The $70,000-a-Year Liberal Arts College Just Won’t Die

(Bloomberg) -- Like leg warmers and mullets, Bennington College seemed a candidate for oblivion a generation ago.

The school has long shined in the now out-of-fashion humanities. Its famous alumni include writers Donna Tartt and Bret Easton Ellis, not some hoodie-wearing tech billionaires. Tucked away at the foot of Vermont’s Green Mountains, it charges $73,000 a year. The college nearly went out of business in the 1990s and was still on its knees earlier this decade.

But Bennington and its more than 700 undergraduates are hanging on. It’s a testament to the staying power of the nation’s small liberal arts colleges amid a torrent of bad news about a deteriorating U.S. higher education marketplace. In particular, the near-death of Massachusetts’ Hampshire College, another school famed for its artsiness, has made many question small institutions’ future. Precious few, however, are going out of business.

“They’ve survived because they’ve been able to exploit what they’re good at, and that has enabled them to continue to attract students and retain faculty,” said David Bergeron, a former deputy assistant secretary in the U.S. Department of Education who specialized in higher education. “The threat of closure has brought a new level of energy.”

No doubt, the college business is challenging. News about the nation’s $1.6 trillion in higher education loans is discouraging students from attending. Democratic candidates for president have said they want public colleges to be free, which would make private institutions less attractive. The number of high school graduates is declining, especially in the Northeast and Midwest. Immigration restrictions threaten the steady stream of full-tuition paying students from China and elsewhere.

Last year, one-third of private colleges saw a decline in revenue from tuition, up from 15 percent five years ago, according to Moody’s Investors Service, which tracks the bonds of colleges.

The Council of Independent Colleges, a small-school trade group, estimates that 2% of its roughly 650 members are struggling financially. A dozen have closed or merged over the last four academic years. Just last week, Vermont’s Marlboro College said it would merge with the University of Bridgeport in Connecticut.

The U.S. Department of Education counts about 750 colleges with 1,000 or fewer students, compared with about 790 a decade ago -- hardly a higher education apocalypse. In 2013, amid the boom in online education, Harvard Business School Professor Clayton Christensen had predicted that half of all U.S. colleges would go bankrupt in 15 years .

Today, the most selective liberal arts colleges such as Williams and Amherst rank among the nation’s most sought-out and wealthiest institutions, relative to their size. But even those with weaker finances have found ways to keep operating.

In 2015, Sweet Briar College, a Virginia school for women whose former students include Jacqueline Kennedy Onassis’s mother, announced it was shutting down. Within three months, alumnae, who had hired a law firm to thwart the plan, raised almost $30 million.

Two years later, in a restructuring, the school slashed its tuition almost in half, to $21,000. It reduced majors to 18 from 40 and now emphasizes programs in science, technology, engineering and math, as well as environmental sustainability. It has balanced its budget and since raised $64 million. Enrollment is expected to grow this fall by 20 percent, with a first-year class of 125, according to spokeswoman Melissa Richards.

Sweet Briar, near Lynchburg, Virginia, even came up with an unconventional revenue stream: raising bees, crops and perhaps later livestock, drawing on its 3,200 acres that were once a working farm.

“We’re driving interest, driving agriculture, driving an experience, which is really selling tuition dollars,” said Nathan Kluger, director of agricultural enterprise.

This January, Hampshire, in Amherst, Massachusetts, looked like the next casualty. The college announced it might not enroll a freshman class and was dismissing two dozen staffers. But, like Sweet Briar, it doesn’t look like it’s closing, at least not yet.

Prominent alumni, led by filmmaker Ken Burns, who graduated in 1975, are busy raising money. Interim President Ken Rosenthal says the school is getting the message out about its strengths.

“We have to look in places for students that we may not have looked before,” Rosenthal said. “We’ll see where our alumni are living and go there and get their help to try to take the message of Hampshire College into their communities.”

As it regroups, Hampshire, which expects to enroll 600 to 700 students this year, is saving money by letting students take more courses at neighbors such as Amherst and Smith, part of an almost 50-year-old consortium of five western Massachusetts colleges.

Hampshire might follow the Bennington playbook. In 2013, the school hired then 35-year-old Mariko Silver, who worked for Arizona State University, noted for its entrepreneurial approach, especially in online education. Under Silver, the school cut costs and instituted unusual interdisciplinary “pop-up” classes on current topics such as gun violence. Silver left in July to lead the New York-based Henry Luce Foundation.

Most important, the school raised $92 million in the last six years. Its endowment tripled in size, to $51 million. Applications are up 20%. It will get new revenue from hosting the summer language program of fellow Vermont school Middlebury. To offset Bennington’s price, the college says that, on average, it awards students $33,000 in annual grants.

Silver kept a tight focus on Bennington’s arts heritage. Michael Hecht, who worked as the accountant to influential painter and Bennington alumna Helen Frankenthaler, helped the school create new programs with museums in New York.

Hecht, a Bennington trustee, also made an introduction to the foundation of another client, the late Broadway producer Lucille Lortel. That led to Bennington students’ securing paid internships at off-Broadway theaters.

“We’re being aware and taking advantage of opportunities that are out there,” Hecht said. “It was all there. We’re really connecting the dots.”

River Valadez picked Bennington over the Boston Conservatory at Berklee, the University of Puget Sound and other schools in the Pacific Northwest near his hometown of Seattle.

Valadez , a rising senior, has a “concentration,” Bennington’s word for a major, in ceramics and music composition. This summer, building on his experience at a Bennington-related museum internship, he’s working in a ceramic studio in East Williamsburg, Brooklyn.

“The programs are awesome,” said Valadez, 22. The campus “is beautiful, and I could shape what I wanted to do.”

To contact the editor responsible for this story: Alan Mirabella at amirabella@bloomberg.net, John Hechinger

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