A private liberal arts college is drowning in debt. Should Alabama make it?

On a crisp fall day at Birmingham-Southern College, students headed to class and stole a few chilly minutes under the golden ginkgo trees. Inside the red brick buildings on the 192-acre campus, professors were preparing finals week exams while administrators prepared the first round of acceptance letters for the next school year.

Yet a troubling question loomed over these typical scenes of college life: Would the school even make it through a fall semester?

The private liberal arts school in Birmingham, Alabama, has been plagued by financial instability for years, with the 2009 recession and the coronavirus pandemic exacerbating the effects of overly ambitious investments and massive debt.

Closure seemed imminent earlier this year, until Alabama lawmakers appeared to offer a lifeline: a law aimed at saving the 167-year-old school with a multimillion-dollar loan program. But in October, the state treasurer denied the school’s loan application, prompting administrators to once again scramble to save the school.

For many outside the school, the fate simply turns on whether a private school that has mismanaged its finances deserves any kind of taxpayer support, especially in a state that has chronically underfunded its public education system. But for alumni and the school’s supporters, there is also the question of whether classical liberal arts education is still valued at a time when colleges and universities face intense scrutiny of their curricula, admissions requirements and cultures.

In the middle sit hundreds of students and professors, drawn by the school’s promise and now forced to reckon with its mistakes.

“There was a time when I didn’t even want to do my homework, do my work or go to class because what’s the point?” said Jadynn Hunter, 21, who is one semester away from graduating with a media studies degree. Like many on campus, she was roiled by fears of a possible school closure a year ago, before the Legislature acted.

If Birmingham-South were to close, it would mean the end of one of the most prominent liberal arts colleges in a state that has very few of them. Her allies also claim that the city of Birmingham would be deprived of one famous institution that has funneled millions of dollars into the local economy and kept the state’s youth from leaving for opportunities elsewhere.

“If a state like Alabama loses Birmingham-Southern, it’s not good for anyone,” said Daniel Coleman, the school’s president and former Wall Street executive who commuted weekly to Chicago and New York from Birmingham.

He added: “It’s easy to complain about flyover country, but if you want to do something about it, you have to support the institutions that are doing something about it.”

There is no denying the college’s long-standing financial desperation, which has its roots in the founding of a Methodist university, Southern University, in 1856. Previous administrations borrowed money liberally to undertake a series of architectural improvements as a way to attract more students to attract. (A man-made lake in particular represents what is now described by many on campus as the folly of an “if we build it, they will come” attitude.)

And then, in 2010, the council heard from one multi-million dollar accounting error in the way federal student financial aid was calculated, plundering its relatively modest endowments without replenishing the funds. The debt quickly became insurmountable, and last year administrators quietly began seeking as much as $30 million from the state while also working to raise more private donations and rebuild the endowment.

Although Alabama has repeatedly ranked near the bottom of national rankings for money spent per student in kindergarten through high school, it currently has a surplus of education funds, boosted in part by federal pandemic relief.

“The challenge we face now is really a political issue, not an educational issue,” said Ream Shoreibah, associate professor of marketing at Birmingham-Southern.

Since December of last year, students have been struggling with whether to transfer and potentially lose credits, or stay and risk the school closing. Among the nearly 280 employees, professors talked to their families about relocating and worried whether cafeteria and prison workers would be able to find comparable jobs.

Enrollment at the school — which has an annual tuition of $21,500, although administration said every student received at least some financial aid — has fallen to about 731 students this fall. One-third of the student body consists of first-generation students.

“Some of my friends had to transfer to another college just because their parents wouldn’t let them come here anymore, so all of this happening a second time really had a negative impact on the students,” said Gabrielle Houston, 23, a junior studying for an English degree. Like other students, Ms. Houston believed that the Legislature’s creation of the loan program had finally averted the threat of closure.

But Ms Houston, who needs some classroom learning opportunities, said she couldn’t imagine continuing her education elsewhere without that level of support.

The school’s survival is also irrevocably intertwined with Bush Hills and College Hills, two predominantly black neighborhoods surrounding the school in west Birmingham. The precarious funding situation has once again sparked some pain and criticism, such as the way the school’s impressive exterior wall – built after a student was murdered just days after her graduation in 1976 – fueled the perception that a largely white institution was isolating itself from its black neighbors. (Black, Asian and Latino students now make up about a third of the student population, a figure the school says is higher than some of its peers in Alabama.)

But several community leaders are concerned about the prospect of nearly 200 acres sitting vacant in their midst. Closing Birmingham-South, they say, would end a thriving partnership: no more Halloweens where neighborhood kids can trick-or-treat on campus, no more student volunteers at the community farm or student teachers at their schools.

“The fact that we are a private university does not hinder us or hinder us from thinking about the ways in which we can educate this community around us,” said Marlon A. Smith, a visiting professor, who considered the opportunity established. of establishing a black studies program in a city shaped by the civil rights movement.

“So you’re going to take an institution that can make that investment?” he asked. ‘I don’t know how well they did, but I wasn’t here at the time. I’m here now.”

Some professors, who have watched the conservative overhaul of public schools like New College of Florida with suspicion, also said that working at a private institution gave them more freedom to challenge their students on sensitive topics.

“We are a liberal arts college — that doesn’t translate very well in the state of Alabama,” said Jim Neel, who graduated from the university in 1971 and now teaches sculpture there. “Liberal arts education is the foundation of all higher education. It is not something new and it has nothing to do with party politics, but that is how it seems to read.”

Although top Republicans failed to provide the school with a grant, the Legislature ultimately negotiated a loan program tailored to Birmingham-Southern’s circumstances.

Young Boozer III, the state treasurer, was given the authority to determine the worthiness of each candidate. In October, he denied applications from both Selma University, a historically black Christian university, and Birmingham-Southern.

“It’s a shame, it’s tragic what’s happening to the students — there’s no doubt about that,” Mr. Boozer said in an interview. “But it’s not my fault. It is the fault of the management and board of directors of the school.”

He added, “I have just been asked to try to assess whether or not the state of Alabama tax dollars will be used to save a school that is a private school.”

The school has unsuccessfully sued Mr Boozer and has also tried to amend the application to address his concerns, promising to prioritize debt owed to the state and mapping out an ambitious plan to raise enough outside money to collect.

He has remained unmoved, pointing to the school’s small enrollment and low teacher-student ratio — both part of its appeal to students and teachers alike — as reasons for skepticism that the school will be able to fill a deficit.

Birmingham City Council recently approved a $5 million loan to the school and joins the Methodist Church in providing financial support.

But, said Victor Biebighauser, a former president of South University, a private school in Montgomery, and a longtime friend of Mr. Boozer, “if they can’t solve their structural financial problems, namely their declining revenues and their excessive debt, they will are just band-aids.”

For now, the remaining students are waiting for something to change.

“People are really trying to bring this school down and we continue to rise above it,” said Anna Withers Wellingham, a 22-year-old senior and student body president.

“This is a school that teaches you much more than just a liberal arts education,” she added, “and it is worth fighting for.”