Tuesday, May 19, 2026 - Closing down a college turns out to be a big job. For this episode, Jeff and Michael talk with a specialist on the complex and emotional process, Doug Moore. He shares all the things that college presidents and trustees should know—as well as surprising moments as he has helped colleges navigate finances, lawsuits, community impact, teach-outs, and more. And he explains why he sees signs of hundreds of college closures on the horizon.
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“The Looming College-Enrollment Death Spiral,” by Jeff Selingo in The Atlantic.
“History auctioned as Iowa Wesleyan closes its doors,” in Homegrown Iowan.
0:00 - Intro
1:04 - The Surprising Complexity of Closing a College
3:00 - How a ‘College Closure’ Found that Profession
5:17 - How Do Colleges Find a Closer?
9:00 - Walking Through the Early Phases of Closing a Campus
14:53 - What Happens After the Final Graduation Ceremony?
18:55 - ‘Community Freebie Days’
22:33 - What’s The Most Surprising Thing a Closing Campus Had to Auction Off?
26:12 - Warning Signs That a College Might Fail
28:19 - Why College Sports Can Shutter Colleges
30:26 - 400 Colleges Could Fail in the Next 10 Years
32:11 - 20 or 30 Colleges Could Close This Year
33:18 - Why Don’t More Colleges Merge?
35:00 - Is Anyone Buying Closed Colleges?
38:33 - The Emotional Toll of Closing a College
42:06 - Sponsor Break
42:35 - Did Higher Ed Build Too Many Colleges?
49:28 - What Is Emotionally Lost When Colleges Disappear?
51:43 - What Will Happen to All These Closed Campus Facilities?
Doug Moore
Absolutely. I'm kind of the grim reaper of higher ed.
Jeff Selingo
Hey, Michael. I thought you were known as the grim reaper with all your predictions of college closures, but it seems that Doug Moore there is fighting you for that title.
Michael Horn
Indeed. But I'm just the prognosticator. Right? Doug is the one who actually goes in and shows up when a college closes. He's the one who comes in months before actually the closure date to wind the campus down.
We're gonna hear the fascinating and sobering story about how that happens at colleges that are closing on this episode of Future U.
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Michael Horn
I'm Michael Horn.
Jeff Selingo
And I'm Jeff Selingo.
So, Michael, we've spent years on this podcast, and I mean years, talking about mergers and acquisitions in higher ed, so much so that I think our probably audience is tired of it. So today, we wanted to take a look at something higher ed rarely discusses, at least openly.
What actually happens when a college reaches that point where it just can't survive anymore?
Michael Horn
And look, Jeff. Closures still feel shocking when they happen, even though a lot of us have been predicting them. But they're going to become an even bigger part of the higher ed landscape.
So grappling with the implications is incredibly important. And behind every closure, it's a complicated mix of finance, operations, teach-outs for the students, community impact, and thinking about where the faculty and staff go, and a whole lot of emotion, Jeff.
Jeff Selingo
Yeah, Michael. And our guest today, he sees that process up close. Doug Moore has become one of the few specialists out there in the country, helping colleges navigate closures, restructurings, and eventually wind downs.
You know, before higher ed, as he'll tell us, he spent years shutting down industrial plants, and now he works with boards and presidents, creditors, faculty, and students during really some of the hardest moments an institution can face. Doug is a founding partner of a firm that manages colleges closing processes and all those logistics.
And in this conversation, Doug gives us an unusually candid look at why colleges close, what warning signs leaders often miss, why mergers so often fail, and what's really lost when a campus disappears. You know, presidents and boards rarely think about all the steps it takes to close a college or even get to that point of making the decision to close.
And so in this higher ed 101 episode, Doug is going to take us through that process often step by step.
Doug, welcome to Future U.
Doug Moore
Hey. Thanks for having me guys.
Jeff Selingo
So, Doug, when I first met you, on an airfield outside of Chicago, I nicknamed you the college closer, but, you know, you weren't always out on the road closing colleges.
So what were you doing before? What were you closing before colleges, and how did you make that switch to campuses?
Doug Moore
So for about 20 years, I have been working predominantly in the timber industry, closing down mainly particleboard plants. My technical expertise is the manufacture of the wood that's on the inside of IKEA furniture. I know more about gluing those little pieces of wood together than anyone you'll ever meet. That means there's like three of us in the whole world. And about now, seven years ago, I was at a job site in Louisiana.
We were moving a huge piece of equipment to have it refurbished and then moved overseas for one of my industrial clients, and we had a near miss. And in the industrial world, near miss is not a good thing. I did something with one of my contractors that would've probably gotten both of us killed had we been in, you know, the wrong configuration. And it was kind of a wake-up call for me.
Michael Horn
Wow.
Doug Moore
Very coincidentally, right after that happened, I kinda had an epiphany of do I wanna keep doing this? I'm 50 years old, probably gonna get hurt or killed doing this as I get complacent. And I was made aware of the enrollment cliff, and a friend of mine said, what do you think it takes to close down a college? And I said, a lot more than it takes to close a particleboard plant. So during COVID, started really thinking about this. You know, the world had shut down. There weren't a lot of things closing because there was so much government money flowing at them, including the wood industry, you know, and the construction world.
So I started to think about what it was gonna take to close a college, and I built a bench of experts that I could bring in as needed as consultants with myself handling the core business of a closure — bankruptcy attorneys, pension accountants, you know, a huge let me think, organizational psychologists, academic experts.
I just kinda made a list and said, 'Okay. What's the worst case? Who are all the people that I would need?' And it turns out I had about half of them figured out.
Jeff Selingo
And so how do you find colleges, or how do colleges find you? It's kind of like a funeral director in a way. Right? You don't think about how to find one until you need one.
Doug Moore
Absolutely. I'm kind of the grim reaper of higher ed.
