Last year, at least 16 non-profit institutions closed due to enrollment and financial challenges. This is a rising trend of non-profit closures since 2020, which we wrote about before.
This year marks the start of the demographic enrollment cliff, where we expect a sharp decrease in the number of college-aged students due to low birth rates that began following the Great Recession 18 years ago.
This year also marks the return of Cohort Default Rates (CDR), and we expect a record number of institutions to lose Title IV eligibility due to single-year CDRs over 40%.
The Record-High Default Threat for Non-Profits
While closures are the most visible sign of distress, a quieter crisis is brewing in the loan portfolios of non-profit institutions. Record-high Cohort Default Rates (CDRs) are expected for the 2024 and 2025 cohorts.
Estimated Default Spike: Based on current delinquency trends compared to pre-pandemic figures, 2026 CDRs could be 2 to 3 times higher than 2019 rates.
Surging Delinquency: Our internal data shows non-profits with 2024 cohort delinquency rates peaking as high as 35%.
The “Dangerous Tail”: Non-profit financial aid directors are currently in a “dangerous 12-month tail” for the FY2024 cohort. To protect your institution’s standing, borrowers must be cured before they default; they can be included in the official CDR calculation until September 30, 2026.
Financial and Enrollment Challenges
The majority of institutions that shuttered in 2025 cited “declining enrollment” and “financial challenges” as the primary drivers. Schools often find themselves in a vicious cycle: decreased enrollment creates operational deficits, which in turn reduce the funding available to invest in student recruitment and retention.
Institutions cannot wait for enrollment to “bounce back,” especially with the demographic cliff now a reality. To survive 2026, institutions must pivot their strategy toward these three critical fronts:
- Faster Outreach by Admissions: Every lead is now mission-critical. Institutions must focus on improving speed-to-lead, responding to inquiries while prospects are at their peak level of interest.
- Gap Funding Solutions: Rising tuition costs can turn prospects away, particularly as federal student aid limits are reached. Non-profits must help students secure and manage private loan servicing responsibly to fill the funding gap and maintain enrollment.
- Centralized Default Aversion: If institutions lose their Title IV eligibility, then enrollments are likely to decline even more. Ensure your default aversion plan is strong.
Is your institution ready to go?
The time for reactive measures has passed. IonTuition provides the unified strategy non-profits need to cure their CDRs and close the federal funding gap.
Contact IonTuition today to learn more about our specialized support and how we can help safeguard your institution’s future.