Christensen Scorecard Update: Data through Fall 2019

In April I used data from our partners at LISTedTECH to look at the predictions made by Clayton Christensen and Michael Horn about upcoming college closures and mergers. We now have updated data for 2019 as well as new views based on the total number of students affected by schools going out of business. You can see more analysis over at LISTedTECH’s blog post, where Justin breaks out a lot of data.

Prediction Redux

As a reminder, in 2013 Christensen made a bold prediction based on his ubiquitous innovation theory that maybe half of all postsecondary institutions could close within 10-15 years.

(source: https://youtu.be/KYVdf5xyD8I, starting at 6:25)

The scary thing is that 15 years from now, maybe half of the universities will be in bankruptcy, including the state schools. But in the end, I’m excited to see that happen.

Christensen then doubled down on his predictions in 2017, humorously saying it might take nine years instead of ten.

Q. Do you still believe, as you’ve said before, that as many as half of colleges and universities will be bankrupt or closed within a decade?

A. Um, yes. [snip] Whether the providers get disrupted within a decade — I might bet that it takes nine years rather than 10. Maybe I’m too scared about the Harvard Business School to be rational about it. But we should worry.

Read the original post to get a deeper examination of whether the predictions are realistic given the data since 2015. The gist of the data analysis was that the vast majority of closures have been from the for-profit sector (which did not seem to be in scope of Christensen’s comments, but we can’t be sure), but the predictions could be realistic if including for-profits but not if applied only to nonprofit institutions.

Updated Data

Since April we have had quite a few news stories about new closures or mergers. Marlboro College, Southern Vermont College, Green Mountain College, etc. How do the new data affect the trends? Below we share updated running totals of closures and mergers since 2011 and running through Fall 2019.

If you include all degree-granting institutions (i.e. for-profits as well as private nonprofits and publics), then the current trends lines show that the 50% closure prediction by 2028 certainly seems feasible. Note, however, that there are fewer than 1,000 for-profit institutions remaining as of Fall 2017 IPEDS data, and the rate of for-profit closures cannot continue more than another 8-10 years (best case / worst case, take your pick).

If you ignore the for-profit sectors, however, then the trend line for private nonprofit and public institution closures & mergers remains far below that needed to hit the 25% level described by Horn or the 50% level described by Christensen. None of this is to say that the trends moving forward will be linear, however.

Christensen does get credit for the timing of the original prediction, as closures and mergers really accelerated starting in 2014.

Adding Enrollments

Campuses vary in size, and counting the number of schools does not capture the full picture. LISTedTECH has updated their enrollment analysis to look at both numbers of institutions and size of total enrollments in the US over time, based on IPEDS data. We are working to generate a running total view of closures that is based on enrollments (i.e. how many students have been directly impacted by schools going out of business) and will share that with you early next year. Below is a chart shared by LISTedTECH. Read through over at LISTedTECH, as they also break down by degree type and sector.