So I would say that half of my contacts are word-of-mouth. I've done a lot of speaking at industry events. Jeff, I think I saw you at the municipal bond conference a few years ago. I've spoken to a lot of insurance companies and their annual board meetings and their client meetings. And also at a number of president retreats and again, a whole bunch of industry, but very specific. My key target is presidents or board chairs. Those are the folks that usually are ready to ask for help and are empowered to do so.
Michael Horn
Quick question on that. We're gonna have to have a fight afterwards over the title grim reaper of higher ed. But the curiosity I have is, they finding you before they have decided or publicly announced to shut down? Or are they bringing you in to help them think through that as well?
Doug Moore
In a perfect world, I wanna get engaged at least 120 days before an announcement is made. And the announcement and the vote to close almost always happen in the same day.
So you can call that T minus zero. I wanna be brought in on T minus 121, especially on schools that have a significant amount of debt and maybe a significant amount of creditors, not just one big creditor but a number of small ones. The most important conversation colleges have to have, even if they're just considering a closure, the worst case event you can have, they need to have a conversation with their secured creditors. The worst thing you can do is to blindside somebody that you owe tens of millions of dollars to. You know, that doesn't go well. I could get into that for hours.
But the most important thing is that I get in early. I can manage that whole process. I've done it for 20-some years.
Closure is the same in a lot of the the basics of closure are the same regardless what industry you're in. Higher ed, there's a lot more public involvement. You know, one thing I tell college presidents and board chairs, the day of announcement, right before you make the announcement, you have to call the governor of the state that your school is in. And that sounds simple, but it's not. If you need to get to the chief of staff, you've gotta do the prework to make sure you have the chief of staff cell phone number, you know their name, they know who you are, and that you can get them 24 hours a day.
So there's a lot of behind the scenes details that go into a day of announcement. And again, that's why I like to get in as early as I can.
Sometimes, you can save a college by negotiating with those secured creditors, but you have to start that conversation in a very open, honest, and frank way. And say, we're in trouble, you know, either we are in technical default or payment default, that really gets into the weeds of the bank requirements.
But a lot of times, secured creditors, they don't want to take over collateralized land. Nobody wants a college. Even U Arts, which ended up selling for more than what was owed on it, the creditors did not wanna take those properties back. So a lot of banks do have flexibility to negotiate credit terms, but you've gotta get in there well before you announce a closure.
Michael Horn
Yeah. That makes sense. And I guess I'm curious, you know, with those creditors, obviously, huge cascade of how long are we gonna, you know, be in existence, what's the teach-out plan, all these things start to ripple through.
So perhaps walk us through what are you helping them do? What's the full set of ... What is the process? How long does it take? What are the major milestones in your work with a campus that's closing?
Doug Moore
So let's say it's a campus that hasn't decided if they have to close yet. Let's say we're at T 120, you know, four months before and announce what would happen. The first thing that we do is a really deep dive into the finances. I've got a retired flagship CEO on my bench and she takes care of ... She does the deep dive and looks at the numbers and makes sure that we have an accurate picture of the situation that the school's in.
And at that point, we'll report to the board of trustees with the president there, but we report to the board. They have the fiduciary duty to the creditors, and we'll give them the honest appraisal. Here's what we see. We think all hope is lost or we don't think all hope is lost. But let's make the assumption that hope is lost. It usually takes 30 days for a board to come to the reality that there are no other options except to close. And it is, I can't stress how emotional and horrible this is.
We take no pleasure in a closure. We serve an important role, but it's a really brutal role and I think the reason I'm good at it is I do it with a lot of empathy. So we talk through the closure.
I break the operations of a college or I break the functions of a college into three. We've got operations, academics, and finance. Academics is the part … the portion that we are least involved in. I prefer to have the college, the experts at the college, handle the teach-out and any other details.
Graduation actually is one of the most important things you can do. So they handle the academics, by and large. Sometimes we get involved with the creditors to talk with them through the actual timeline, but finance and operations, depending on who the creditor is and what they want us to do, we will either kind of observe and advise, or we will go as far as to take over both of those functions.
Again, it depends on who the secured creditor is and what they want us to do before the announcement is made. And as I mentioned already, you know, there is a lengthy checklist of what has to happen up to the vote to close and then the actual announcement of closure. We could go in for several hours, but the most important part is that the president needs to make some very important phone calls. The chair of the board of trustees is calling some people that maybe he or she knows personally, big donors.
So there's a number of different functions that have to happen all in a very compressed time frame.
You only have about an hour between the vote to close and an announcement. Otherwise, things start to leak out. There's too many people that are involved in that vote for it to say secret.
So you make the announcement. It's horrible. You do the best you can. You change the website. You have a point of contact for faculty, staff, and students or student parents. The way we handle it is each one of those groups has a separate email address, and they also have a phone number that a real human being answers that phone. It's a call center down in Florida that I've worked with, and each one has a certain script. And our target is to reply to every phone call within two hours, no matter what it is, no matter how upset they are.
And as that's happening, you know, there's chaos for ten days. Depending on when you make that announcement, a perfect announcement would be made mid-March. Thatif you announce March 15, you've got approximately two months before graduation.
So you can use the resources of the closing college to help handle your teach-out, to do an employment fair for your employees, and there's also a period of time there — an unquantifiable emotional period there as well.
You know, when schools announce a closure two days before graduation or the day after graduation, I go berserk. You haven't given people any time to grieve that closure, and that's when litigation starts, accusations start, and it's not a good situation for anybody.
Michael Horn
So you're trying to get sorry, keep going. Yeah.
Doug Moore
Well, no, go ahead Michael. Jump in and I can then move into post graduation because that's a little different animal.
