Birmingham-Southern College to Close After Failing to Secure State Loan

Birmingham-Southern College, a private liberal arts school in Birmingham, Ala., is set to close at the end of May, bringing a bitter end to the school’s nearly 170-year history after it failed to secure a multimillion-dollar loan from the state.

The school’s board of trustees voted unanimously on Tuesday to shut the school, with the college’s hundreds of students and staff receiving formal notice shortly after.

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

The school has been mired in debt for years. The 2009 recession, and then the coronavirus pandemic worsened the toll of expensive campus investments and a dwindling endowment. But many staff and students had hoped that its future could school could be salvaged after Alabama lawmakers last year approved a new loan program that could lend Birmingham-Southern 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 sought to replenish its endowment with commitments 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 loan it, you will own it — it is a falling knife,” Mr. Boozer told a House committee this month.

The school’s allies in the legislature sought to change the loan program with a new bill this year, which moved the responsibility of approving loans from the state treasurer to the Alabama Commission on Higher Education and further specified the terms of the loan.

If the school closes, “there will be real revenue loss to the state, both direct and indirect,” Mr. Coleman told lawmakers this month. “And I think for the immediate area of west side of Birmingham, it’ll be devastating.”

While the new bill cleared the State Senate 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 news release.

On Tuesday, while the school was on spring break, the board convened to vote on the closure. (The school said the timing of the meeting was “not ideal,” but best allowed trustees to convene and review their options.)

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

The school’s allies had warned of the consequences of shuttering an institution that has helped drive investment in Birmingham and of leaving its sprawling, nearly 200 acre campus empty. Its critics have said that it was not worth diverting any kind of public assistance, even in the form of a loan, to a school with a long history of fiscal mismanagement.

Caught in the middle, however, were students and staff who still believed in the college’s approach to education and its small classes.

The school said it had begun work to help students transfer to other colleges both in Alabama and outside the state. Some seniors set to graduate at the end of the summer will be able to either complete their final requirements online or at other schools.

“We are putting 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, a provost and science faculty member.