Dive Brief:

• The Massachusetts Department of Higher Education plans to tighten up its oversight policies for private colleges at risk of closure, it announced at a meeting Tuesday. 
• Noe Ortega, the state’s outgoing higher ed commissioner, said the department will start requiring institutions to alert their students by Dec. 31 each year if they might fail to meet their financial obligations within 18 months. 
• The department also plans to improve fiduciary training for leaders of at-risk private institutions and hire outside accounting and finance experts as needed to help it assess colleges’ financial health.

Dive Insight:

The department’s policy changes follow two high-profile closures announced this year at private Massachusetts institutions, Anna Maria College and Hampshire College. 

Ortega invoked both institutions when announcing the new requirements and initiatives. 

“We made commitments over the summer to circle back and begin to review our own processes in order to improve them,” he said, pointing to the need to beef up contingency planning for closures within the department’s Financial Assessment and Risk Monitoring process. 

As Ortega explained, that planning involves working with colleges to form potential transfer pathways for students should they shutter and helping them account and budget for the resources they would need in a teach-out scenario. 

Much of the department’s efforts revolve around earlier warning and planning. A department presentation stated that college leaders often want to wait until spring deposit deadlines for the next academic year before deciding whether they have the resources to survive another year. 

The December deadline “better positions” the department to protect students, Ortega said, adding that many of them make college decisions as the spring term approaches. 

He also said colleges need to start building partnerships with transfer and teach-out partners early — well ahead of a teach-out scenario — to ensure those pathways are firmed up and ready should they be needed. 

In the case of Anna Maria, the department alerted the public to the college’s vulnerable financial state in April. At the time, it said it was working with the institution to ensure Anna Maria had a long-term operating plan, as well as a contingency plan for any major downsizing. 

Less than two weeks later, the college announced it would close at the end of the spring term, just weeks away at that point.

Hampshire announced it would close the same month. In that case, the department had not issued any advanced warning about the college, but Hampshire gave itself a longer path to closure — to the end of its fall 2026 term. 

However, those plans nearly fell through over the summer. Hampshire had to scramble to raise funds to sustain its operations through the fall, which it did via a multimillion-dollar loan to support its wind-down.

During Tuesday’s meeting, Ortega pointed out that teach-out scenarios involve tricky planning, with faculty and students often leaving an institution for another after a closure is announced. 

“It puts a tremendous amount of pressure on the operating budgets,” Ortega said. “We want to make sure that we include an assessment of the teach-out resources that are going to be required for an institution to operate as they move through a closure process as well.”