Michael Horn
Well, let's carry it through there actually. Yeah. Okay. Play out play out the movie if you will. When it goes right and when it goes wrong.
Doug Moore
Yeah. Okay.
So we announced the closure mid-March. We've gone through to graduation day, we've held a number of student fairs with teach-out partners.
My approach is that I will bring in any school, not just teach out partners, but I'm not gonna die on that hill. If the teach out say, we don't want anybody else there, that's okay. I don't believe you're serving the students as well as you could. I'm a big believer in having a huge tent as opposed to limiting it to your teach out partners.
We do the same thing for an employment fair for faculty and staff, and pension is always a big issue. Healthcare, also a really big issue. Again, using the resources of the closing colleges. When I say resources, a lot of this is physical space. You know, a large meeting room, large flat space where you can have people spread out, you can answer questions, you can have meetings.
And so you lead up to graduation day, and up until that point, everyone is working hand in glove. Operations, academics, and finance. And most of the employees are still there, and graduation day is the point of transfer. So that's the point that we take over completely, get the keys.
My preference is at that point that the president would step down. I think there's a lot of benefit for a president to get through graduation, but step down at that point. I think for their future employability, they don't want to be the grim reaper.
Michael Horn
So Yeah. That makes sense.
Doug Moore
Yeah. End of graduation day.
You make sure graduation goes well. It's an incredibly important milestone for kids and families. You know, do what you can. If you have to raise money to do so, you know, that's the way it goes. I did a school in 2023 that we pulled off a graduation with some cash from my pocket, the president, a number of us threw some money in, and it was the right thing to do. It's that important of an event and a celebration.
So then after graduation, we take over, and then it becomes pretty much a standard liquidation project.
You know, higher ed's a little different because of FERPA. There's a lot of confidential information that's sitting in paper in file cabinets. So what we do is we first make the campus safe. The way I handle that, and this is where my industrial experience comes in, we will put the facility in a zero energy state. And that's kind of an industrial safety term, but it basically means no power, no compressed air, no pressurized water. You get it to the point that the dumbest thing could happen, and nobody's gonna get hurt.
The example I always give boards of trustees is I don't really care if somebody breaks in and steals a couple 100 pounds of copper. What I do care about is if a high school kid breaks in to drink beer with his buddies and says, 'Hey, let's turn some lights on or let's get some power so we can plug in our Bluetooth speaker,' and they get electrocuted. You know, there is nothing that can be lost or stolen that is more valuable than a human life.
And this is, I've actually fired a few clients over the years that don't seem to understand this because the 'make safe' is not a cheap prospect. You have to bring in contractors to make sure you do it right.
So we are sorting through all of the file cabinets looking for FERPA-sensitive documents. We pull those out. We either shred those or we burn them. We make them unreadable. That's the general standard. And then with the important documents for the history of the college, we have a ... Usually just a storage unit, a conditioned storage unit that we've acquired that we start to put all the important stuff in.
The history of the college, the old yearbooks, the mace, any memorabilia that is not pledged as collateral. So we start putting that aside. We get it to the point that all we have is items to be sold on behalf of the secured creditors in an auction, and things that are bolted in, and junk.
So then we do what we call 'bag and drag,' which is exactly what it sounds like. We throw all the junk in a bag and we drag it to the dumpsters. Then kinda concurrent with that, we start the auction process. I work with an auction group out of Iowa that I've known for years. They've done a number of school auctions for me. They'll come in and as we bag and drag one building, they follow us.
So they do the auction setup, they're all online auctions. And at this point, we're selling on the behalf of the secured creditors. The college is kinda out of the picture at this time. Most of the assets of these colleges have been pledged as collateral. So when the loan goes into default, that becomes recoverable assets, meaning selling to recover some of the money. We do the auction, and again, the auction, it's not the whole campus at once. You do it build building by building, you have a setup, the auction, and then you have pickup. After pickup, this is something I think I'm kinda unique on.
There's always stuff left over in these buildings that doesn't sell in the auction. So what I do is I call it community freebie days.
So we literally open up the doors, we advertise it, especially in the smaller towns. And it's not just a time to come and get free stuff that is, you know, sitting around, but it's also an opportunity for people to say goodbye. And that has turned out to be the most powerful thing that we've come up with, And it takes some time.
And after that process, then you have a campus that is ready to be sold. There's some small items that always come into play here. There's memorabilia that has value. There's art, which also pledges collateral. That usually gets shipped off to a very specialized art auction house. Sometimes there's issues with power, HVAC, and things like that. You sort all those out, and then you get to the end and you have a campus that you can list for sale.
And in some cases, we have been involved in the sale process. In many cases, the secured creditors will bring in a national broker in order to sell these properties.
So the work on-site usually takes between three and six months from the point of closure.
And selling the campus, if you're lucky, maybe within a year, but there's a couple sitting out there right now that have been out there for well more than a year, and I don't foresee them moving anytime soon.
And what we do after we leave the site for seven years after the closure announcement date, we are the face and the phone number of the university. Predominantly, that's for accreditation ... How would I how would I describe this? Certain specialties and certain background checks require a raised seal and a signature. A lot of medical specialties require something from the college that that person attended. So if that's required, we're the people that do it. We have a post office box in Ames, Iowa for every school we've closed, and that'll be there for seven years.
So, and I usually, maybe one or two requests a month after the first year. The first year is chaos. After that, it just dribbles down to nothing. But as I said, a lot of it is nursing accreditation or nursing certifications in different states require a representative of the school and a lot of medical specialties and some high end security clearances with the US government. They want somebody from the college and that's the role that we play. And unfortunately, we also handle all the paperwork for the inevitable litigation that comes with unpaid bills, maybe class-action lawsuits from employees, parents, students, you know, there's a whole bunch of things that happen.
