Tuition Bubble Bursting: College Closing After 114 Years Due to “Insurmountable Financial Challenges”

Sweet Briar, VA – the prestigious, all-female Sweet Briar College, successfully standing for nearly 115 years, is now closing its operations after this school semester.  A press release, copied on the college’s Facebook page, cites “insurmountable financial challenges” as the reason for this sudden shake-up that is affecting students and faculty alike.

School president Jimmy Jones elaborated in a video message on the college website that the school’s “immediate focus” will be to see to it that all current students not in their graduating class successfully transfer to other colleges before the facility closes its doors for good.  No word yet on how Sweet Briar intends to logistically do this for each of its 700+ attending undergraduates before the August closing date, but it would be the least the institution could do considering the fact that this news has surprised and enraged pretty much every parent bothering to virtually comment on the announcement as of this writing, on Wednesday, March 4th, 2015.

Further in the same video announcement, Sweet Briar’s Board Chair Paul Rice had this to say regarding the school’s decision to close:  “Sweet Briar has faced financial challenges that have continued to escalate over the years.  In light of these challenges, the college pursued multiple strategies to alleviate financial pressure … [we instituted] significant cuts in the operating budget, deferred maintenance on facilities, and drove initiatives to increase enrollment.”

This last point is very telling.

As The Libertarian Republic has already covered in the past, predictions have been made regarding what some are calling the ‘tuition bubble’ in colleges and universities country-wide – that due to incentives posed by government pledges to cover (in the form of federal grants) the difference between what a student is charged in tuition and what she can actually pay, colleges have over the years trended toward charging significantly more than necessary in tuition and spent significantly more in operational budgets.  In fact, we know this because average college tuition costs have gone up at a rate 6% higher than inflation alone could explain during this same time period.  The problem, of course, is that government could not deliver on its promise of subsidizing all those tuition bills, and so colleges are now finding themselves operating significantly under budget, and students are having to take out interest-gathering loans that have by this point racked up around $1 trillion in debt across the nation.

As we can see, this is precisely the problem that befell Sweet Briar, as Rice explained that initiatives to increase overall enrollment to the school was a prime strategy in trying to make up for its prior operational costs that put the school in the red in the first place.  Rice continues:  “even though in recent years our marketing and admissions efforts have brought us significantly greater numbers of applications, the percentage of accepted students who have chosen to enroll at Sweet Briar is at an all-time and unsustainable low.”

While parents and faculty are understandably livid about this news, based on the predictions TLR has been following, this really shouldn’t come as too much of a surprise.

Sweet Briar is not the first school to shut down due to financial woes, but it might be among the first schools to close because of preventable government policies that have gone a long way toward crippling both the facilities themselves and the financial standing of their students.  If people like Mark Cuban, Peter Thiel, and other predictors of the tuition bubble are correct and we are now seeing said bubble’s seams begin to tear, it won’t be long before it bursts completely and more and more schools suffer the same fate for the same reasons as this 114-year-old Virginia college.

As has also been pointed out before, the ultimate result of this occurrence could potentially be favorable for future college students, as tuition costs might ultimately recalibrate to more realistic rates, but in the meantime, as this initial blowout happens around us, all current students can do is hold on, stand out, and hope their school isn’t the next Sweet Briar.

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