Michael HornCo-founder and Chairman, Christensen Institute

Higher Ed 101: Inside the Process of Closing a College

5 Jun 2026 · 1 min

Watch on YouTube

1:06

In this segment of Michael Horn’s YouTube discussion on why colleges close, speakers A and B explain how the competitive push to expand athletic programs creates a financial cascade that can destabilize institutions. They describe a “race to the bottom” where schools offer steep tuition discounts—up to 70%—to attract recruited athletes, especially when a new sport (e.g., women’s lacrosse) is added to draw spectators. As more schools copy the model, the number of athletes swells, demanding a proliferation of facilities. These new stadiums, fields, and training centers are typically financed through debt, creating a massive “brick‑and‑mortar arms race.” The accumulated debt and high discount rates erode the college’s fiscal foundation, turning the institution into a “wobbly house of cards” that can ultimately lead to closure.

But why?
What makes that such a drain, Doug?
Because it's, it's a race to the bottom as far as giving those kids money. That's where your 70% discount rate tends to come from. When it was— when you were the first school on the block to go big in athletics, let's say women's lacrosse, you didn't have to give a huge discount to get kids in the door. Well, then the school down the road went, hey, we should put women's lacrosse on there because that's 60 kids. that we can put butts in seats. And so that's where that huge amount of athletes is a big problem. The other part of it is a huge percentage of athletes. The other part of it is when you have that many athletes, you also have a mountain, usually a mountain of debt in facilities costs. You can't have 14 sports without the facilities to support those. And that has become an arms race of brick and mortar. The problem is most of those facilities have been paid for with debt, and that's where the house of cards really gets wobbly.