If we do it right, we don't have any litigation over the academic side. If we don't do it right, then there's all kinds of problems. And I say do it right, having lots of time as I described at the front end.
If you have a what I call a chaos closure, litigation's inevitable. And I'll name names. Alderson Broaddus in West Virginia was the poster child for as bad as it could happen. And that one was where the West Virginia Higher Ed Commission removed their accreditation four days before their athletes are due to arrive on campus. It was the right decision, but it was chaos.
Michael Horn
But it was chaos. Yep. Yeah.
Doug Moore
And there were several lawsuits.
Michael Horn
Let me ask you this, Doug.
I mean, occurs to me what you just described is, A, fascinating. Probably most of our listeners haven't thought through just how comprehensive, it is.
But, second, that the amount of coordination, culture, cash needed frankly to pull this off at a college that probably is low on all three is extremely challenging as well.
What's the most surprising thing you've had to deal with or auction off?
Give us a little flare, I guess, for the surprising as you've had to shut down a college.
Doug Moore
So we did a nursing school in Chicago in 2024 that was almost brand new, and this was not bad finances. This one was COVID related.
It was a transfer-in school, and they lost their entire pipeline of community college kids that were doing the prereqs. You know, they would then come to the nursing school. And the teach-out partner took quite a bit of staff with them, and I got a call out of the blue from the radiation monitoring company that the little radiation tags that the instructors for x-ray techs, everybody has to wear one of these including the students. Well, they're cumulative, and they get sent in for analysis every couple of months.
Well, the tags and the faculty went to the teach-out partner and they took ... again, the tags went with them. So we were about one day from the Nuclear Regulatory Commission having to get involved in this because they had never been involved. But these people were not gonna be allowed to teach if we didn't get some kind of resolution about the tags and the folks that run the tag program also had not been paid. So you have an unsecured creditor who's not real excited to help. You have a group of wonderful faculty people who just wanna teach, and they're being held up by this little tag, and it turns out that you can't replace your tag. Because, again, it has to be cumulative. It's the exposure over time. And it was an absolutely fascinating part of the world of radiation that I never would have known had happened. And at the end of the day, we did have to …
We made an offer in kind or we made an offer to the unsecured creditor. We paid them 50%, and they were able to help us resolve this entire issue without getting the Nuclear Regulatory Commission involved.
Michael Horn
Hey. Sounds like a ransom situation.
Jeff Selingo
I'm gonna situation. Yeah. I'm gonna bring you to my next cocktail party too because you just have so many great stories, and you've been involved, obviously, with helping to close a number of colleges.
I know you can't name every name, but can you name any names in terms of some of the ones that you've closed?
Doug Moore
Oh, yeah.
So I've been involved, either directly or on the periphery, of just about every school in the Midwest that's closed in the past five years. I've handled the direct closure of Iowa Wesleyan from soup to nuts, and Oak Point Resurrection in Chicago.
On the periphery, I was involved on the front end before the bankruptcy filing at Alderson Broaddus. Wait, I gotta go back a little bit now. I was involved at the auction at Green Mountain and the early stages of the limestone debacle, which still is unwinding down in Gaffney, South Carolina, and then advising. I've got eight client schools right now that I can't name that we're working with to help them survive.
And a lot of that is in negotiations with their secured creditors.
Jeff Selingo
So I wanna go there because, you know, you've seen some trends now in what have turned out, you know, after the fact and what really should be warning signs that a college is headed for closure.
What are some of those trends that have really turned out to be warning signs to you that a college is in trouble?
Doug Moore
More than 70% of your students are athletes.
You have more than a 70% discount rate.
And you have a president who's been there less than one year.
And each one of those on its own is bad. All three of those is almost a guarantee that you're gonna have some real serious problems.
Just last week, Anna Maria closed. They announced their closure. Their president has been there since not even a year yet. I think he's been there nine months.
What tends to happen is that presidents see the writing on the wall, and they will retire. They bring in the new president, and maybe they don't know the questions to ask as far as, you know, reading financial statements, getting into the federal audits, the things that I spend a lot of my time doing. And they take the job, and then all of a sudden, the skeletons come out of the closet, and it's unrecoverable. But the president that caused the problems is long gone.
So the short-term president or a lot of presidential turnover is a huge red flag. The 70% discount rate is absolute insanity, and any school that has a year-on-year discount rate like that that doesn't have a Macalester-level of endowment is just not gonna happen. I'm not picking on Macalester. They're a wonderful school. Macalester, or Grinnell, one of those $3 billion unicorns. You know, unicorns that sending a lot of money. Right.
And then the the percentage of athletes, that goes hand in hand with the discount rate. And, you know, Jeff, I know that, you know, there's been a ton of books written about the rise of D II and D III athletics. There's a number of consultants. There's a guy on Facebook that puts up great stuff, Keith Marillo, I think is his last name, about the recruiting and the scholarship process.
Jeff Selingo
So what makes that such a drain, Doug?
Doug Moore
Because it's a race to the bottom as far as giving those kids money. That's where your 70% discount rate tends to come from. When you were the first school on the block to go big in athletics, let's say women's lacrosse, you didn't have to give a huge discount to get kids in the door. Well, then the school down the road went, 'Hey, we should put women's lacrosse on there because that's 60 kids that we can put butts in seats. And so that's where that huge amount of athletes is a big problem.
The other part of it is when you have that many athletes, you also have a mountain, usually a mountain of debt in facilities costs. You can't have 14 sports without the facilities to support those. And that has become an arms race of brick and mortar. The problem is most of those facilities have been paid for with debt. And that's where the house of cards really gets wobbly.
The debt is not what's causing colleges to close. They're losing money on their base operations. But when you have this 800-pound gorilla of tens of millions of dollars of debt over your shoulder, it's a no-win. And in a declining enrollment, we all know about the enrollment cliff, the skilled trade pay increase is going off the charts.
