Smaller colleges and universities have been dealing with the issue for years.
For example, after Notre Dame College, a small Catholic school outside Cleveland, closed in 2024, Natalie Strouse wanted the $30,000 gift she had given previously so she could re-establish the scholarship created in honor of her late husband at another institution.
An administrator informed her, however, that the money was gone.
"She told me they used it to pay the bills," Strouse said. "I consider it theft."
With recent trends showing that higher education, particularly in smaller instructions, is in trouble, leaders are cutting programs, laying off staff and, like Notre Dame College, spending endowments to make ends meet.
According to The Wall Street Journal, nearly 200 private colleges borrowed from restricted endowments in 2025, and more than 440 colleges are at risk of closing or merging in the next decade.
Dr. Zachary Marschall of Campus Reform says this is not a new trend. What is new, however, is the fact that medium and large universities are also feeling the pressure.
"This year we've seen Temple University, Syracuse University and Penn State all suffer very difficult financial realities," he notes.
After missing enrollment targets, Marschall reports that Temple has had to lay off faculty two years in a row, Syracuse entered this summer in a "dire financial situation," and Penn State is planning to close around seven satellite campuses in the next few years.
He encourages others across the country to learn from the mistakes of these universities and go back to proving why a degree from their institution is worth the investment.
"I think for those colleges that are in a better, more stable position right now, they have an opportunity to really overhaul and rethink their business model," Marschall submits.
His prescription is that colleges should "slim down" by reducing overhead, focusing on academics, and abandoning the idea that every institution must provide a comprehensive residential experience with extensive amenities. He argues that institutions that adapt to this leaner model are more likely to survive.
If they want to have a viable and stable future, Marschall says, "The time to innovate is now."
