Cornish College of the Arts, the private art university in Seattle (Washington), has put its crown jewel up for sale in the face of the drop in the number of applicants resulting from the low birth rate that is ravaging the United States. It is the most recent example of the need to clean up the accounts, even temporarily, to which the country’s small universities are being forced by the decline in the number of students.
Kerry Hall, in Seattle’s trendy Capitol Hill neighborhood, is the university’s greatest treasure. The building of almost 3,000 square meters in which there are still vestiges of the Spanish Renaissance style that bathed the west coast of the United States a century ago, houses dance studios, performance halls and classrooms that have been the hallmark of the art school. However, the economic reality has changed the pace of the university, which hung the ‘for sale’ sign in April to the stupor of professors, students and alumni.
The economy of dozens of small private universities derives from the constant decline in the birth rate nationwide. If classrooms don’t fill up (Cornish has fewer than 500 students, down from nearly 800 a decade ago), covering costs and keeping the business profitable becomes difficult. One of the exits that have found this economic stress is the sale of high value assets. Currently there are housing complexes, presidential mansions, apartments, even paintings, for sale, they have put on the market in search of an injection of cash that, in some cases, even prevents financial collapse.
Having property but no cash is a problem. This is materialized not only in the numbers of private school closures, which have skyrocketed in the last two years, but also in the non-payment of bonds by universities.
This reality is little known because it is hidden behind the good performance of the largest American private and state institutions, whose large investment funds and high tuition prices allow them to prosper financially.
A boomerang decision
The decision to sell the treasures is tough, and effective? The second is not only not there, but it can be counterproductive. Emily Raimes, higher education analyst at Moody’s Ratings, remembers Bloomberg that while the funds generated can provide immediate relief, They do not generate a constant flow of income that they can count on in the future. In addition, the sales effect can damage the attractiveness of schools, further deepening the shortage of students without having resolved structural problems.
The College of Saint Rose in Albany (New York) is an example of how the liquidity of the sale does not solve long-term problems: despite having sold its properties, it closed at the beginning of the year and in October it declared bankruptcy and put selling his campus to pay his creditors.
Not all sales indicate that a school is in financial difficulty, but there are several schools that are taking stock of what they can sell. The New School in New York City has 10,000 students and healthy accounts and still sold a housing complex in Manhattan at the beginning of the year for $30 million due to low demand among students.
