Massachusetts eyes new office to protect students at cash-strapped colleges

  • Hampshire College campus in Amherst on Friday, December 2, 2016. GAZETTE FILE PHOTO

  • Carlos E. Santiago, commissioner of higher education for Massachusetts MASSACHUSETTS DEPARTMENT OF HIGHER EDUCATION

Staff Writer
Published: 1/25/2019 4:14:50 PM

AMHERST — The state is considering a proposal to identify small nonprofit private colleges at risk of financial failure, monitor them and intervene if an institution can not sustain its operations.

The proposal to create an Office of Student Protection within the Department of Higher Education comes amid a wave of small college closures and mergers across the higher education landscape, including 12 in the past five years in Massachusetts. Locally, Hampshire College announced Jan. 15 that it is seeking a “strategic partner” amid money troubles. In nearby Poultney, Vermont, Green Mountain College announced Wednesday it is closing, unable to attract enough students or find a suitable partnership. And as experts predict more closures and mergers on the horizon, officials in Massachusetts are saying the state needs to give the issue greater scrutiny.

The proposed regulations emerged from a working group convened in May by the state’s Board of Higher Education — shortly after Mount Ida College suddenly announced it was closing and selling its campus to the University of Massachusetts Amherst. As a result, Mount Ida students and their families were thrown into uncertainty as they suddenly had to find new schools, and employees were suddenly without jobs.

State regulators have said they want to avoid the kind of chaotic closure that happened at Mount Ida.

“Anything that could go wrong went wrong with Mount Ida, and the Board (of Higher Education) basically said, ‘We can’t allow this to happen again,’” Carlos E. Santiago, the state’s commissioner of higher education, told the Gazette in a phone interview Wednesday.

The recommendations of the state’s working group include requiring annual screening of private nonprofit colleges to determine which are at risk of failure and monitoring those that are at risk. If an institution can not sustain operations, the state would require the school to notify students and prepare a contingency plan to ensure students can transfer or finish their education.

In order to measure a school’s financial viability, the working group proposed relying on a metric developed by consultants at the firm EY-Parthenon. The “Teachout Viability Metric” would use publicly available financial data to assess the ability of a school to “teach out” its current students to graduation.

If a college were found to be unable to complete the current academic year and the following — an 18-month period — the state would require that institution to make a contingency plan to transfer its students.

The state could remove the institution’s financial aid or accreditation for any college found to be noncompliant, the report suggests.

Santiago said the new regulations, which he expects can be implemented by this fall, are designed to protect students. But he added that they could also benefit the higher education industry, which likely wants to avoid another disastrous situation like Mount Ida’s closing.

“If you look at higher education in Massachusetts, it is our third or fourth most important industry,” Santiago said. “I see this as a mechanism to support that.”

There is likely to be some pushback from the state’s small colleges — and the lobbying group that represents them — on some aspects of the proposal. 

At Tuesday’s Board of Higher Education meeting, Richard Doherty, the president of the Association of Independent Colleges and Universities in Massachusetts, said the small colleges and universities his group lobbies for are worried about the metric for measuring financial viability. He also said that they have “grave and real concerns” about “ensuring that the screening metric and its results remain absolutely confidential.”

In a previous interview with the Gazette, Doherty expressed worry that if the state’s concerns over a school’s finances were made public, it would become a “self-fulfilling prophecy.” For that reason, his group is pushing for the financial monitoring to be private.

Santiago said the Department of Higher Education will be looking to state lawmakers to make the conversations about finances between the department and colleges private. Whether that means a specific exemption from the state’s Public Records Law is unclear. 

The new oversight comes as more college closures and mergers are expected. The working group found that the risk of further financial challenges at these non-profit institutions of higher education is “significant, ongoing and likely growing,” and that the state’s regulations are currently “insufficient to ensure prevention/mitigation of future unacceptable disruption to students and others.”

Of those private, nonprofit colleges that remain, almost a quarter of them saw enrollment decreases of more than 10 percent from 2011 to 2016, and 34 percent saw expenses increase by at least 5 percent above revenues for that same period, according to the working group’s findings.

On Friday, Hampshire College President Miriam “Mim” Nelson said that the college took into account its expectations of coming regulations when deciding how to move forward with its own announcement of a desired merger. 

“We have been very aware of this work, we’ve been kept abreast of the work," Nelson said of the state's newly proposed regulations, adding that state officials have talked about these kinds of changes for several years.

Now that the new regulations have been proposed, Nelson said they will become part of the conversation the Hampshire College’s board of trustees has late next week when it decides whether to admit a fall 2019 class. That decision is expected before Feb. 1.

More than 2000 students, current and former faculty, professors from other colleges, parents and others have signed a petition calling on Hampshire College to admit a class this fall. Not admitting a class could result in layoffs and other human costs, and could create further pressures on the college’s budget, the petition reads.

Nelson said there is a greater level of scrutiny on colleges than there was several years ago. The state’s proposed regulations are meant to protect students who are considering whether to come to campus, she added.

As to why Hampshire decided to admit 39 students as part of early admissions, only to then announce the college might not accept an incoming class, Nelson said college officials unfortunately were still deciding how to proceed at that moment.

“We had been gathering all of this information, talking to the different folks of higher education in the Boston area, getting guidance,” Nelson said. “We just weren’t ready to make that decision at that point in time.”

For his part, Santiago, the higher education commissioner, said he’s appreciative of the advanced notice Hampshire College gave the state regarding its future plans.

“I congratulate them for that, it shows they really do have their student’s interest in mind,” he said. “And if it comes out that they can’t find a strategic partner, I think the students will be well taken care of.”

Santiago said Hampshire has reached out to establish communication with the Department of Higher Education, which wants to be appraised of any developments, in case the state needs to work with the college to develop a teachout plan for its students.

Dusty Christensen can be reached at
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