Fitch Ratings issued a "deteriorating" outlook for the U.S. higher education sector in 2026 — the second consecutive year with that designation. The primary cause is demographic: colleges born during the 2008 recession are reaching college age starting this year, shrinking the pool of traditional-age students. More than 100 colleges, mostly small private nonprofits, are considered at elevated risk of closure or merger. Here's what this means when you're deciding where to enroll.

When you're choosing a college, you're making a multi-year commitment. Most students think about fit, cost, and programs — but almost no one thinks about whether the school will still exist in four years.

That's not paranoia. It's a reasonable question in 2026.

What the Enrollment Cliff Is

Demographers use "enrollment cliff" to describe the projected decline in traditional college-age students — the 18-to-22-year-olds that four-year colleges were built to serve.

The cause traces back to the 2008 recession. When the economy collapsed, birth rates dropped. Those children born in 2008 and 2009 are now reaching college age. The Western Interstate Commission for Higher Education had projected for years that steady declines in college-age students would begin around 2026 — and that moment has arrived.1

The impact varies sharply by region. The West is projected to see the steepest declines, followed by the Northeast and Midwest. Southern states and some Sun Belt metros are partially insulated by population growth, but no region is entirely unaffected.2

Which Schools Face the Highest Risk

Not all colleges are equally exposed. Large public universities with strong research profiles, professional schools, and significant endowments are the most stable. The schools under the most pressure are smaller private nonprofits — particularly those with endowments under $100 million and heavy dependence on tuition revenue.1

These schools have less room to absorb enrollment declines. When fewer students enroll, the revenue drops. Fixed costs — faculty salaries, facilities, administrative staff — don't drop at the same rate. The gap widens until the school either cuts dramatically, merges with another institution, or closes.

More than 100 colleges fall into the elevated-risk category according to analysts who study institutional financial data. The number of colleges merging or closing was expected to "continue at an elevated pace" in 2026, according to Fitch's outlook.1

16 colleges closed in 2025 — a figure that doesn't count the schools that merged into larger institutions or eliminated dozens of programs to survive.3

A school announcing program cuts, faculty layoffs, or a financial restructuring is not automatically heading toward closure — but it is a meaningful signal worth investigating before you commit. These announcements are usually covered by local news and trade outlets like Inside Higher Ed and Higher Ed Dive.

What This Has to Do With International Students

One dimension of the enrollment cliff that rarely gets discussed in conversations aimed at domestic students: international enrollment has been a financial lifeline for many colleges.

International students, who typically pay full tuition with no financial aid, helped offset domestic enrollment declines for much of the 2010s and early 2020s. But international enrollment is now under pressure too. Visa restrictions have reduced the pipeline of international students to U.S. colleges, and some schools are reporting significant revenue losses as a result.2

The combined effect — fewer domestic students and fewer international students — is hitting some schools simultaneously from both sides.

How to Check a School's Financial Health Before Committing

The good news: financial information about colleges is publicly available. You just have to know where to look.

Check the Form 990. Private nonprofit colleges file annual Form 990 tax returns, which include financial statements. These are publicly available through ProPublica's Nonprofit Explorer. Look for trends in total revenue, net assets, and whether the school is drawing down its endowment to cover operating expenses. Endowment drawdowns above 5% per year are a yellow flag.

Look at enrollment trends. The National Student Clearinghouse Research Center publishes enrollment data by institution. A school that has seen 10%+ enrollment decline over five years deserves a closer look.

Read the audited financial statements. Many colleges post these on their websites (look under "About" or "Administration"). An auditor's "going concern" opinion — language noting substantial doubt about the institution's ability to continue as a going concern — is the clearest possible warning sign.

Use the College Scorecard. While the federal College Scorecard (collegescorecard.ed.gov) is best known for outcomes data, it also shows enrollment trends over time.

Check recent news. A simple Google News search for the school's name plus "budget cuts," "layoffs," or "program elimination" will surface coverage quickly. If a school has declared financial crisis or retrenchment in the past year, it will show up.

Practical Steps for Students Choosing Right Now

If you have May 1 coming up and are deciding between a financially uncertain school and a more stable option:

Compare the real cost. A financially struggling school may offer a large merit scholarship to attract you. But that scholarship exists precisely because the school needs students. Run the numbers on what you'd actually pay, using the net price calculator for each school.

Ask your financial aid office directly. Schools are not required to disclose financial problems to prospective students, but asking direct questions — "Are any programs in my intended major facing cuts?" — can surface useful information.

Look at your college list with this lens. Our guide to building a balanced college list covers how to include schools with different profiles of selectivity and cost. The same logic applies to financial stability — a list with at least one clearly stable, financially healthy institution gives you a safe option.

Don't ignore safety schools. Many financially healthy public universities and community colleges offer strong programs with genuine stability. In a volatile environment, a school that will unquestionably be there in four years has real value.

Use the college planning checklist to make sure you're covering all your bases before May 1 — financial stability included.

The biggest risk isn't dramatic closure — it's a school eliminating the department your degree lives in while you're a junior. Program cuts are more common than full closures and happen with much less public attention. Asking specifically whether your intended program has been flagged for review is worth doing before you commit.

What Comes Next

The enrollment cliff won't resolve quickly. High school graduation numbers are projected to decline through the late 2020s before stabilizing. For students entering college now, that means several years of continued financial pressure on institutions — especially the smaller, tuition-dependent ones.

The flip side: this environment is also producing more institutional incentives to retain students once enrolled. Schools that do remain open are increasingly focused on student success, retention, and outcomes. A smaller, financially stable school with strong student support may ultimately serve you better than a larger school under financial strain.

Choose carefully. The school you pick in the next few weeks is where you'll spend the next four years.

Footnotes

  1. Higher Ed Dive. (2025). Higher education faces 'deteriorating' 2026 outlook, Fitch says. https://www.highereddive.com/news/higher-education-faces-deteriorating-2026-outlook-fitch-says/807222/ ↩ ↩2 ↩3

  2. Inside Higher Ed. (2025, December 5). Further Negative Projections for Higher Ed in 2026. https://www.insidehighered.com/news/quick-takes/2025/12/05/more-negative-projections-higher-ed-2026 ↩ ↩2

  3. The College Fix. (2025). 16 colleges closed in 2025 and more could shut down in 2026. https://www.thecollegefix.com/16-colleges-closed-in-2025-and-more-could-shut-down-in-2026/ ↩