Why U.S. Colleges Are Closing: Hampshire College Shutdown Highlights a Growing Crisis

Students outside the Hampshire College library in Amherst, Massachusetts, on November 28, 2016. | Joanne Rathe/The Boston Globe via Getty Images

Higher education is facing a crisis. Last week, Hampshire College — a private liberal arts school in Amherst, Massachusetts — announced it will shut down after the fall 2026 semester. Founded in 1965 to “reimagine liberal arts education,” Hampshire counts documentary filmmaker Ken Burns and actors Lupita Nyong’o and Liev Schreiber among its most notable alumni.

Hampshire is just the latest casualty in a broader trend. There are roughly 4,000 colleges in the United States. According to Jon Marcus, senior higher education reporter at the Hechinger Report, a nonprofit publication covering education, around 100 have closed since the COVID-19 pandemic, and many more are at risk over the next decade.

For now, large public universities and well-endowed private schools like Harvard and Yale remain relatively stable. But smaller regional colleges are increasingly at risk. That shift could leave students with fewer options for higher education, and for some, close the door on higher education entirely.

Why Are Colleges Closing?

To understand why colleges are closing and what it means for the future of higher education in the United States, Today, Explained co-host Sean Rameswaram spoke with Marcus, who explained the story of Hampshire College and some of the financial, demographic, and cultural elements afflicting colleges. Below is an excerpt of the conversation, edited for length and clarity. There’s much more in the full podcast, so listen to Today, Explained wherever you get podcasts, including Apple Podcasts, Pandora, and Spotify.

What Happened to Hampshire College?

Last week it was announced that the private liberal arts college Hampshire College would close after its fall semester. Tell us the story of what happened to Hampshire.

Like a lot of small colleges, Hampshire had a lot of problems hidden just below the surface. In Hampshire’s case, they weren’t that well-hidden. It had been having problems for more than six years, since before the pandemic, but was being kept afloat by its very loyal alumni, who include some people that have been extremely successful, largely in the arts. Its endowment was very small. Its enrollment continued to decline. It had fewer than 800 students left at the end. It had $21 million in debt.

Debt is a really important and largely misunderstood component of this. When people think of debt and college, they think of student loan debt, but there’s also institutional debt, and it is really piling up. Colleges and universities have borrowed significant amounts of money and, so, servicing that debt becomes a big drain on their operating budgets.

To attract students, colleges do something else that isn’t widely known: They discount the tuition. Almost no one pays the list price you see on the website.

At colleges in general, the discount rate is more than 50 percent. So, if you were a private business, and you gave back 50 percent of your revenue, you’d be out of business. And that’s what’s happening to many colleges.