Closures test resilience of Philadelphia higher education
Writer: Melis Turku Topa
August 2025 — Higher education is facing one of its toughest tests in decades as enrollment drops and costs rise. Meanwhile, the value of a degree is being questioned as interest in trades and technical colleges grows and college closures and consolidation become increasingly common.
“This is a very volatile landscape. We are a small private college, just as vulnerable as many,” Brian McCloskey, interim president & CFO of Chestnut Hill College, told Invest:. As the college marks its centennial anniversary, planning is underway to stay ahead of the curve for the next century. “I see the challenges, the headwinds that are coming. In higher ed, we talk about the enrollment cliff. It’s here in the fall of 2025 and the fall of 2026… But we’ve positioned ourselves well.”
Between 2010 and 2021, enrollment at U.S. degree-granting institutions dropped by roughly 15%, according to the Federal Reserve Bank of Philadelphia.
“We conclude that the demographic cliff is predicted to significantly increase the number of institutions at risk of severe financial distress, including closure,” a 2024 Philadelphia Fed study noted, estimating that in worst-case scenarios, annual closures could more than double to 80 institutions nationwide.
Financial instability compounds the problem. Public funding has flattened, tuition growth has slowed, and inflation has raised costs. “This revenue trajectory is unlikely to be sufficient to fully offset still-elevated labor and wage costs, rising capital needs, and a sharply uncertain legislative landscape,” explained Emily Wadhwani, senior director at Fitch Ratings, as cited by WHYY.
Philadelphia saw a major shakeup to its college ecosystem in June 2024, when the University of the Arts (UArts) abruptly closed, leaving 1,300 students without clear paths forward. A fixture of the city’s cultural life, UArts cited rapid enrollment decline and mounting expenses as key factors in the closure.
“With a cash position that has steadily weakened, we could not cover significant, unanticipated expenses. The situation came to light very suddenly. Despite swift action, we were unable to bridge the necessary gaps,” said Judson Aaron, chairperson of the University of the Arts’ board of trustees, and UArts President Kerry Walk, as cited by Action News.
Students and faculty described the closure as a loss of community. “I’d never been to Philadelphia before I moved here, I just loved the school so much that I had to be here,” one student told WHYY News. “I was really feeling like I had a strong foundation and community here and now it’s gone.”
The ripple effect is not limited to UArts. In May 2025, Penn State announced the closure of seven Commonwealth Campuses, including DuBois, York, and Wilkes-Barre, by the end of the 2026-27 academic year. The decision, driven by financial losses and high maintenance costs, shines light on the systemic nature of the crisis.
In an interview with Invest:, Gary Liguori, chancellor of Penn State Abington, highlighted the broader challenge of communicating higher ed’s value. “The challenges are getting more complex every day. It is no secret that in 2025, there is growing public questioning of the value of higher education… However, when looking at the trajectory of our nation and the world, the value of higher education is clear. It fosters innovation at a level that has allowed America to be a global leader in research and innovation.”
He added that campuses like Abington must prove their relevance through workforce alignment and community engagement. “We must ensure that people see the value of higher education locally, in their neighborhoods, and recognize that it truly makes a difference.”
Colleges are not just centers of learning, they are major economic anchors. In Pennsylvania, private colleges contributed nearly $29 billion to the state’s economy in 2024, and when including teaching hospitals, the figure reached $65.6 billion. Collectively, they support about 195,000 jobs and generate more than $1.5 billion in state and local tax revenue, according to the Association of Independent Colleges and Universities of Pennsylvania (AICUP).
“These schools lead the state and do the heavy lifting for Pennsylvania by creating jobs and attracting talent to the state,” said Thomas Foley, president of AICUP, in a press release. “The AICUP schools are the lifeblood that keeps dozens of towns in Pennsylvania thriving.”
Cities lose more than classrooms when colleges close. According to The Philadelphia Citizen, the weakening of the education sector can have ‘highly disruptive impacts on jobs, real estate, and most of all, students and faculty’ — a dynamic that played out after UArts’ exit from Center City.
For students, closures often mean abrupt transfers, lost credits, or abandoned degrees. Nationally, only about half of students whose colleges shut down continued their education elsewhere, according to the State Higher Education Executive Officers Association. Meanwhile, faculty and staff face job insecurity and financial stress; at UArts, unpaid wages added to the turmoil for employees already grappling with the loss of their institution.
The Philadelphia Fed is working on predictive models to flag institutions at risk of financial distress earlier, offering potential tools for policymakers and communities to prepare. The predictive model is built on machine learning techniques, specifically logistic regression frameworks augmented with regularization methods to handle incomplete or missing data. The researchers trained the model using data from the National Center for Education Statistics’ Integrated Postsecondary Education Data System (IPEDS), along with institutional finance, staffing, and enrollment data. By incorporating a broad set of predictors, from tuition dependency and liquidity ratios to enrollment shifts and local economic indicators, the model can estimate the probability that a given college will experience financial distress or closure. But without stronger intervention, whether in the form of state support, collaborative mergers, or innovative funding models, closures are likely to accelerate.
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