A Risky Proposal for At-Risk Private Colleges: Ten Reasons Why the Board of Higher Education Must Rethink Its Plan. White Paper No. 195

In just the last 18 months, Massachusetts has seen the closure of small private liberal arts colleges Mount Ida and Newbury Colleges. The pressures on these types of institutions include technological disruption, changing student demands, and ever-escalating costs. To address this, the Massachusetts Board of Higher Education (BHE) and Department of Higher Education (DHE) have proposed creating a new state agency, called the Office of Student Protection (OSP), that would be granted unilateral authority to order colleges to notify students and other stakeholders by December 1st of any academic year where a meaningful risk exists that the college cannot complete the current school year and the next one. Under the proposal, OSP would be empowered to order a December 1st notification even if the college has a current satisfactory Financial Responsibility Composite Score from the U.S. Department of Education, qualifying its students to receive federal financial aid and loans, and even if the college is currently accredited by the U.S. DOE's approved regional accrediting agency, the New England Commission of Higher Education (NECHE). On March 6, 2019, Governor Baker filed Senate Bill 2183, which proposes giving BHE authority to request information from private higher education institutions "to accurately and fairly determine the institution's financial condition and to monitor such condition over time" and "to impose sanctions on institutions that do not comply in a timely manner." The legislation also proposes giving BHE authority to compel higher education institutions "to prepare and submit to [BHE], for its approval, a contingency closure plan which shall include a process for providing enrolled and admitted students and staff with timely notification of the institution's financial condition" and "arrangements for enabling students to complete their programs of study" if BHE identifies the institution as having liabilities or risks that may result in imminent closure or jeopardize the institution's ability to fulfill its obligations to current and admitted students. Under the proposed legislation, such contingency closure plans would be subject to BHE approval. The proposed legislation would exempt information submitted by institutions of higher education at BHE's request from the Massachusetts public records law. The proposed legislation also directs BHE to establish regulations interpreting and applying this new section of law, following consultation with representatives of public and private colleges and universities. The stated goal of BHE's proposal is to protect students from sudden, unexpected closings such as what happened with Mount Ida College. According to BHE and DHE, their proposal would provide an earlier warning of potential college closures than has historically been provided by USDOE and NECHE. In this report, Pioneer Institute identifies 10 serious problems with the BHE/DHE proposal.