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States Struggle with Regulating Risks Associated with College Closures

Based on an unprecedented number of college closures, along with complex demographic challenges showing continued reductions in the number of college-aged students, states are struggling to determine how to best protect both students and college employees. Currently, most states have been reactive, and have only taken action after a college has announced its intention to close, often with little notice to employees and students. On the other hand, requiring a college that is just starting to show signs of financial struggle to publicly announce that position would surely chill student applications, encourage transfers, limit financing, and send employees fleeing for other employment. In turn, this could exasperate the college’s financial condition, all but ensuring closure.

In Massachusetts, where 18 colleges have closed or merged in the past five years, the legislature is looking at several options. Specifically, Massachusetts Governor Charlie Baker has proposed a bill that would require notification of “any known liabilities or risks which may result in imminent closure of the institution or jeopardize the institution’s ability to fulfill its obligations to current and admitted students,” with notice to the Massachusetts Board of Higher Education (MBHE). Because the proposed legislation allows the notification to be confidential, it is intended that colleges could still freely pursue financing, merger, and/or the continued enrollment of students in order to try to turn around its financial condition. When notifying the Board, the school must also put forth a contingency plan for notifying students and assisting with transfer in case closure becomes necessary. The bill also would allow the state to request financial data from schools.  If a school failed to provide the requested data, it could be sanctioned by the Board of Higher Education.

The MBHE has issued proposed regulations consistent with this bill. Two or three hearings to allow for public comment on the regulations will be scheduled in early August.

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About this Author

Kathleen Dion, Robinson Cole Law Firm, Litigation Law Attorney, Hartford

Kathleen Dion, a member the firm's Litigation Section, focuses her practice on all aspects of civil and criminal litigation. She frequently handles cases related to education, government and internal investigations, and business disputes.

Education Law

Kate represents private schools, colleges, and universities in a variety of civil matters, such as tuition disputes, allegations of staff misconduct, and Title IX matters. She has assisted her clients in reaching favorable settlements in several employee...