A deal between two private colleges in Pennsylvania shows the growing divide in US higher education.
(Bloomberg) — A deal between two private colleges in Pennsylvania shows the growing divide in US higher education.
Cabrini University, plagued by falling enrollment and financial challenges, announced that it would close its doors and plans to sell its land to its more well-known neighbor, Villanova University. The deal hasn’t been finalized and must be approved by the boards of both institutions.
Cabrini, enrolling just about 1,700 students, determined there was “no credible path forward” to allow it to operate after June 2024, the school said in a statement posted to its website on Friday. Villanova — located just two miles (3.2 kilometers) away and boasting a $1.9 billion endowment — will assume ownership of the school’s land. The upcoming academic year will be Cabrini’s last.
Colleges in the US have become increasingly split between large, well-known institutions with ample resources and small, private colleges that are struggling to attract students. The transaction between Villanova and Cabrini illustrates those very different financial situations.
“In a shifting and increasingly difficult higher ed landscape; ongoing financial challenges and declining enrollment led us to the difficult decision to close Cabrini University and seek a partner institution to help preserve the school’s legacy and mission and honor the original intention for the Cabrini campus to promote opportunities in Catholic education,” Cabrini said in an online post announcing the deal.
Cabrini has an 112-acre campus roughly 19 miles from Philadelphia in eastern Pennsylvania. The center-point of the grounds is the school’s original building — an early 1900s Tudor-style home aptly named The Mansion, built by Gilded Age architect Horace Trumbauer, known for constructing manors for the ultra-wealthy.
Cabrini was founded by the Missionary Sisters of the Sacred Heart of Jesus in 1957. The school had about 1,700 students in fiscal 2022, compared to 2,300 in 2018, according to S&P Global Ratings. It had an endowment valued at about $45.5 million in fiscal 2021.
Villanova, for its part, has strong name recognition boasting alumni like First Lady Jill Biden and NBA player Kyle Lowry. It has a Division 1 basketball program that is a frequent participant in the NCAA March Madness tournament. Roughly 6,700 full-time undergraduate students are enrolled, with an additional 3,100 graduate and law students, according to its website.
Cabrini has about $46 million of municipal-bond debt outstanding, according to data compiled by Bloomberg. The bonds, sold in 2017, are rated BBB- by S&P. The ratings company noted that the college has struggled with continued enrollment declines and deficits.
A spokesperson for Cabrini said she didn’t have information on what would happen to the bonds. A spokesperson for Villanova did not respond to a request for comment.
Pennsylvania is a highly saturated market for private colleges who are competing for students. Pennsylvania is expected to see a 7% drop in the number of high school graduates from the class of 2019 to 2037, according to a 2021 report by the Western Interstate Commission for Higher Education. That will resulted in fewer enrollees and therefore less revenue.
For students who haven’t graduated by spring 2024, Cabrini said it had partner schools in the state that would honor students’ credits and maintain a similar level of financial aid. There will be an expedited review process for students interested in attending Villanova.
“While Cabrini can no longer endure as an independent university, Villanova stands with us, willing to honor Cabrini’s history, tradition, and legacy,” Cabrini leaders Helen Drinan, president of the university, and Amy Lambert, chair of the board of trustees, said in the letter posted on the school’s website. “Though we know this is not the outcome any of us hoped for, we do believe this agreement with Villanova is the best path forward.”
Read more: Colleges Dangle Tuition Deals to Head Off Harsh Economic Reality
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.