The landscape of higher education in the United States is experiencing profound transformations due to a combination of falling enrollment numbers, budget constraints, and shifting demographics.
From Philadelphia and surrounding suburbs to South Jersey and Delaware, the challenges faced by local universities reflect a national trend witnessed between 2010 and 2021 when the number of students enrolled in institutions of higher learning dropped by 15%, according to the National Center for Education Statistics.
As the number of college-age students dwindles, institutions are responding by cutting costs, merging with other universities, and pooling resources for services like energy consumption, computer services, and health insurance.
Industry experts indicate that the financial landscape is becoming increasingly bleak amid cuts in federal funding for higher education and research.
The Trump administration’s proposed tax increases on university endowments and stricter restrictions on foreign students further exacerbate the uncertainty in the sector.
In this challenging climate, Thomas P. Foley, president of the Association of Independent College & Universities of Pennsylvania (AICUP), has highlighted efforts among member schools to remain financially sustainable.
“AICUP manages 39 cost-saving programs resulting in tens of millions of dollars in annual savings for participants,” said Foley.
This cooperative initiative helps member institutions save in various sectors including technology, finance, human resources, and research.
The association comprises over 80 member colleges and universities, including prominent institutions like Carnegie Mellon, Drexel University, and Villanova University, alongside smaller private colleges such as Haverford and Swarthmore.
While many of AICUP’s member institutions do not receive direct funding from federal or state governments, they do rely heavily on financial aid through federal Pell Grants and other programs to support a sizable number of their students.
Lincoln University, a historically Black institution and part of this ongoing struggle, faces unique challenges.
As a state-related university, Lincoln depends on state funding for 25% of its budget.
However, the state budget remained unresolved as of June, adding further financial pressure to Lincoln and similar institutions.
Brenda Allen, president of Lincoln University, expressed concern over the impact of staffing cuts in the U.S. Department of Education’s financial aid offices, particularly regarding the timely processing of student financial aid.
“We are having to figure out how to manage our own cash flow,” she stated, indicating the precarious nature of their current situation.
Despite not having to lay off employees so far, Allen mentioned that the university is engaged in “cost-cutting and right-sizing”.
In Pennsylvania, the consolidation or closure of institutions at an alarming rate is evident.
According to Higher Ed Dive statistics, 10 higher education establishments have either merged or shut down since 2016.
Among these closures are the University of the Arts in Philadelphia, which shut its doors abruptly in 2024 due to significant financial and enrollment challenges, along with Pittsburgh Technical College and Clarks Summit University.
Moreover, several institutions have opted to merge rather than close.
Recent mergers include Rosemont College with Villanova and the collaboration between Lackawanna College and Pierce College in Philadelphia, both institutions seeking to optimize operations and appealing course offerings.
Drexel University’s merger with Salus University, recently approved by federal authorities, is designed to strengthen educational offerings and sustainability in a rapidly evolving healthcare landscape.
“The Drexel-Salus merger represents a strategic and collaborative integration that combines our strengths,” a Drexel spokesperson stated.
Amid these adjustments, some institutions are resorting to scaling down operations.
In May, Pennsylvania State University announced it would close seven campuses by the end of the 2026-27 academic year, citing a decline in enrollment by up to 30% at these locations, coupled with intense financial pressures owing to demographic shifts.
Additionally, Temple University recently disclosed plans to eliminate 190 positions to combat a significant deficit exacerbated by declining student enrollment, marking a loss of approximately 10,000 students since 2017.
With these closures and mergers, there are broader implications for local economies that depend heavily on these educational institutions.
According to a 2024 report from the Federal Reserve Bank of Philadelphia, the closure or merger of colleges can severely impact enrolled students, employees, and the local economy, particularly in areas where these institutions serve as economic anchors.
Universities like Drexel, Temple, Penn, and Jefferson University are among the biggest employers in Philadelphia, contributing significantly to the region’s health care systems and overall economy.
In light of these challenges, Governor Josh Shapiro has initiated efforts to reevaluate higher education in Pennsylvania.
He has established a state Board of Higher Education aimed at supporting and enhancing the sector’s sustainability.
Shapiro’s proposed budget for 2025-26 allocates increased funding for community colleges, state-owned universities, and performance-based funding for institutions like Lincoln, Penn State, the University of Pittsburgh, and Temple University.
Nationally, the marriage of higher education and hospital institutions plays a crucial role in the economy.
In a 2022 report by the Federal Reserve Bank of Philadelphia, these sectors collectively contribute about $1.7 trillion in goods and services, supporting approximately 18 million jobs or about 9% of the nation’s workforce.
The higher education sector alone accounted for approximately $700 billion of this contribution, enrolling around 25 million students and employing about 3 million people nationwide.
Looking ahead, Emily Wadhwani, a senior director at Fitch Ratings, warns that universities will likely continue to undergo mergers and reorganization amidst ongoing financial pressures.
Wadhwani’s analysis points to stagnant public funding as states adjust to normalized revenue growth, with only modest prospects for net tuition growth.
As universities navigate this delicate situation, Foley emphasizes the ongoing value of a college degree, which translates to approximately $1 million more in lifetime earnings compared to non-degree holders.
He argues that education fosters essential skills required in the modern workforce, particularly as industries evolve with technological advancements like artificial intelligence.
Allen echoes the imperative for students to value their education as an avenue for socioeconomic advancement.
“Our ability to move people out of poverty and into higher socioeconomic levels will always be important to us,” she affirmed, reinforcing a commitment to the transformative power of education in contemporary times.
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