Study finds state protection policies need improvement to reduce student harms associated with college closures

A new State Higher Education Executive Officers Association (SHEEO) report shows that the association between student protection authorization policies and enrollment and completions after college closure is not overwhelmingly positive. 

A Dream Derailed? Investigating the Causal Effects of Student Protection Authorization Policies on Student Outcomes after College Closure is the third and final report from a collaborative research team of SHEEO and the National Student Clearinghouse Research Center. The research seeks to quantify the impacts of college closures on students’ subsequent postsecondary enrollment and completion outcomes and to identify the policy levers states may have to support students who experience a closure. This final report incorporates the state authorization policy context to determine if policy interventions can improve the negative impacts of closures on students. It uses the treatment and control samples developed for the second report and adds a longitudinal dataset capturing state authorization policies related to student protections.

As outlined in the first report, A Dream Derailed? Investigating the Impacts of College Closures on Student Outcomes, more than 100,000 students experienced their institution closing without adequate notice or a teach-out plan from July 2004 to June 2020. As outlined in the second report, A Dream Derailed? Investigating the Causal Effects of College Closure on Student Outcomes, the data show college closures have an overwhelmingly negative impact on students, with students 71.3% less likely to reenroll within one month and 50.1% less likely to earn a credential than students who did not experience a closure. This third report focuses on the post-closure student protection policies that aim to reduce the harms associated with closure: collection of tuition recovery funds, payment of surety bonds, preservation and dissemination of student records, and creation of teach-out plans. As part of consumer protection, many states have enacted a mix of these policies.

Collectively, these four policies can provide students with tuition refunds, completion or transfer opportunities, and access to transcripts, all of which can assist students in recovering from an institutional closure. Among the four policies examined, student records policies tied to closure were the most common form of student protection across all states that had any institutional closures between 2004 and 2020. During this time frame, the largest percentage of states had no tuition recovery policy (79.3%), no surety bond policy (43.9%), no teach-out plan policy (47.3%), or a student records policy tied to closure (45.5%). Additional findings include:

  • Tuition recovery and surety bond policies have no positive correlation with reenrollment within four months after closure.
  • Student records and teach-out plan policies have a strong positive correlation with reenrollment that lessens over time. 
  • Tuition recovery and surety bond polices have no consistent positive effects on credential completion, type of credential completed, or time to completion for students who experienced a closure. 
  • Student records and teach-out plan policies may have some positive effects on the type of credential completed and time to completion, but results are mixed. 
  • The most encouraging results indicate that students are more likely to immediately reenroll in states that have records retention and teach-out policies in place. Both policies are designed to ease the transfer process for students after a closure, and results suggest the presence of both policies is more effective than just one.

“These findings reinforce how disruptive institutional closures are for students and suggest that states should consider stronger consumer protection policies and procedures,” said SHEEO President Rob Anderson. 

As currently designed, surety bond and tuition recovery fund policies do not allow students to receive a refund and utilize a teach-out option. This policy design requires students to make a difficult decision between reenrolling at a teach-out institution or receiving a refund. In this regard, the student protection policies counteract each other (e.g., students can only pursue tuition reimbursement if a teach-out opportunity is not pursued).

Surety bond and tuition recovery fund policies are designed to reimburse students for harm caused by closing institutions and are not designed to help students reenroll let alone advance toward the completion of a credential. Similarly, records retention policies help ensure students have access to transcripts and other records that will help aid the transfer process to another institution. Once students have transferred and their previously earned credits have been accepted, records retention policies do little to promote completion.

State agencies of higher education and institutions can play a key role in helping to minimize the negative impacts on students due to college closures. Several policy implications were outlined in the report, including that states should provide greater oversight of teach-out institutions to ensure that they are financially viable, offer quality educational opportunities, and provide program alignment to prevent students from having to retake courses. While the results that show that the presence of a student records retention and teach-out policies led to a greater likelihood of reenrolling within four months, the other results suggest that the consumer protection policies could be improved to better promote reenrollment within one year to improve the likelihood of completion.

For additional data resources and to access all three reports and an interactive data visualization, visit the project website at

This series of three publications examining the impacts of college closure on student outcomes is supported by Arnold Ventures.