“Back to School” Assumes it will Re-Open

August is a busy month for families with kids in college. The new tuition is due and then there’s the business of “outfitting” the child and the dormitory for 2026-2027. The money flies freely and separated couples have the angst of whether their former spouse will come up with his/her share.

In the past couple of years a new problem has emerged. College solvency. This past weekend Philadelphia’s overpopulated college market suffered a new casualty when Valley Forge University (formerly “Christian College”) announced it was out of gas and would not re-open this Fall.

The Philadelphia Inquirer noted this disturbing trend in November 2024 although Valley Forge wasn’t then on the list. How are Philadelphia’s small, private colleges faring financially? Meanwhile, even local academic giants like Temple and Drexel Universities are struggling with deficits as the population of eligible enrollees shrinks and parents openly question the price. Temple has seen a 27% decline in enrollment since 2017.

The modest, good news is that there are plenty of colleges ready to take your kid. The more concerning aspect is what becomes of your money if the school fails. So far, several schools have found merger partners and even the ones which closed (University of the Arts and Valley Forge) finished their semesters. But what happens if the school runs out of gas after you took the loan and paid the tuition? We just saw a report about a widow who had funded a scholarship in her late husband’s name. When the school closed she sought to recover the funds and redeploy them to a new school. She was informed that the funds had been used to keep the school operating.

This was a clear violation of the scholarship agreement, but what is a state attorney general to do when the college sinks into the sea of insolvency? Realize as well that the problems are not always apparent. Penn State is completing a $1 billion stadium renovation but if you look under the hood, it is not immune to rising costs and a diminishing pool of new students. Penn State plans to slash $94M from budget, including deep cuts to Commonwealth Campuses | Pennsylvania News | wfmz.com

Picking colleges is a weird process. Graduating seniors come to the transaction with no knowledge or experience. Parents come with experience that is now ancient history in terms of cost and financing. Now we have a new integer called “school viability.” It merits some attention given the investment involved.

Postscript: Today’s Philadelphia Inquirer (8/3/26) reports the immediate closing of a small Quaker elementary school outside Philadelphia. Parents who paid tuition are reporting their refund inquiries are not getting a response.