Medaille University, a nearly 150-year old private university in Buffalo, New York, is closing its doors after failing to sell itself to a nearby college.
Universities across the country are facing more financial pressure as fewer students enroll and expenses rise. Medaille’s enrollment fell to about 1,537 full-time students in 2021 from about 2,340 a decade earlier, according to data from the National Center for Education Statistics.
Medaille had told bond investors in February that it planned to “sell substantially all of its assets” to nearby Trocaire College, according to a filing on the Municipal Securities Rulemaking Board’s EMMA disclosure website. That sale subsequently fell through.
The university has about $41 million of outstanding debt according to a February report evaluating the credit from S&P Global Ratings. Those obligations include about $22 million of bonds, issued through conduit Buffalo Industrial and Land Development Corp., and $18.5 million of lease obligations for the school’s sports complex, S&P said.
The school declined to comment on how the bonds will be paid after the closing or on restructuring alternatives it’s considering.
“Medaille has been under significant budgetary constraints over the last several months due to several factors, including declining enrollment, outstanding liabilities and other challenges that are affecting colleges and universities across the region, state and nation,” Interim President Lori Quigley wrote in an emailed statement.
“Because the integration will not occur, and due to the financial instability of the institution, the Medaille University Board of Trustees has voted to close Medaille, as of August 31, 2023.”
Medaille’s bonds are rated BB-minus by S&P after being downgraded one notch in February. The ratings firm said at the time that Medaille’s profile was “vulnerable,” citing high staff turnover, falling enrollment and weak retention and graduation rates. The university traces its roots back to a teachers school in 1875, and has a Rochester satellite campus in addition to its main facilities in Buffalo.
A third of U.S. universities face an “unsustainable financial future,” and about 100 closed or merged between 2010 and 2020, Bain & Co. consultants said in a July report. Holy Names University in Oakland, California, said it would be closing its doors at the end of the academic year. In 2022, another New York private school, Cazenovia College, announced its plans to shut down.
“On the fringes you do have some of these smaller, particularly very small liberal arts colleges that are struggling,” Daniel Solender, head of municipal securities at Lord Abbett & Co. “Overall the education sector is a really good place to invest.”
Medaille said students who are on track to complete their required credit hours and graduate on or before Aug. 31 will receive a degree from the university. For other students, the “highest priority” is to successfully transfer them to other schools where they will be able to finish their degrees.