Dive Brief: 

• Fontbonne University, a Roman Catholic institution in St. Louis, plans to close after the summer 2025 term, officials announced Monday. 
• The university will not admit a class for fall 2024 and will instead focus on graduating as many current students as possible. Officials said they made the decision after determining that the university’s financial model was unsustainable, pointing to years of falling enrollment and a shrinking endowment. 
• Washington University in St. Louis, a private nonprofit institution, will purchase Fontbonne’s 16-acre campus. Washington University said Monday that it doesn’t have “any definite plans” yet for how it will use the property. 

Dive Insight: 

Fontbonne, a 101-year old institution, joins several other Roman Catholic colleges that have recently announced their closures due to enrollment declines and financial difficulties. 

Last month, Ohio’s Notre Dame College said it would close after the spring term when discussions fell through for it to be acquired by nearby Cleveland State University. Likewise, the College of Saint Rose, in New York, said in December that it would close following the spring term, citing a lack of resources for another academic year. 

Fontbonne likewise succumbed to pressures plaguing colleges nationwide. That includes falling enrollment — with Fontbonne’s headcount shrinking from 2,075 students in fall 2012 to 944 in fall 2022, according to federal data. 

Meanwhile, enrollment troubles are expected to soon get even worse. College officials are bracing for the so-called demographic cliff, a projected decline in high school graduates expected to start next year. 

“Despite the best efforts of faculty, staff, administration and our faithful supporters, we have faced challenges, including more than 15 years of enrollment decline heading into the enrollment cliff, the impact of COVID, and many other financial struggles impacting small, private institutions like ours across the nation,” Nancy Blattner, Fontbonne’s president, said in a statement. 

Recent federal actions are also threatening small private colleges, according to analysts from Fitch Ratings. 

The rollout of the latest Free Application for Federal Student Aid has been hamstrung by delays, potentially harming institutions that enroll high shares of low-income and minority students. 

The U.S. Department of Education just started sending FAFSA applicant data to colleges this month, The Associated Press reported. 

That means most colleges won’t be able to offer financial aid packages to applicants until late March,  at the earliest. That has put them at risk of losing students to other institutions that are either less expensive or that can make financial aid offers without first receiving FAFSA data, the analysts wrote.

The U.S. Department of Labor is also set to release new regulations that would require employers to pay overtime to workers earning less than about $55,000, up from the current threshold of roughly $35,500. 

“For colleges already managing extremely tight or deficit operations, any additional mandated costs will compound budgetary stress,” Fitch analysts wrote. 

Fontbonne itself frequently incurred annual expenses that surpassed its revenue. The institution ran deficits in eight of the 10 years ending in fiscal 2022, according to tax documents. 

Fontbonne did not share the purchase price of its campus, and a Washington University spokesperson declined to share details of the deal. But Blattner credited the purchase with allowing the institution to continue to teach classes through summer 2025

To help students complete their courses, the university will offer full-tuition scholarships for all undergraduates for the summer terms in 2024 and 2025. Those who cannot finish at Fontbonne — or choose not to — will get help from the institution in transferring to other institutions. 

Fontbonne said it’s in the process of finalizing teach-out agreements.