The Massachusetts Board of Higher Education is preparing to adopt a stress test to monitor the financial health of private nonprofit colleges in the state. The proposal comes after the abrupt shutdown of Mount Ida College in Newton last year.
A draft report obtained by WGBH News shows the board is considering a new method to determine whether a school is at risk of abrupt closure.
The report, drafted by a working group of the board, finds an “ongoing and likely growing threat that more Massachusetts non-profit colleges will be forced by their financial conditions to merge or close."
“Shifting fundamentals including on demographics, competition and costs have created significant financial viability risk for some private, non-profit colleges in Massachusetts and have led to closures so abrupt as to injure students and families and undermine the credibility of higher education,” the report notes.
The draft report recommends the state look at a school's enrollment, revenue and debt to determine whether it has the resources to keep its doors open for at least 18 months.
Under that proposal, schools would be notified confidentially and could challenge the state's findings.
Massachusetts has dozens of small colleges, and an abrupt closure, as happened with Mount Ida, can leave students and faculty members in the lurch. The report recommends vulnerable schools develop contingency plans to teach out or transfer students before its too late.
The board is scheduled to meet to take up these recommendations Jan. 22. Industry lobbyists and leaders are expected to challenge them.
Barbara Brittingham, president of the regional accrediting body New England Commission of Higher Education, is concerned that word would leak out if the state considers a school at risk of closing.
“That could lead to a self-fulfilling prophecy of distress or possibly even closure for institutions," Brittingham said, arguing no school should be flagged on a single metric. "When our commission looks at financially-fragile institutions, it looks at a wide range of metrics, it looks at trends and it considers narrative analysis."
Brittingham is calling for legislative action to ensure any state intervention remains confidential.
This story has been updated.