We've got AI concerns right now, and then you've got the drop of the college degree requirement by some of the largest employers in the country. So it's like the perfect storm of closures. And I don't know if it could have been foreseen. I think there were some people that saw this with the getting big in athletics. I think some warning signs were out there about the cost of facilities.
The ones I really like are the folks that have the shared facilities with, like, a local high school or maybe another college or a community college. Those you can cut your costs on. But if you're a standalone school, you know, you're talking probably $40 to $50 million in facilities, minimum.
Michael Horn
Well, so, Doug, when you start to you... You talked about forecasting this and seeing it and so forth, and I how widespread, you know, you're obviously looking at a lot of numbers. You're thinking about future clients and where demand is gonna be also. Like, how widespread is this challenge of failing colleges in this moment of higher education? I'm curious.
Would you make a prediction for us of how many campuses might be forced to shut down in the next couple of years?
Doug Moore
I think we're gonna see 400 schools close completely in the next seven to ten years. Years. No mergers, meaning an abandoned campus. And that is a big number.
Michael Horn
That is a big number. And I'm curious, you know, you started to diagnose the scenarios for why. Do you finger the blame at someone at the campus, or is it much more complicated than that always?
Doug Moore
It's actually simpler than that, Michael. This is supply and demand.
That's it. We have too many seats for not enough buts, and those butts are declining.
I just got a piece of data, a graphic today from Wally Boston. He did a great job in 2024, and it's a graphic showing state by state the drop in 18 year olds. And, you know, Nathan Grawe did beautiful work on this as well and continues to do it out of Carleton College up in Northfield.
And if you look at some of the numbers. You know, Illinois has a 32% drop in 18 year olds coming in the next five years. Supply and demand is the oldest thing in the world. What's gonna happen is who's gonna survive when we reach that point of equilibrium? You know, can you maintain it, when all these other colleges are closing? Right? We're reducing our supply, and we have a little bit of a decrease in demand. You know, there will be schools that survive through this.
But we also have to remember, we built an industry for the baby boom generation, and it has never and I hate to use the word right sized. That's, you know, that's a way to justify layoffs in corporate America, but we haven't. There's been no adjustment.
There haven't been that many colleges closing. You know, last year, we had 25 nonprofit four years. This year, we're at eight so far, and I think we're gonna see another 20 or 30. And again, going back ...
Jeff Selingo
To the end of the year? By the end of the year, Doug?
Doug Moore
I think by the end of the summer.
Jeff Selingo
There's a headline for us. There's a headline us.
Doug Moore
I think what's gonna happen is that, a lot of these schools ... I talk about you're either holding on by your hand, you're holding on by your fingertips, or you're holding on by your fingernails. The fingernails should not open in the fall. Most of them can't … they can't guarantee they're gonna pay the big three: payroll, utilities, and feed your students. If you can't guarantee that you can pay that through at least the first semester, I personally say you shouldn't open.
Jeff Selingo
Yeah. Well, so, Doug, the thing that Michael and I have done, we've done a ton of shows on mergers and acquisitions in higher ed in hopes of maybe trying to encourage more of them, but there just are not a ton. Why is that?
Doug Moore
All the attractive schools have been picked up. I have this conversation every week with boards that they think this is the panacea, and they've been told by consultants that this is the panacea. There aren't that many schools that are willing to take on a campus, and they're definitely not willing to take on the debt associated with that campus.
So if we think about the situation where a school owes $20 million, they've collateralized every inch of property on their campus, and they have a school that's interesting in acquiring, maybe a part of their college.
The second the discussion comes down to, 'Okay, we'll take your health sciences operation and we'll take that facility.' And then somebody, usually at the the attorney level, does their due diligence and they say, 'Wait a minute, that facility is under is pledged as collateral for $20 million in debt.'
And that's when these mergers fall apart. And that's why, now I'm coming full circle, that's why those contacts and discussions with your secured creditors have to happen way earlier, and need to be very blunt and honest. And, you know, you actually need to go to that table and say, 'We're in trouble. We have a possibility of someone acquiring part of our campus, but we're gonna need you to give us a release.'
And that's when discussions about what's called workout in the banking world Right. Or credit negotiations comes into play. And most colleges don't speak that language, and they're terrified to have those conversations where I argue you need to have those. Yeah.
Jeff Selingo
So, Doug, I know that you're not really on the selling side once the campus is ready to be sold, but I'm just kinda curious. What is the buyer's market like for a closed college? Or are these gonna be you know,
I'm on I for some reason, I get all these things around closed malls around the country, right, where, you know, you're talking about teenagers, right, going into those. They film these, like, great videos inside these closed malls, which had these great lives years ago. Is that what all these colleges are gonna look like? They're just gonna look like these closed malls, or is there a market for these campuses?
Doug Moore
It depends on the community that they're in. The real heartbreak of a closed college is the more rural that the community is, number one, that college is much more important to a small community than it is to the city of Philadelphia.
So you've got a small college in a very rural area and they close and there's an economic, huge economic, you know, carry on effect, stores, bars, all the things that college could spend money on.
When those sell, you know, the most recent, we have a what I would call an arm's-length transfer number of Alderson Broaddus sold for $5 million out of bankruptcy, and that included all the contents.
So let's just say that the contents is worth $2 million in liquidation. So the land and buildings of that whole campus sold for, give or take, $3 million in a bankruptcy auction. Their last appraisal was somewhere near $70 million, if memory serves. So you're talking about getting, you know, pennies on the dollar.
The real fear is that there won't be a buyer. You know, you'll have a property that it sits empty and becomes short term an attractive nuisance, you know, the kids going in to drink beer, and long term becomes an actual blight on the community, and there's no money to pay to demolish it or to maintain it.
