Higher education meets high finance - The Hustle
The Hustle

Higher education meets high finance

College mergers and acquisitions are on the rise.

Academia and industry have some stark differences — but a new trend in higher ed is straight out of the corporate playbook.

There have been 95 college mergers in the past four years, 21% more than in the previous 18 years, per The Wall Street Journal.

Why would colleges merge?

Like most things in business, it starts with supply and demand. Demand for college degrees has been falling due to:

Another reason? National sentiment around college is shifting. In 2019, only 51% of US adults said they considered a college degree to be “very important,” compared to 70% in 2013.

But not all schools are struggling

Brand-name schools and state schools are doing just fine. It’s the community colleges and smaller, less prestigious private schools that are getting hit the hardest.

One example is Mills College, a historically all-women’s school near Oakland, California — not far from Silicon Valley. This proximity made the school a target for Northeastern University’s M&A team when Mills announced it would close in March 2021.

The deal looks like a no-brainer:

This is just the beginning

When the pandemic swept the country in 2020, the US government dropped $76B to help colleges avoid financial peril. While the short-term solution helped, it’s also allowed struggling schools to delay the inevitable.

Robert Zemsky, a professor at the University of Pennsylvania, suggests 500 four-year colleges and universities may close in the near term.

In other words — a lot more acquisition targets.

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