Hiram College borrowed from its $56 million endowment and eventually withdrew more than $47 million|@hiramcollege|Instagram

Small US colleges are increasingly using their endowments to cover financial shortfalls as enrollment falls and operating costs rise.

Hiram College in Ohio shows how serious the problem has become. The 1,000-student liberal arts school borrowed from its $56 million endowment and eventually withdrew more than $47 million. 

Some of the money came from funds donors had restricted for specific purposes. Hiram is now working with Ohio’s attorney general’s office on a repayment plan.

Enrollment decline drives crisis
Hiram is not alone. Nearly 200 private colleges borrowed from restricted endowment funds in 2025, up from about 130 in 2021, according to Perspective Data Science.

Even top schools are feeling the pressure. Syracuse University faces an enrollment shortfall and a 1.5% budget deficit this fall after international enrollment plunged 50% last year, the Wall Street Journal reported.

What is happening?
Colleges are bracing for fewer enrollments after the 18-year-old population peaked last year.

The country could see a 13% drop in undergraduate enrollment over the next 15 years, according to the Western Interstate Commission for Higher Education.

Meanwhile, a declining birth rate has reduced the number of potential students, putting smaller colleges under greater pressure. Some institutions have already closed after struggling with falling enrollment and revenue. Trump administration limits on international student visas are adding to pressure on colleges.

At the same time, families are chasing the best financial aid offers as doubts about the value of college grow.

Ivy League schools, however, remain selective amid heavy applicant demand.

Short-term relief, long-term risk
Colleges generally aim to spend about 5% of their endowments each year. However, schools with $51 million to $100 million in assets spent 5.5% in 2025, compared with 4.1% in 2016.

Using endowment funds can keep struggling colleges operating, but experts warn that repeated withdrawals can weaken finances and hurt donor trust.