More than half of colleges show signs of money problems. Students will suffer the consequences

LYNCHBURG, Va. — Nalia Mutz started her freshman year at the University of Lynchburg in 2022 knowing exactly where she wanted to be four years later: right on track toward her dream of becoming a doctor.

When the university eliminated a dozen majors in 2024, the resulting layoffs left fewer professors to teach the science courses she needed to graduate. She began to fear earning her biomedicine degree the way she’d planned could take two extra years. 

“It was just a lot of cuts all around, and then they just didn’t have enough staff,” Mutz, 21, said. 

Higher education has faced fiscal headwinds in recent years as hundreds of institutions grapple with declining enrollment because of demographic trends and growing public skepticism about the value of a college degree. Trump policies targeting international students and cutting federal research funding made the financial situation more dire, as have new caps to graduate student loan borrowing and threats to block undergraduate programs from accepting federal financial aid unless alumni earn more than a typical high school graduate. 

As colleges tighten their belts, millions of students like Mutz feel the consequences. Small, private nonprofit institutions that rely heavily on tuition — like the University of Lynchburg — are likely to be hit hardest.

While just a small fraction of colleges will end up closing, those that survive may resort to cutting programs and staff, a move that could balance the books but leave students adrift. Experts and students themselves say it’s time to pay more attention to the impact of college downsizing.

“The academic literature draws a straight line from student-faculty ratios and advising supports to what that means for students’ likelihood to persist and complete their college degree,” said Justin Ortagus, professor of higher education and public policy at the University of Texas at Austin. “It has a real impact on their ability to graduate.”

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A new interactive tool from The Hechinger Report, the College Financial Health Tracker, allows users to research whether a particular college is showing financial warning signs: dropping enrollment, declining revenue, growing deficits and shrinking endowments. The tracker also includes data on faculty layoffs and cuts to academic programs, as well as accreditation decisions. 

Hundreds of four-year colleges and universities show clear signs of financial stress, according to Hechinger’s analysis of a decade of federal higher education data for colleges primarily granting bachelor’s degrees.

• Roughly 1,100 out of the 1,900 colleges in our dataset experienced enrollment drops in three of the five years from 2019 to 2024, the most recent year for which data is available. About 6.4 million students attended these schools.
  
• About 1,500 colleges saw net revenue from tuition drop from 2019 to 2024. 

• Roughly 960 institutions, enrolling 5.2 million students, had 75,600 fewer instructional staff in that period. 

• Nearly 440 colleges and universities reported ending the financial year in the red in three of those five years. 

It can be hard for students and families to figure out how a college is doing financially. Small colleges tend to provide limited information about their finances in annual public reports. And unlike public institutions, private nonprofits are exempt from public records laws.

Yet the tough choices colleges make to stay afloat directly affect students. Meal plan costs can go up. Library hours may decrease. Staff might not have the time to handle complaints about dorm conditions. Cuts to academic advising staff can increase caseloads, which research links to worse graduation rates. 

Faculty make up the largest — and an increasing — portion of college job cuts, federal data shows. Hechinger’s analysis found private nonprofit institutions that cut instructional staff tended to do so at a faster rate than their enrollments fell, leading to worse faculty-to-student ratios. Layoffs can mean fewer professors to teach classes, making it harder to graduate on time or in a chosen major. Buyouts can mean fewer classes taught by the most experienced faculty. 

And replacing tenured professors with instructors who have fewer job protections could limit academic freedom and hurt the student learning experience, said Tim Gibson, president of the Virginia conference of the American Association of University Professors, which filed a complaint in February 2025 protesting cuts at the University of Lynchburg.  

“Faculty in those positions tend to be very afraid of speaking out on matters of curriculum or governance issues, or pushing back,” said Gibson, an associate professor of communication at George Mason University.

Scores of schools that Hechinger’s analysis flagged with warning signs have cut staff and campus amenities to balance their budgets. 

At the University of New Hampshire, officials closed the dining hall on weekends, shut campus pharmacies, raised tuition and laid off dozens of professors and staff members. Students have protested the state legislature’s votes to further cut funding for higher education.

Students at Meredith College in North Carolina are protesting layoffs they say have led to fewer courses offered and the elimination of four dean positions.

Rhode Island’s Johnson & Wales University cut 91 faculty and staff positions last year. Students have raised concerns about worsening dorm conditions, the rising cost of laundry and meal plans, and a new policy requiring students to live on campus for three years. 

Related: More than a quarter of private colleges are at risk of closing, new projection shows 

And the University of Lynchburg cut, in all, 12 undergraduate majors, 25 minors and five graduate programs, as well as announced 40 staff and 40 faculty reductions.

For most universities, financial troubles start with student enrollment. Declines have been accelerating; in 2019, for instance, about 1,050 colleges and universities — or 53 percent — had experienced enrollment drops in three of the previous five years. By 2024, that figure rose to about 1,090 institutions — or 58 percent. And public universities in particular are seeing steeper enrollment declines: One in 3 public universities saw enrollment decline at least 10 percent from 2019 to 2024. That’s up nearly 50 percent from 1 in 4 in 2019. 

