Back from the Brink: Sweet Briar and the Changed Conversation About College Finances

I blogged a while back about the announcement that Sweet Briar College would be closing its doors this summer. At the time that news sent shock waves through higher education. It was the first time in recent memory (ever?) that the Trustees of a respected institution with a good reputation, a beautiful campus, acclaimed programs, and $80 million in endowment still in the bank had decided to shut down for financial reasons. Despite these apparent advantages the Trustees were convinced that closure was inevitable, and they chose to try to wind things down with some order and dignity.

It turns out that Sweet Briar may have a few years left after all. A deal has been reached with the Virginia Attorney General's office to change the leadership of the institution (new president and a largely new Board) and keep the operation going. Alumnae, many of whom were distressed and outraged by the decision to close, have raised some $21 million in pledges to help the college continue to operate. The AG has also agreed to lift restrictions on some $16 million in the college's endowment, allowing that money to be spent for any purpose that will help keep the college running (rather than on whatever specific purposes the original donors had intended).

This is certainly a happy day for those alumnae who have fought to keep the institution open. Sweet Briar still faces massive challenges, not least seriously diminished student and faculty populations (many have already transferred elsewhere). The college has been doing essentially no recruiting during the peak of recruiting season, so the incoming class is likely to be small. Whatever operations start up again in the fall are likely to be a shadow of the former institution, which was not that large to begin with. Nevertheless, the college now has a second chance at life.

The larger issues that led the Trustees to decide to close the institution still remain. The $12.5 million that alumnae have pledged initially is roughly equal to the college's operating deficit last year. It's great that former students are willing to lay out that kind of money, but what about next year? The year after that? One would guess that the $21 million in pledges raised by the organization Saving Sweet Briar represents a substantial proportion - perhaps nearly the entirety - of the giving capacity of the alumnae base. When that is tapped out, what next? The college was already burning off its endowment at 10% per year - that $80 million will disappear pretty quickly even if the state AG agrees to lift all restrictions on it.

The question here isn't whether the college will stay open for next year. The question is, can Sweet Briar build and run a sustainable financial model? Given the competition for students, the challenges of finding families who can and will contribute significant sums to their kids' educations, and the weakened borrowing power of those same families, where is the money going to come from? There isn't a clear answer. But if the new Board and president don't come up with a solution within the next year or two, we'll be having this same conversation in two years' time. If they do, this will be one of the greatest success stories in higher education and could pave the way for a lot of new thinking at institutions across the country.

One thing I do want to applaud the outgoing Trustees for: they have changed the conversation by calling the question. For too long, people both inside and outside higher ed have assumed that "real" colleges and universities - those with good reputations, status, and name recognition - could never really close down. Faculty and administration have always assumed that "we'll find a way" - even when that way involves shell games or unsustainable financial practices, hoping that "it's just for a few years". Now we know that failure is an option.

That knowledge should cause all of us, especially administrators and faculty inside the walls of academe, to take these matters much more seriously. Universities are mission-driven institutions where decisions should never be made "just to make money". But the money constraint is very real, and if we can't find a way to fulfill our missions in a financially sustainable fashion we too will ultimately close our doors. The message to the rest of us in higher education is clear: don't wait until the wolves are at the door. We should all be thinking about sound financial practices and models now. Because if we don't do it now, someone else will surely do it for us later.