The Washington PostDemocracy Dies in Darkness

Loyal alumni make it extremely difficult to close a college. Just ask Sweet Briar.

Seniors and their family members prepare to line up before what was believed to be the final commencement ceremony at Sweet Briar College, an all-women’s liberal arts college in Sweet Briar, Va. on Saturday May 16, 2015. An agreement has been reached to keep the school open at least one more year. (Photo by Jabin Botsford/The Washington Post)

A few years ago, Clay Christensen, the Harvard Business School professor and champion of disruptive innovation, predicted that the “bottom 25 percent of every tier” of colleges will disappear or merge in the next 10 to 15 years.

But the latest round in the battle to save Virginia’s Sweet Briar College — where a judge approved a deal on Monday to keep it open next year — shows just how difficult it is to put a college out of business, even a small one facing stiff financial headwinds.

[Sweet Briar survives as judge approves settlement deal to keep the college open.]

Customers of Borders or Tower Records didn’t save those retail chains when the forces of technology and changing shopping habits forced them to close. Alumni of a college are a different kind of customer. A college diploma is perhaps the only “product” we buy one time in our life (and usually early on), and in which we still take an active interest during the business years or even decades later. We even advertise the college for free to other prospective customers throughout our lifetime with sweatshirts and car-window decals.

Alumni are a powerful constituency in higher education. I’ve told audiences of fundraisers in the past that if they wanted to quickly get millions of dollars in donations, they should just say that their institution was about to go out of business. After all, no one wants to say they graduated from a defunct college.

It was meant as a joke, but Sweet Briar alumnae tested the theory by raising $12 million in pledges in just a few months. Of course, Sweet Briar just didn’t threaten to close, it actually tried to close.

Whether Sweet Briar alumnae ultimately did the college a favor by saving it for a year is a matter of debate. The actions of alumni are not always in the best interest of colleges that are facing new challenges with students and a much more difficult financial environment than when most graduates graced the campuses.

Take any of the big issues that grab headlines about colleges these days: drinking, fraternities, and athletics. Several college officials tell me privately that they are reluctant to place restrictions on any of them because they don’t want to offend alumni who like to recall the good old days of their youth when colleges weren’t so paternalistic. This is a problem particularly for big public colleges and universities that increasingly depend more on alumni donations than they do state taxpayer dollars.

The value of a college degree often changes as people age, and they view their undergraduate years through the prism of how much the credential ultimately contributed to their success. Those graduates who attended colleges that are now much more selective in admissions than they were a decade or two ago tend to see their degree as more valuable today than at commencement. How many times have you heard someone lament: “I’d never get into X school now.”

But the truth is that unlike the value of almost any consumer good we buy, we never really know the true value of a college degree. It is what economists call an “experience good,” meaning you don’t know what you’re buying until after you experience it.

A number of places from the Obama administration to LinkedIn are trying to better measure outcomes of a college degree so that prospective students and their families have more information when picking a college. Most of those efforts focus on the return on investment: How much it costs vs. how much graduates from a specific college earn at graduation. Previous studies that focused on salaries after graduation showed there wasn’t that much of a difference in how much someone earned based on where they went to school. The data are getting much better, however, at pinpointing earnings based on specific degrees and colleges.

Earnings don’t really put a value on a degree. Picking a college is still largely an emotional decision, and so too is how one feels about their alma mater. Graduates earning millions of dollars and those who are unemployed might have the same fuzzy feelings about their undergraduate years. That’s why closing a college is so much more difficult than shutting down a bookstore or a record shop.