The problem is likely going to get worse. 

“Looking at demographic projections, with smaller high school graduating classes coming, it’s going to be harder for them to compete for students and get enough bodies in the door,” said Robert K. Toutkoushian, a University of Georgia professor who specializes in economic analysis of higher education issues.

At Lynchburg, enrollment rose to nearly 3,600 in 2020, before dropping to roughly 3,200 in 2024. University President Alison Morrison-Shetlar declined to provide the latest enrollment figures.

The institution’s struggles offer a glimpse of what students at more colleges may soon encounter. 

It ended four of the last five fiscal years at a deficit, reporting a $2.1 million loss as of mid-2025, according to a financial audit. Graduation rates have slipped: Fifty-seven percent of students seeking bachelor’s degrees graduated within six years as of 2024. That’s down from 66 percent in 2021, though similar to the 2014 rate, 56 percent. 

An accreditation body placed the university on warning in 2024 and again in 2025 for its failure to meet standards for financial responsibility and student outcomes. Morrison-Shetlar told the accreditors she’s confident the university will reach full compliance by December 2026. The accreditor did not respond to emails or phone calls seeking comment.

The university’s board of trustees has shrunk from 36 members in 2020 to 22. Former trustee Michael Gillette said he resigned in 2023 because administrators made key financial decisions without providing board members with budget documents. The university said it follows established governance procedures.

The University of Lynchburg spent at least $1.7 million to change its name from Lynchburg College in 2018 to raise the institution’s stature and attract more foreign students, who typically pay full price. Federal data shows the university had 249 international students — about 8 percent of the student body — in 2024, nearly quadruple the number in 2014. 

Appealing to foreign students to subsidize domestic ones is a popular strategy; about 750 public and private not-for-profit colleges have boosted enrollment of international students by at least 10 percent in the past decade. But those efforts are in jeopardy as the Trump administration pushes to make it harder for international students to get visas.

Recently, the university launched certificate programs like one for cannabis careers, its first Ph.D. program and several three-year bachelor’s degree programs. Morrison-Shetlar is focused on stabilizing the budget, launching a fundraising campaign and “adding programs that are attracting more students towards high-paying jobs, something that families are very, very aware of these days,” she said. “They want to make sure that their kids have a good job to go to and are well prepared for that job. And we do that very, very well at the University of Lynchburg.”

Mutz enrolled there because it was near her hometown and offered a better financial aid package than another local university. Her family still took out about $10,000 a year in federal loans, but she hoped that investment would be worth it as she pursued a biomedicine major.  

Mutz said officials announced the 2024 cuts in a mass email to students. “They did tell us you can still continue your degree plan,” Mutz said. But she said university officials didn’t acknowledge the cuts meant fewer in-person classes at the university — and she didn’t receive any follow-up after that initial email.  

Instead, students often learn new information first through the student newspaper, The Critograph. This year, student journalists reported about a recent and otherwise unpublicized round of university-wide faculty buyouts. The newspaper also revealed that the university is down to just three academic advisers, compared to seven previously. 

Morrison-Shetlar has said that students will still receive adequate advising, but some students have already run into problems. Willow Martin, a psychology major, received a surprising message from the advising office this year — that she won’t be able to graduate on time.

Martin, who expected to graduate in May, was told she needs 11 more credits, including courses that she fears the buyouts will affect.

“I’m not really sure who’s going to teach my upper-level psychology classes,” she said. “I’m not really sure what’s going to happen.”

Meanwhile, Lynchburg has moved some undergraduate classes online. 

Morrison-Shetlar, who will retire at the end of June, said students can take other classes through a regional consortium.

“All of the students work with their advisers to make sure that they can graduate on time and that the classes that they need are appropriately provided,” she said. 

Students said that is not the same as taking all their classes at Lynchburg. Some have started voting with their feet. Thirty percent of Lynchburg students transferred out in 2024, according to federal data — up from 18 percent a decade ago.

Related: Losing faith: Rural, religious campuses are among the most endangered  

Mutz tried to make it work at Lynchburg. She returned to campus in fall 2024 for junior year, but “I didn’t really like the environment,” she said. “The financial issues were a huge contributor. We were paying, but we just weren’t getting enough resources or benefits.”

She ended up transferring to Radford University, in southwest Virginia. Even when she learned some of her core courses wouldn’t transfer because they didn’t meet her new university’s standards, she said it was the right choice to leave Lynchburg.

“All my friends that I know that went there transferred,” Mutz said. “I don’t know anyone that graduated from there.”  

Contact investigative reporter Marina Villeneuve at 212-678-3430 or villeneuve@hechingerreport.org or on Signal at mvilleneuve.78. 

This story about college cuts was produced by The Hechinger Report, a nonprofit, independent news organization focused on inequality and innovation in education. Sign up for the Hechinger newsletter.

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