You know, the carry cost of a closed anything, a closed building in a freeze area is about $7 a square foot, and that includes property taxes. So we can't you know, we won't worry about tax-exempt status. Below the Mason Dixon line or in an area that doesn't have a freeze cycle, it's about $5.50 a square foot per year.
So if you have a million square foot campus, which would be average of small, call it a 1,200 student campus, you're talking $500,000 a month just in carry cost. And again, the college closed, they didn't have $500,000.
Michael Horn
Right.
Doug Moore
That was why they closed. What happens when the school that it doesn't sell, and as I mentioned early, banks do not want to take ownership of their collateral. This is the reason.
So to answer your question, Jeff, it depends on where it is. You know, U Arts, I brought up as an example. A book could be written about their closure in Philadelphia, but at the end of the day, U Arts closure was devastating to faculty, staff, students. It was horrible, and it was handled horribly.
Financially though, the bond ... The folks that held the bonds, they sold that debt to a distressed bond buyer who then sold the buildings through a foreclosure process and bankruptcy, sold those buildings and made back almost everything that was originally owed on them.
Jeff Selingo
This is what happens when you're in a city. Right?
Doug Moore
Exactly.
Jeff Selingo
So, Doug, in closing, and and no pun intended with that.
What's lost here? You have talked about the emotion of this. Right? These so many of these colleges dot the landscape, small colleges, small towns, kind of the heart and soul of them. But how about you personally? Do you, you know, we talked about the emotion on the other side, but you're coming in. How do you handle the emotion of it? Do you just, like, say, this is my job. I'm moving forward, or do you ever get emotional about these places?
Doug Moore
No. Because I'll tell you, Jeff, the day that I don't get emotional about it is the day I quit because that's the key to this is being empathetic. I mentioned that before. This is devastating to a community. It's devastating to faculty, staff, everyone who has touched that college, alums. It's hugely impactful. This is the best four years of most people's lives.
So I tend to vent off some steam, but I also am brutally honest, and I'm upfront with everybody.
You know, I actually move into a building of the closed college, I move into. So I lived in the basement of Iowa Wesleyan's building for six months. And I tell people, 'Hey. If I'm here, the door's open. Come. I will answer any question I can.'
In many cases, I can't answer the story of, ‘How did this happen in the long term?' In the short term, it's usually pretty clear cut. We ran out of money. In the long term, I do my best.
My background is I have an accounting degree, so I can do some forensic accounting. But I always try to be cognizant of the pain that this is, and I also try to take my own time to show respect to the institution. You know, I take a lot of care. I take a lot of care, and I take a lot of pleasure in finding those important pieces of memorabilia and getting them to people that care about them. You know, the mace. It's a big silly thing. Well, it's important to one person.
You know, we had a beautiful hand carved chair at Iowa Wesley. I'll never forget it. And I was able to give that to the beloved choir director. And it was a big deal, and it meant a lot to me, I felt good about it. There are days that this job really is miserable. And, you know, you've gotta have, you gotta be a little bit of a psychologist, and, you know, I try to do the positive things or at least find the positive. You know, one of the things I do take a lot of pride in, every college has former students who they have had to send to collections after they've graduated. In some cases, this is a lot of money at a collection agency. One of the first things on my checklist after I take over on graduation day is we cease all collection efforts, period.
And we take ... If we have any physical diplomas on the campus, I have one of my staff people go through that box and attempt to call every kid there.
Jeff Selingo
Right. Right. Because at that point, it doesn't really matter.
Doug Moore
Yep. And it's interesting. What I found is, particularly with first-gen kids, not having that physical diploma, even though they have graduated, you know, they didn't get their physical diploma because they owed the college some money. Showing mom and dad that physical piece of paper is ... I've had kids break down in tears because mom didn't believe that the kid had really graduated until we were able to get them that document.
Jeff Selingo
Doug, such the human element of this story that sometimes I think gets lost in all the discussion about the numbers.
Thank you so much for joining us on Future U.
Doug Moore
I appreciate you guys having me. No problem.
And we'll be right back.
So, Michael, we actually don't have a sponsor here this week, so there's no ad break.
Michael Horn
Well, there you go.
I guess a college, though, that's closing probably shouldn't spend its spare cash on us.
But if you're trying to reach the thousands of viable schools that are out there and impact the conversation, come on board. Right, Jeff?
Jeff Selingo
Yeah. Sure. Just reach on out.
But let's go to the conversation we just had. And as I was listening to Doug, it felt like there were some much bigger themes underneath all of this. And here are three that I wanted to kind of unpack and hit on here.
First, whether higher ed simply just built too many colleges for a very demographic era.
Second, what's emotionally and culturally lost when campuses disappear?
And third, which I kind of found most interesting, is whether there's actually a viable future for many of these physical campuses once colleges close.
So let me start with the first one, Michael. You know, did higher ed simply build too much capacity for a country and a generation that really no longer exists?
And I think it's a pretty uncomfortable answer for us. In, 'Yes, you know, higher ed really built itself for peak demand.' And for a long time, the market rewarded growth.
I also think that there was really no one at the institution looking long-term. You know, boards are supposed to do that, but they turn over quite frequently. And even with longer board terms, no one is going to be the person in the room, and I could tell you this from being on a board myself, but also being, you know, witnessing other boards.
You know, no one wants to be the one in the room to downplay growth. Right? Like, this is the American way. We just keep getting bigger and bigger, and do you really wanna be the board member who says, yeah, maybe we shouldn't build that dorm. Maybe we shouldn't build that building. Maybe we shouldn't go after all these students who are demanding to come here. Right? I guess if you're, you know, the Ivy League or one of the big wealthy institutions that don't need to grow to capture more money, you could do that.
