The livelihood of some rural colleges depends on this 1 unlikely federal agency

Iowa Wesleyan had an estimated $55.1 million annual economic impact on southeast Iowa, according to a 2017 study conducted for the university by Hanover Research. 

When facing potential closure in 2018, a good actor saved Iowa Wesleyan University with a $26.1 million loan. Still, the inevitable happened, and as Iowa could not pay back its loan, the only collateral Wesleyan’s Board of Trustees could give this entity was its property.

Why does the Department of Agriculture now own the 60-acre tomb of a now-defunct, 181-year-old private university in rural southeast Iowa? The answer is more straightforward than you think. The USDA is taking out risky loans worth tens of millions of dollars to colleges and universities to prevent rural communities from becoming higher education “deserts,” according to The Hechinger Report.

The rural schools the USDA tends to take on are out of time and options for other lenders. In Iowa Wesleyan’s case, Gov. Kim Reynolds turned down the school’s request for $12 million, which eventually led to the school’s closure. Institutions have had to eliminate swaths of majors and have even resorted to merging or closing due to rural states cutting their higher education funding. This began ten years after the housing market crash of 2008.

Still, the USDA sees how universities like Wesleyan closing their doors can eventually lay detriment to a community, especially in the economic sector. Iowa Wesleyan, for example, had an estimated $55.1 million annual economic impact on southeast Iowa, according to a 2017 study conducted for the university by Hanover Research.

“Beyond the educational prospects, these institutions support small businesses who depend on the student and faculty population, and they make their communities a more attractive place to live,” said Secretary of Agriculture Tom Vilsack. “They generate opportunity,” Vilsack said. “When an area loses one of these colleges, like we are seeing in Mount Pleasant right now, it is a very emotional loss.”

Aside from the financial implications, rural colleges and universities that close down deprive students of postsecondary learning opportunities. As a result, the disparity between rural high school graduates attending a college or university compared to suburban high school graduates is growing. This is partially due to the 13 million Americans living in areas where the nearest university is beyond a reasonable commute away, which is especially true for those in the Midwest and Great Plains, according to a report from the American Council on Education.

A “net importer of talent,” Dordt University, which has an estimated $43.4 million annual economic impact on northwest Iowa, received a $30 million USDA loan to build a student common area and recital hall. About 40 percent of its students come from more than 400 miles away and 14% of them stay after graduating, according to Brandon Huisman, vice president for enrollment and marketing.

Even so, at least a dozen postsecondary institutions in rural areas have closed or announced their closings in the last three years.

Alcino Donadel
Alcino Donadel
Alcino Donadel is a UB staff writer and Florida Gator alumnus. A graduate in journalism and communications, his beats have ranged from Gainesville's city development, music scene, and regional little league sports divisions. He has triple citizenship from the U.S., Ecuador, and Brazil.

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