After 115 years, Concordia University in Oregon will close its doors following the end of the 2020 spring semester and faces a potential class-action lawsuit launched by a student who claims he was misled about the institution’s financial struggles.
In a statement, the private Lutheran institution with about 5,700 students explained that its board of regents voted after much prayer and consideration of all options to cease operations of the school in a resolution approved on Feb. 7.
The board’s vote follows “years of mounting financial challenges and a challenging and changing educational landscape.”
Interim President Tom Ries said the board concluded that it's “impossible to pursue” the school’s mission considering the current and projected enrollment and finances of the school.
“The board has come to this difficult decision recognizing that it is in the best interest of our students, our faculty, our staff, and our partners,” Ries said. He pledged to share more information as it becomes available.
According to Oregon Live, the closure will result in over 1,500 layoffs that will occur by September.
Concordia says it is in “active discussions” with accrediting bodies to provide students with opportunities to continue their education at other higher education institutions. Concordia is also in talks about how to help faculty and staff transition to the next phase of their careers.
The university’s 24-acre, Northeast Portland campus will return to the ownership of the Lutheran Church-Missouri Synod and the Lutheran Church Extension Fund, one of the campus’ lenders. The institutions will be looking to sell the property.
One Concordia student said that he plans to sue the school on grounds that it misled students about its financial condition and left them without a way to graduate or transfer to another school.
Student William Spaulding told Oregon Live that he hired an attorney Monday to draft a class-action lawsuit in state court accusing the school of unlawful business practices. Spaulding is requesting a jury trial.
Spaulding claims that he and other students would not have paid for the 2020 semester had they been informed about the schools struggling finances.
According to the College Board, the average annual tuition costs for first-year students at Concordia is $29,480. Including room and board and other expenses, the average cost is $45,360.
“Concordia University misrepresented the qualities and characteristics of its education services and the value of its tuition credits,” the complaint claims.
The lawsuit does not specify how much Spaulding is seeking in monetary damages but does request injunctive relief to require the university to disclose how much it profited from tuition in 2020. The lawsuit can be amended later to reflect the value of damages.
According to Spaulding’s lawsuit, the first time Concordia students were told about the financial struggles of the school was the same day the school announced it would close.
“Upon information and belief, the high-paid executives at Concordia University knew since 2019 that the University was in dire financial condition and that the University’s closure in 2020 was looming,” the lawsuit argues.
The lawsuit further complains that the university advertised programs through late 2019 and early 2020 and even promised students that by 2024 the university would have a “strong national reputation."
“Relying on Concordia University’s advertisements and representations, plaintiff paid Concordia University thousands of dollars for educational services and tuition credits in 2020,” the lawsuit adds.
Spaulding is represented by lawyer Michael Fuller. Fuller told The Portland Business Journal that he is also talking with three Concordia University students who attended Marylhurst University when it shut down in 2018.
In an interview with Business Journal, Ries said that the school had been considering an option to stay open before the vote of the board of regents last week.
A Concordia University spokesperson told The Christian Post in an email that the university believes that the claims made in Spaulding’s lawsuit are “without merit.”
“Right now we are focused on supporting our faculty, staff and students in their transition,” the spokesperson added.
Concordia University’s closure comes as many small, private colleges are struggling with lower enrollments and struggling finances.
In 2018, it was reported by Moody's Investors Service that about a quarter of private colleges and universities in the U.S. spent more than they earned in 2017. Meanwhile, the median revenue for such schools was 2.4 percent with a median expense growth of 3 percent.
Ries told KGW8 that Concordia University has had a “negative cash flow for quite some time.”