But as you know, there are very few of those institutions, and what has changed is that, you know, the demographics changed, the economics changed, and honestly, I think the perception of college changed over the last 30 years.
But I also think there's this deeper issue here, which is that higher ed assumed kind of demand would always be infinite. And when demand looks soft, you know, the answer has become discounting tuition, adding more sports, building another amenity, you know, recruit in another state.
But, again, those were often short-term strategies, not long-term sustainability strategies.
And what Doug made clear is that a lot of these closures aren't really sudden events. Right? They've been kind of if you've really been paying attention at a college, you probably should have known this was coming for quite some time. And so I think a lot of this is a result of institutions trying to preserve a version of themselves that the market no longer fully supports.
And there's a lot of nostalgia here, Michael, and again, I think this goes back to something we've discussed several times on this podcast, is when a majority of your board are alums, it's really hard for them to separate the nostalgia for their youth when they were on campus for the stark reality of what faces a university.
Michael Horn
Yeah. I think that's right. I'm gonna come in with a number of cliches here. Right? But the first one that occurs to me hearing you is, you know, they say winning is the ultimate deodorant in sports. Right? I think growth is the ultimate deodorant in all organizations. Right? It can paper over all sorts of issues. And when you're not growing, you're often struggling or, you know, contracting or closing in this case. Right? And so I think that's part of it.
And then the second line is the Hemingway line, of course. Right? 'How did you go bankrupt? Gradually, then suddenly?' And that's obviously what we're going through here. Right? And a lot of institutions, as you said, took demand for granted. But, you know, supply demand in some ways, as Doug said, is the simple piece.
The other piece is what use you alluded to, right, which is the economics of running a school. It's just it's gotten more expensive.
There aren't economies of scale for traditional institutions. And because of the arms race, they've been pressured to do more. And because of expectations, we should also say from students and families, they've been pressured to do more.
And because there haven't been productivity gains, the baseline cost has just gone up faster than inflation.
Put all that together, and it's just unsustainable coupled with what you were just talking about.
One more thing on this, Jeff. You probably get this too. Whenever I post about closing colleges, which is all too frequently in my case, I get all sorts of ...
Jeff Selingo
You're the grim reaper. You're the grim reaper.
Michael Horn
I'm the grim reaper, right, also. Yeah. Exactly.
But I get all sorts of comments to the posts around, you know, 'But what about adult learners? There's never been a bigger market. Right?' And you and I make the same point all the time. Right? Actually, it's so I then have to say like, oh, look here, here, and here, like we're saying the same thing. But I think here's the other thing that those posters don't acknowledge, which is serving adult learners with a very different academic model, a very different model is not a panacea for a traditional institution. It's a wholly different enterprise. It's a wholly different mindset. It's a wholly different set of processes and assumptions and undergirding what you are offering and how you go to market.
And so it's not as simple as just flipping a switch. Now, you know, we're serving the lifelong learning alum community. Great idea, but really hard to do. Or the adults that frankly need a lot more upskilling.
You know, we had Matt Sigelman earlier in this season, and I still sort of marvel at how much he was just like, 'Well, online learning has changed so much and we sort of don't appreciate how much it's changed because learning occurs all the time around us. It's just not credentialed as a degree in many cases like we used to think of learning for those adults.'
And so it's just a radically, Jeff, I think, much harder problem to chase what should be actually a big opportunity in this time.
Jeff Selingo
You know, Michael, each time we've done an episode on mergers and acquisitions, you always get our guests to try to talk about the emotional side of this. But it seems like closing a college is probably much more emotional.
Although Doug strikes me as somebody who approaches this almost like a funeral director. Right? It's all business, at some point, and you can't get, you know, emotionally tied to each, you know, each part of the the business of this, of each closing a college. But what do you think is really emotionally lost when campuses disappear? It's different than being acquired or merging because you just no longer exist in any form in a lot of ways.
Michael Horn
Yeah. Well, to Doug's credit, I'll say he was actually much more emotional or empathetic, right, than I maybe expected coming into it because he said that's a critical part of the job and giving what we heard also in an earlier episode around a merger, just the opportunity to grieve.
And I think it is much deeper when you're closing because your institution literally becomes history. Right? It's hard to point to the place as an alum. Someone who used to work at the institution who's looking to, you know, maybe the crowning achievement of your career was being a department chair or president or whatever it is, and it's not there anymore. I don't know if you've had this experience. As you know, I've served on a lot of boards, and I've had to, you know, be the board member of two entities that have closed. One, a nonprofit and one, a for-profit.
And it's not fun. Like, you want to delay the writing on the wall as long as possible. I will say in the case of the for-profit, we essentially, got the institution acquired. And so people had their jobs saved. They still had places to work. And a lot of that like, that felt really good. The nonprofit, that was not the case.
And it was really hard, Jeff. I mean, there's just no you know, even if it's not valued, right, and you make the difficult call as a board, you have to have respect for the human lives, I think, that that impacts. And obviously with a college, there's a lot of lore and folklore and storytelling that's wrapped up in there. And I think that's really where emotion sits. Right? That's how we sort of convey who we are as a people and how we matter. And colleges really do tell that story in many cases sort of ripple out, right, in a way just certain organizations, I don't think, have that same maybe lore, if you will, in American history.
Jeff Selingo
Yeah. I mean, I probably the only thing I could compare it to is the church.
You know, my childhood church growing up in Pennsylvania was one of many Catholic churches that have been consolidated and closed over the years. Right? Again, you have memories of those places.
Probably K-12 schools would be the same, I guess. And, you know, I don't wanna you know, we keep talking about the grim reaper and all these other things.
I don't wanna make light, by the way, of any of these closures. These are, it's obviously important business, and it's really emotional for those people who've been part of these campuses. So, you know, before we get some letters from people around this, I think this is both serious business, but also at the same time, it is an emotional piece that we do have to think about.
