see whether any issues repeat across sources.
• Read the school’s audited financial statements or fact book, if they’re publicly available. You want stable net tuition revenue per student, healthy liquidity, and a clear capital plan.

While you’re on campus

• Watch for service strain: fewer sections, delayed repairs, hiring freezes, or sudden fee increases.
• Listen for policy shifts: rapid tuition resets, aggressive discounting, or mandatory furloughs.
• Ask questions: how the school prioritizes investments, whether technology and facilities are getting refreshed, and how they’d handle an under-goal first-year class.

If the signs look bad

• Make a transfer plan now, not later. Keep unofficial transcripts handy, map likely course equivalents, and identify a few transfer-friendly options.
• Protect aid and credits. Confirm how institutional scholarships, state grants, and federal aid would move with you if you switch.
• Act early if needed. Transferring before a formal closure preserves more credits and time. 

Make smarter college search decisions with Appily

Hopefully, now you can stress a little less. You know what to look for and can research and make informed decisions.

Now it's time to create a free Appily account to explore thousands of colleges, surface those hidden gems, and compare what actually matters. You'll see net price, average scholarship awards, degree completion rates, deadlines, and acceptance rates. Build a shortlist, track requirements, and apply to those colleges that fit your budget and goals. Jump in and start planning today.