The Skills Gap Crisis: Why Small Colleges Must Act Now or Risk Obsolescence
The Enrollment Cliff Is Here—And It’s Accelerating
Small colleges across America are facing an existential crisis. Enrollment at institutions with fewer than 2,000 students has plummeted by an average of 35% since 2010, with some schools losing more than half their student body. The reasons are stark: declining birth rates, soaring tuition costs, and perhaps most critically, a fundamental shift in how students and employers view the value of traditional liberal arts education.
But here’s the uncomfortable truth that most college presidents and board members are reluctant to acknowledge: students aren’t just leaving because college is expensive—they’re leaving because traditional degrees no longer guarantee career outcomes.
In 2024, 94% of students said they wanted micro-credentials and industry certifications to count toward their degrees, up from just 55% the year before. Meanwhile, 85% of employers now say they’re more likely to hire candidates with specific vocational credentials than those with only traditional liberal arts degrees. The message is clear: the market has spoken, and it’s demanding skills-based education.
For small colleges still operating under the old playbook, this represents an adapt-or-die moment. But for those willing to act strategically, it also represents the greatest growth opportunity in higher education today.
The Liberal Arts Paradox: Essential Skills, Unemployable Graduates
Don’t misunderstand—the core value proposition of liberal arts education remains powerful. Critical thinking, communication, analytical reasoning, and cultural literacy are more important than ever in our complex global economy. The problem isn’t that these skills are worthless; it’s that they’ve become invisible to employers who lack the time or framework to recognize them.
When a hiring manager sees a resume with a philosophy degree, they don’t automatically think “excellent analytical thinker who can solve complex problems.” They think “unemployable idealist who can’t contribute to the bottom line.” This perception gap has created a vicious cycle: students avoid liberal arts programs because they fear unemployment, employers continue to overlook liberal arts graduates because they see so few of them, and colleges respond by desperately trying to make their programs more “practical”, often in superficial ways that satisfy no one.
The solution isn’t to abandon liberal arts education. It’s to combine it with immediately recognizable, market-validated credentials that make those essential liberal arts skills visible and valuable to employers.
The Micro-Credentials Revolution: A $1.9 Billion Opportunity
The micro-credentials market is exploding, projected to reach $1.9 billion by 2029. But this isn’t just about digital badges or online certificates, it’s about a fundamental restructuring of how education creates value. Strategic Education’s Q1 2025 results showed 45% revenue growth driven largely by micro-credential offerings, with over 70% of new enrollments coming through employer partnerships.
Here’s what’s driving this transformation:
Students want stackable credentials. They’re no longer willing to commit four years and six figures to a degree that might not lead to employment. They want to see career progress year by year, with credentials they can use immediately while building toward a full degree, and ultimately, lots of career options.
Employers are willing to pay for skills-based training. Companies now spend billions of dollars a year on workforce development, and they’re increasingly eager to partner with educational institutions that can deliver job-ready skills at scale.
Credit recognition is becoming universal. More than 30 professional certificates now carry formal credit recommendations from accreditation bodies, making them truly stackable toward traditional liberal arts degrees.
For small colleges, this represents a massive opportunity—but only if they act quickly and strategically.
The Acquisition Imperative: Why Organic Growth Isn’t Enough
Most small colleges are approaching the skills gap crisis through partnerships with platforms like Coursera or by adding a few “practical” courses to their existing curriculum. This is “too little, too late” and will prove fatal for many institutions.
Platform partnerships sound appealing because they require minimal upfront investment, but they’re actually a trap. When students enroll in a Google certificate through Coursera, Google gets the brand recognition and career outcome credit, not your college. You become a facilitator in someone else’s ecosystem, competing on price rather than value, with no control over the student experience or employer relationships.
Organic program development is equally problematic. Small colleges lack industry connections, employer relationships, and specialized faculty needed to create truly job-relevant programs. By the time you’ve developed new curricula, hired qualified instructors, and built employer partnerships, market demand will have shifted to new skills.
