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Hampshire College Faces Financial Crisis, State Audit Reveals

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  Published in Business and Finance on Tuesday, January 13th 2026 at 17:21 GMT by MassLive

Amherst, MA - January 13th, 2026 - A recently released state audit has cast a stark light on the precarious financial situation at Hampshire College, a small liberal arts institution nestled within the prestigious Five College Consortium. The audit, spearheaded by State Auditor Suzanne Bump, details a worrying trend of declining enrollment, persistent operating deficits, and a reliance on short-term borrowing, prompting calls for increased oversight and decisive action to ensure the college's long-term viability.

Hampshire College, known for its progressive pedagogy and unique experimental approach to education, has navigated turbulent waters financially in recent years. This struggle is partially rooted in a period of significant institutional restructuring, exacerbated by a controversial and ultimately unsuccessful attempt to merge with Bard College. The fallout from these events, coupled with broader demographic shifts impacting higher education, has contributed to the current crisis.

The audit paints a grim picture of enrollment decline. In 2013, Hampshire boasted an enrollment of 1,453 students; that number has plummeted to 968 by 2023. This substantial decrease directly correlates to a significant reduction in tuition revenue, the college's primary revenue stream. A smaller student body means less income, leading to a vicious cycle where the college struggles to maintain its programs and attract future students.

Compounding the enrollment issue is the college's consistent pattern of operating deficits. For years, Hampshire's expenses have consistently outstripped its revenue, resulting in annual shortfalls that reached a staggering $7.3 million in fiscal year 2023. To bridge this financial gap, the college has increasingly relied on short-term borrowing, a strategy that carries considerable financial risk. These loans often come with higher interest rates and stricter repayment terms, further straining the college's resources and creating a precarious financial future.

Auditor Bump's transmittal letter emphasized the urgency of the situation. She explicitly stated, "Hampshire College's financial situation requires immediate and sustained attention. Without significant corrective action, the college's long-term financial stability is at risk." The audit's recommendations echo this sentiment, calling for a multi-faceted approach to address the challenges.

The key recommendations outlined in the report include:

• Development of a Comprehensive Financial Plan: A detailed and realistic plan is needed to outline a path towards financial sustainability, addressing both revenue generation and expense reduction.
• Enhanced Fundraising Efforts: Aggressively pursuing philanthropic support from alumni, foundations, and other donors is crucial to bolster the college's resources.
• Cost Reduction Strategies: Identifying and implementing strategies to reduce operational expenses while preserving the quality of education and campus experience.
• Increased State Legislative Oversight: Strengthening the state's role in monitoring the college's financial health provides an extra layer of accountability and support.

While acknowledging the gravity of the situation, a spokesperson for Hampshire College expressed a commitment to addressing the audit's findings. They affirmed a willingness to "work collaboratively to strengthen [the college's] financial position." However, many observers remain skeptical, pointing to the difficulty of reversing years of financial decline.

The situation at Hampshire College serves as a microcosm of the broader challenges facing many small liberal arts colleges across the nation. Declining enrollment, increasing costs, and shifting student demographics are forcing institutions to adapt or risk closure. The future of Hampshire College, a unique and vital educational institution within the Five College Consortium (alongside Amherst College, Smith College, Mount Holyoke College, and Vassar College), hangs in the balance, demanding swift and decisive action from its leadership, the state, and its dedicated community.