Cheyney University is about to succumb to the effects of the higher ed bubble.

David Dekok of Reuters reports.

Oldest U.S. black college on verge of financial collapse

The nation’s oldest black college, Cheyney University, one of Pennsylvania’s 14 state-run universities, is on the verge of a financial meltdown that threatens its ability to continue operating, a state official said on Wednesday.

Cheyney’s student body has shrunk by two-thirds, to about 1,000, since its 1983 peak, and its four-year graduation rate is just 9 percent. A quarter of students never receive a degree, and student loan defaults are high.

“Cheyney is in dire, dire, dire straits,” the state’s auditor general, Eugene DePasquale, said. The university has had a deficit for four of the last five years, growing to a cumulative $12.3 million shortfall as of June 30, 2013.

Cheyney’s fiscal problems – students who are unable to repay debt and increasing pension costs – were exacerbated by cutbacks in state higher education funding.

DePasquale called upon the State System of Higher Education – the governing body for the state-owned universities – and the legislature to help Cheyney find a way out of “a vicious, destructive cycle” in which declining enrollment and state funding leads to less money for investments that could attract much-needed students.

Cheyney, located in the Philadelphia suburb of the same name, was founded in 1837 after Quaker philanthropist Richard Humphreys bequeathed part of his estate to build a school to educate descendents of the African race, according to the university’s website.