The optimal strategy is to acquire an established for-profit vocational school.
The Strategic Acquisition Model: Liberal Arts + Vocational Training
The most successful higher education institutions of the next decade will be those that combine the depth and breadth of liberal arts education with the immediate market relevance of vocational training. This isn’t about creating a “vocational track” within your existing college, it’s about acquiring an established vocational college and integrating it strategically.
Here’s why acquisition makes sense:
Immediate Market Access
For-profit vocational schools already have employer relationships, industry partnerships, and job placement networks that take traditional colleges years to develop. When you acquire a vocational school, you’re not just buying facilities and equipment, you’re buying market access.
Proven Revenue Models
Successful vocational schools operate on fundamentally different economics than traditional colleges. They charge premium prices for in-demand programs, maintain high job placement rates, and often have waiting lists for enrollment. This cash flow can stabilize your institution while you integrate programs.
Complementary Student Populations
Vocational schools serve students who might never consider traditional four-year programs—working adults, career changers, first-generation college students. By combining liberal arts and vocational programs, you can serve both populations while creating pathways between them.
Stackable Credential Architecture
The most powerful integration model allows students to earn industry credentials as they progress through liberal arts programs, or to add liberal arts depth to vocational training. A traditional biology major could graduate with a Bachelor of Science degree and a certificate in diagnostic medical sonography. A traditional business major could graduate with a Bachelor’s in Business and technical certifications in cybersecurity. Think of the career opportunities these kinds of students have over traditional students.
Case Study: Successful Liberal Arts + Vocational Integration
Hilbert College, a small, private, non-profit Catholic college, recently acquired Valley College, a for-profit vocational school with campuses in Ohio and West Virginia. This move allows Hilbert to expand its online offerings and potentially increase enrollment by tapping into Valley College’s existing student base. It also allows liberal arts students to graduate with certificates or diplomas as practical nurses, medical clinical assistants, veterinary assistants, or veterinary technicians. It also enabled Hilbert to offer over a dozen online vocational programs in business, cybersecurity, healthcare, and IT to students in 49 states, greatly expanding Hilbert’s traditional reach, At the same time, the merger allows Valley College’s vocational school students to continue their education by earning an Associates or Bachelor’s degree at Hilbert with programs in over 50 different subject areas.
The Integration Playbook: Making the Marriage Work
Acquiring a vocational school is only the first step. Success requires thoughtful integration that preserves the strengths of both institutions while creating new value. Based on our experience advising higher education M&A transactions, here are the critical success factors:
Preserve Distinct Brand Identities Initially
Don’t rush to rebrand everything under one umbrella. Vocational schools often have strong employer relationships built around their specific brand and reputation. Maintain these relationships while gradually introducing the liberal arts value proposition.
Create Clear Pathways, Not Forced Integration
Students should be able to move between programs naturally, but don’t force artificial combinations. A welding student might benefit from business communication training but probably doesn’t need art history. Focus on complementary skills that enhance career outcomes.
Leverage Cross-Faculty Collaboration
Your liberal arts faculty can provide valuable perspective on critical thinking, communication, and ethics to vocational programs. Meanwhile, vocational instructors can ground theoretical liberal arts concepts in real-world applications.
Maintain Employer Relationships as Strategic Assets
The vocational school’s employer partnerships are among your most valuable acquired assets. Nurture these relationships and gradually introduce the expanded capabilities of your combined institution.
Financial Modeling: The Economics of Educational Transformation
Map of Private Non-profit College Closures
The financial case for strategic acquisition is compelling, but it requires sophisticated modeling that accounts for multiple revenue streams and integration costs. Key considerations include:
Revenue Synergies: Combined institutions can command premium pricing for integrated programs, serve broader student populations, and access new funding sources including employer partnerships and workforce development grants.
Cost Efficiencies: Shared administrative functions, facilities optimization, and combined marketing can reduce per-student costs significantly.
