A recent New Yorker column named the trend Compass Vermont has been watching for months.

by Compass Vermont

ANALYSIS — Six weeks after a scholarship-fund raid drew legislative skepticism, UVM announced a $12 million budget deficit. The university pitched a $175 million arena in the same Statehouse appearance.

On May 13, University of Vermont President Marlene Tromp brought two pieces of news to the House Appropriations Committee.

The first: UVM is facing an approximately $12 million structural budget deficit for fiscal year 2027. First-year and transfer enrollment is projected to drop 15 percent this fall. Overall undergraduate enrollment is projected to drop 7 percent. Tuition makes up more than two-thirds of the university’s general fund, so the enrollment hit translates directly into a budget hole.

The second: UVM still wants its $175 million multipurpose center — a 5,000-seat arena for basketball and concerts that broke ground in 2019 and was paused by the pandemic. According to Tromp, UVM has spent $75 million on the project to date and needs roughly $100 million more to finish. The state piece of that funding would come from the Higher Education Endowment Trust Fund, the same fund that supports the Vermont Student Assistance Corporation and the Vermont State Colleges System.

Two announcements. One appearance. One university.

What April Said

Compass examined the structural problem six weeks ago, in coverage of UVM’s $15 million arena ask from the scholarship trust.

The numbers from that piece haven’t changed. Vermont residents make up about 23 percent of UVM’s undergraduate population, with recent first-year classes hovering below one-quarter Vermonters. UVM’s 2019 NECHE self-study noted that only about 6 percent of the university’s applicant pool came from the state. The same accreditation documents describe “an unusual profile for a land-grant institution.”

The comparison points were stark. The University of Virginia maintains a two-thirds Virginia majority. The University of Maine enrolls 61 percent in-state students. The University of New Hampshire enrolls 47 percent. UVM is at 23 percent.

In April, this was framed as a question of fairness — whether a scholarship fund created to help Vermont students should subsidize construction at an institution that primarily educates students from elsewhere.

The May 13 announcement reframes it as a question of viability. The out-of-state student strategy Vermont’s flagship has relied on for two decades is exactly the strategy now under the most pressure nationally.

The Vermont Model

UVM’s out-of-state share didn’t happen by accident.

Vermont ranks 49th in the nation in per-capita state spending on higher education. The “Vermont Model,” a policy choice dating to the early 1970s under Governor Deane Davis, deliberately kept direct state aid low. The math forced UVM to recruit out of state to balance its books.

The result is among the highest in-state public tuition rates in the country. For the 2026-27 academic year, per UVM Student Financial Services, Vermont resident tuition and the comprehensive fee total $19,996. The out-of-state equivalent is $49,713 — high relative to peer flagships. UVM raised out-of-state tuition 4.5 percent in October 2025, the second consecutive year of 4.5 percent increases for non-residents.

The strategy was: charge a lot to a lot of out-of-state students, subsidize a smaller in-state population through programs like UVM Promise (covering tuition and comprehensive fee for Vermont families with adjusted gross income up to $100,000, after other federal, state, and institutional aid), and use selectivity and reputation to keep the funnel flowing. When the funnel is full, the model works. The May 13 announcement is what happens when it doesn’t.

The pricing tells you the positioning. UVM has priced and recruited as a peer of selective national flagships, not as a regional public school competing on in-state affordability. The consequence is that with Vermont residents at 23 percent of the undergraduate body, UVM also lacks the in-state alumni base and generational loyalty other flagships rely on as a buffer when demand softens — what amounts to a state-school flywheel of local pride and family tradition. Maine, UNH, UNC, Wisconsin, and most flagships outside Vermont have one. UVM, structurally, does not.

The National Pattern

UVM is not the only flagship facing this math. It is, however, one of the more exposed.

In a column published this week, The New Yorker’s Jay Caspian Kang surveyed which colleges are likely to survive the coming demographic contraction. He named UVM specifically, calling it “an extreme case” of the flagship vulnerability pattern — a school whose aggressive out-of-state recruitment and weak in-state base leave it badly exposed when the national applicant pool shrinks.

Kang’s analysis drew on a 2024 Federal Reserve Bank of Philadelphia working paper that modeled a scenario in which an abrupt 15 percent enrollment decline could trigger as many as 80 additional college closures in a single year. The Western Interstate Commission for Higher Education projects the national number of high school graduates will fall about 13 percent by 2041, with the Northeast facing some of the steepest declines. Goddard College and Green Mountain College have already closed in Vermont; Sterling College is concluding degree-granting programs after Spring 2026.

