Birmingham-Southern College to close after failing to secure government loan

Birmingham-Southern College, a private liberal arts school in Birmingham, Alabama, will close at the end of May, marking a bitter end to the school’s nearly 170-year history after it failed to secure a multimillion-dollar loan from the university.

The school’s board of trustees voted unanimously to close the school on Tuesday, with the university’s hundreds of students and employees receiving formal notice shortly afterward.

“This is a tragic day for the college, our students, our staff and our alumni,” the Rev. Keith D. Thompson, chairman of the board, said in a news release. “But it is also a terrible day for Birmingham, for the neighborhoods that have surrounded our campus for more than 100 years, and for Alabama.”

The school has been struggling with debts for years. The 2009 recession and then the coronavirus pandemic exacerbated the toll of expensive campus investments and a dwindling endowment. But many employees and students had hoped its future could be saved after Alabama lawmakers last year approved a new loan program that could lend Birmingham-South as much as $30 million.

Daniel Coleman, the school’s president, had proposed an ambitious plan to use the loan as a bridge to stay open while the college tried to supplement its endowment with pledges from private donors. But Young Boozer III, the state treasurer, twice denied the loan last year, citing concerns about the school’s ability to pay its debts.

“If you borrow it, you own it — it’s a falling knife,” Mr. Boozer told a House committee this month.

The school’s allies in the legislature tried to change the loan program with a new account This year, responsibility for approving loans was moved from the state treasurer to the Alabama Commission on Higher Education, and the terms of the loan were further specified.

If the school closes, “there will be a real loss of revenue for the state, both directly and indirectly,” Mr. Coleman to lawmakers this month. “And I think it will be devastating to the immediate area of ​​the west side of Birmingham.”

Although the new bill won Senate approval earlier this month, “subsequent conversations with House leadership confirmed that the bill did not have enough support to move forward,” the school said in a press release.

On Tuesday, while the school was on spring break, the board met to vote on the closure. (The school said the timing of the meeting was “not ideal” but that it was best for administrators to meet and assess their options.)

The question of whether Alabama should provide a loan to a private university forced lawmakers, university officials and students to question whether a classical liberal arts education is still valued in the state.

The school’s allies had warned of the consequences of closing an institution that has helped drive investment in Birmingham and of leaving its sprawling 500-acre campus vacant. Critics have said it was not worth directing any kind of public assistance, even in the form of a loan, to a school with a long history of financial mismanagement.

In the middle, however, were the students and staff who still believed in the university’s approach to teaching and its small classes.

The school said it had begun helping students transfer to other colleges, both in Alabama and out of state. Some seniors graduating at the end of the summer may complete their final exams online or at other schools.

“We put students first and we will do everything we can to help them find the best place to continue their path to graduation,” said Dr. Laura K. Stultz, provost and science faculty member.