In less than a month, California’s Holy Names University, a 154-year old Catholic college founded by an order of French Canadian nuns called the Sisters of The Holy Names of Jesus and Mary, will be shutting down permanently. Its 60-acre wooded campus, with breathtaking views of San Francisco Bay and Oakland, will be auctioned and its 1,000 or so full time students, 70% of which identify as people of color, will have the option to transfer to another fiscally challenged small liberal arts college 26 miles away, Marin County’s Dominican University.
In January, Dallas-based Preston Hollow Community Capital, a $1.4 billion social-impact oriented private equity firm with an affinity for troubled colleges, sent Holy Names’ CFO a letter announcing it had officially defaulted on the $49 million municipal bond issue it owned paying 7%, issued just three years prior. The financing was part of a five-year strategic plan by the administration and Board of Trustees of Holy Names to somehow reverse its inevitable financial tailspin, in which operating revenues have fallen short of its expenses by several million each year.
The quick demise of Holy Names University is scene that is likely to play out more over the coming years. Forbes 2023 College Financial Grades ranking, which assesses the operational viability and balance sheet strength of more than 900 private colleges in the U.S., found that a year after Covid-19 shut down campuses, colleges had, for the most part, pulled off a “return to normal,” and their finances looked better as room and board revenues rebounded as well as a return of in-person events—reunions, conferences, weddings, and sporting events—brought back opportunities for auxiliary revenue. Federal assistance continued to trickled through from the American Rescue Plan. This has given many struggling schools a false sense of hope.