And so part of this though then, Michael, is what happens to the campus itself.
Michael Horn
Yeah.
Jeff Selingo
You know, maybe it's some meta algorithm that somehow has captured my feed on Facebook, but for some reason, it keeps delivering videos of these zombie malls that exist. And, you know, maybe it's because I'm a child of the '80s, you know, going to the movies at the mall, the Gap, the Orange Julius, you know, Spencer Gifts.
Would love to know what our listeners' favorite eighties stores are in their local mall.
Michael Horn
It's like All Things Remembered or something. Right?
Jeff Selingo
Yeah. Right. All Things Remembered.
Where I don't know who shopped there, but I guess you used to have to get a gift for somebody.
Michael Horn
I think it was bar and bat mitzvah gifts.
Yeah. Keep going. Yeah.
Jeff Selingo
So, you know, and as we know, all these places are now empty, and people go in, and they take these videos, and they post them online.
And it's amazing to me if you ever look at the comments on those, like people, oh, I remember being at that mall in this year, and my friends and I used to hang out at this store and things like that. Like, there is an emotional tie, believe it or not, to retail in the U.S., as well.
And I'm starting to wonder if the same thing will one day happen to college campuses where we'll have these, you know, kids essentially, because I think most of them are kids, like, breaking into these places, taking videos.
And I was really surprised in the conversation with Doug that there isn't a huge market for a lot of these institutions.
Now, obviously, if you're in a city where real estate is you know, there's prime real estate available, Thus, yes, there will be a market there. But as we know, there's a lot of colleges in suburbia, a lot in rural areas where there may not be as much of a market for these.
Michael Horn
Yeah. And look, this has always been somewhat of a mystery to me. It's not and obviously not an area of expertise for me, but, you know, I think we often hear that, 'Oh, health care, you know, facilities could go into this place or senior living, right, or things of that nature.' And you certainly see some of that. Certainly see some of that in Massachusetts where we've closed a lot of colleges over the last decade.
But I think you're right. Like in rural places, this gets, you know, trickier to imagine as well as in suburban places. But I also think it points to, you know, how can you create places that are really experienced-based that pull people back into these spaces. That's certainly something we've seen malls do and sort of recapture some of that nostalgia.
And maybe we're being myopic. Maybe maybe nostalgia goes further than the higher ed campus and church.
But I think the fundamental puzzle, Jeff, that I see is this, which is I think a lot of your hometown actually when I think about this sort of dilemma, if you will. And I think there's a vicious circle at work here, which is that jobs start to migrate elsewhere, people start to migrate elsewhere, the college either contracts or starts to shut down, and then even more economic activity exits. Right? And more people start to leave the town and sort of you have this vicious circle that just sort of winds down.
And the key to me, it seems to me that a college can be part of helping spur or create economic activity by producing the right people for, you know, local thriving for the enterprises, entrepreneurship, and so forth. But I think the trap that a lot of these communities fall into is thinking that the college can be like the remaining site of economic activity itself unless it has like some sort of really clear and compelling value proposition like Williams or Dartmouth — and and now like all the people in Hanover and Williamstown are gonna send me hate mail.
But I guess the point is if all of those things have gone, right, Jeff, like who's there to enjoy a repurposed beautiful campus that is not operating anymore? And it's notworth that much. Right? And so unless you're part of a larger effort of rebuilding the community economically to start with, I'm just not sure where you go.
Jeff Selingo
Yeah. I don't know either, Michael, because many of these campuses will have a lot of deferred maintenance. So many of the buildings on campus, and as Doug said, you know, it just costs money to run the place, you know, even empty. And the deferred maintenance bill for anybody who comes in is gonna be high, so there's probably gonna have to be some, you know, demolition of some of these buildings no matter what it becomes.
But I do think the economic savior argument is what is is hurting colleges right now. They cannot be seen as the factory, because they're not for-profit businesses. Right? They're not meant to be employment centers like a factory or a big manufacturer or a big company that might locate in an area. And I think in many of these places, they've become the de facto company town. Right? They've become central to that. And that puts really undue pressure on these institutions.
And then, by the way, when they do close or shrink, then a big part of the economic activity, as you said, like leaves the town.
And who is going to come in then and say, well, we're gonna turn this into a mixed-use development? Because, by the way, there's no more professors here. There's no more staff members who are getting, you know, pretty good salaries for this town at this university.
And so it's a big worry. It reminds me of not only what's happening with malls, what's happening with big office complexes. You know, there used to be these office parks outside of town. It's essentially what used to happen to military bases as well. Right? All of these things need to be reborn in some way, but you can't have ... There's only so many opportunities to rebirth such places that have huge infrastructure, some of which is very dated.
And so I'm not quite sure what happens besides just, you know, taking a bulldozer to them. I hate to say that, but, like, what else can be done?
Michael Horn
Well maybe that's at least a strategic conversation that communities or governments, right, need to be having. Is this a revitalization effort, or is this frankly the bulldozer and we're gonna do conservation of land and something environmental, right, and give back in that way in these areas?
Both could be plausibly helpful for a community, but that's probably a really big conversation that needs to occur.
Jeff Selingo
Yeah, and I would imagine given the hundreds of colleges that may go out of business over the next 10, 15, 20 years, I'm not making any predictions there, but that seems like a lot to put on the backs of communities.
So with that, we are going to close out this Higher Ed 101 episode on the process of closing a college.
Thank you to Doug Moore for joining us.
Thank you to Michael for engaging, I think, in this critically important conversation.
And we appreciate all you listeners out there who continue to write to us with ideas. Continue to listen, and please again share this episode with others who might be interested, and give us reviews, as well as star ratings on your favorite podcast player.
Until next week. Have a good one.