Risk Mitigation: Diversified revenue streams reduce dependence on traditional enrollment, providing stability during demographic transitions.
Growth Capital: Improved cash flow from vocational programs can fund expansion of liberal arts offerings or acquisition of additional specialized schools.
Contact our team for a confidential consultation regarding detailed financial modeling for your institution’s specific situation.
The Competitive Landscape: First-Mover Advantages
The window for strategic acquisition of quality vocational schools is narrowing rapidly. As more traditional colleges recognize this opportunity, competition for the best targets will intensify, driving up valuations and reducing availability.
Early movers have significant advantages:
- Better acquisition targets are available now at reasonable valuations
- Less competition for quality vocational schools
- More time to execute integration before market pressures intensify
- Stronger market positioning as education evolves
Colleges that wait will find themselves choosing from less attractive targets at higher prices, or worse, competing directly with institutions that have already completed successful integrations.
Beyond Survival: Building Tomorrow’s Educational Powerhouses
This isn’t just about saving colleges, it’s about building the educational institutions that will dominate the next generation of higher education. The colleges that combine liberal arts depth with vocational relevance will enjoy:
- Premium pricing power for differentiated offerings
- Diverse revenue streams, reducing enrollment risk
- Strong employer relationships driving job placement and reputation
- Broader student appeal across demographic and economic segments
- Strategic flexibility to adapt to changing market demands
The question isn’t whether higher education will evolve—it’s whether your institution will lead that evolution or be left behind.
The Path Forward: Strategic Planning for Educational Transformation
College presidents and board members who recognize the urgency of this moment have a clear path forward:
- Assess your current position honestly, including enrollment trends, financial stability, and competitive positioning
- Identify strategic acquisition targets that complement your liberal arts mission while providing immediate market relevance
- Develop integration planning that preserves institutional strengths while creating new value
- Secure stakeholder buy-in from faculty, alumni, and community partners
- Execute with experienced guidance to ensure a successful transaction and integration
- Engage an Expert M&A Advisor to help you objectively assess and address each of these points.
The institutions that act decisively now will not survive—they will thrive for decades to come.
Take Action: Your Institution’s Future Depends on It
The data is clear, the trends are accelerating, and the window to take action is narrowing. Small colleges that fail to adapt to the skills-based education revolution will continue to lose students, struggle with finances, and ultimately face closure.
But those willing to act boldly have an unprecedented opportunity to transform their institutions into thriving, market-relevant educational powerhouses that serve students, employers, and communities better than ever before.
At Jackim Woods & Co., we’ve helped dozens of higher education institutions navigate strategic transformations through carefully planned mergers and acquisitions. As one of the most active and creative financial and M&A advisors to higher education institutions, we understand both the urgency of your situation and the opportunities available to forward-thinking leaders.
Rich Jackim and Jackim Woods & Co.
Rich Jackim is an education industry investment banker, education industry entrepreneur, and former mergers and acquisitions attorney.
For the last 25 years, Rich has been providing boutique investment banking services to middle-market companies in the education sector.
Rich also founded a successful training and certification company called the Exit Planning Institute, which he sold to a private equity group in 2012. Rich created the Certified Exit Planning Advisor (CEPA) designation and the executive MBA-style CEPA training program.
Rich is also the author of the critically acclaimed book, The $10 Trillion Dollar Opportunity: Designing Successful Exit Strategies for Middle Market Businesses, as well as dozens of articles on mergers and acquisitions, business valuation, and exit planning.
Jackim Woods & Co offers skilled mergers and acquisitions advisory services to privately owned schools, colleges, and EdTech companies in both sell-side and buy-side transactions. Jackim Woods & Co has arranged over 100 successful transactions, ranging from less than one million to more than eighty million dollars in value.
If you own an education-related business and are interested in exploring your options, I would welcome an opportunity to speak with you. Feel free to contact me at 224-513-5142 or rjackim@jackimwoods.com.
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