The structural argument is not editorial. When applicant numbers drop nationally, schools slightly above UVM in the prestige hierarchy begin admitting students they would have rejected in better years. Those students don’t end up at UVM. UVM is then caught between maintaining standards and meeting tuition targets — the same dynamic Tromp described to lawmakers when she said competitor schools are “reaching for students that would ordinarily come to us.”

The squeeze gets harder when the sticker is already at the top end of the range. At $49,713 a year, UVM’s out-of-state price is high enough that prospective families are increasingly likely to ask whether a slightly more selective school justifies the same money — or whether a less selective one at substantially lower cost makes more sense. Either answer is bad for UVM.

Kang drew on commentary from Kevin Carey, vice president of education and work at New America, who has described a winner-take-all environment in which institutions with market power consolidate gains while those without it face hard contraction. And from Nathan Grawe, an economist at Carleton College who has written two books on the demographic cliff and told the magazine that the sector is now navigating its first sustained enrollment contraction after sixty years of uninterrupted growth — leaving current leaders without comparable experience to draw on.

Neither analyst was speaking about Vermont specifically. They didn’t need to.

The Strategy Question

UVM’s response to the deficit, outlined by Vice President for Finance and Administration Alicia Estey and Vice President for Enrollment Management Jay Jacobs in a May 13 letter to staff reported by Seven Days and VTDigger, is to cut general-fund spending by 3.25 percent, review staffing and leased space, expand recruitment and aid programs, and stabilize the budget within a year. Tromp told lawmakers the university is also leaning further into in-state enrollment.

At the same Statehouse appearance, Tromp made the case for the $175 million arena. Her argument: competitor schools have facilities UVM does not, and prospective students choose elsewhere in part for that reason. The arena, in this framing, is part of the recruitment fix — not separate from the budget fight but central to it.

Two questions follow.

The first is whether the amenity strategy works when demographic decline means there are simply fewer 18-year-olds, regardless of facilities. A nicer arena does not change the WICHE projection. Out-of-state students who can afford the $49,713 sticker have choices. They will continue to have choices, and a 5,000-seat arena is unlikely to be the deciding factor against schools further up the prestige curve now reaching down into UVM’s traditional applicant pool.

The second is whether the Legislature should accept UVM’s framing. The state is being asked to underwrite a recruitment amenity — partly through a scholarship trust meant for Vermont students — at the moment the underlying recruitment strategy is producing a $12 million shortfall. The university’s argument is that the arena is part of the fix. A reasonable reading of the same data is that the arena is part of the bet that produced the problem.

The Senate has already split the difference. Its version of H.951, passed April 29, would draw $15 million from the trust fund’s principal but distribute it three ways: $12 million to the UVM project, $600,000 to a Vermont State University housing project in Johnson, and $2.3 million to expand VSAC’s Freedom and Unity scholarship program. The Senate also added a new revenue source for the trust fund — 20 percent of the state’s retail cannabis excise tax, beginning in FY2028 — estimated by the Joint Fiscal Office at $4.9 million the first year and $5.0 million the next. The House version of H.951 stripped the trust fund money entirely. The two chambers are now in conference committee. Tromp’s May 13 testimony to House Appropriations was, among other things, making the case for the Senate’s restoration.

What’s Next

The enrollment decline, Tromp told lawmakers, is significant not just for the university but for the state. That framing is correct, and the implications cut in more than one direction.

UVM is one of the largest employers in Vermont. If the institution contracts substantially — through layoffs, program closures, or further enrollment decline — the Burlington economy is exposed. The Vermont State Colleges System, which serves a higher share of in-state students at lower tuition, may absorb some demand. The Community College of Vermont, more nimble and far cheaper, may absorb more. Neither has the research infrastructure or the federal grant pipeline UVM brings to the state.

The choice in front of the conference committee is not whether to save UVM. The choice is whether the arena ask, even as the Senate has restructured it, is a stabilization strategy or a doubling-down on the model the May 13 numbers suggest may be approaching its limit.

The Higher Education Endowment Trust Fund money is finite. The deficit is real. The demographic curve is not negotiable.

The math is showing up.