Such is the financial crisis hitting American higher education -- particularly small, liberal arts colleges -- that some are doing the unthinkable, sacking staff, and even abolishing academic tenure.

Bennington College in Vermont, which educated the author Camille Paglia and Groucho Marx's daughter, nurtured abstract expressionist painters and jazz musicians, has shocked academia by firing one-third of the teaching staff and abolishing all academic departments.

The foreign language department has been closed, and outside lecturers recruited to teach instrumental music. All professors of flute, piano, cello, violin, guitar and clarinet have been sacked.

Bennington was beloved by the American avant garde. Founded in 1932 as a women's college, it was where Martha Graham helped to invent modern dance. W. H. Auden and Bernard Malamud taught there. Like Dartington School in Devon, it did not believe in rules or tests or in force-feeding. It was America's "School for Scandal". "A girl could hang upside down from a tree in her bloomers if she felt like it," said one of its founders.

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Today, however, Bennington is in crisis. This year it stands to lose $1 million. Its popularity has waned. Student numbers, at 400, are below the 600 needed to break even. And it has no cushion. Its endowment is only $7 million.

Elizabeth Coleman, the college's president for the past seven years, attributes the decline to the fact that Bennington has become mediocre. Its pioneering features -- tutorials, curricula tailored to individuals and relaxed social atmosphere -- have been reproduced across the nation.

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Its academics, once leading lights in their fields, working as novelists or writers as well as teachers, have grown complacent and lost their edge, she says. Coleman wants to recruit a new breed of teacher-practitioner. She also seeks a multidisciplinary curriculum with students designing majors across subject boundaries.

Then maybe the college will be able to attract students at a tuition cost of $25,800 a year. The big question is whether Coleman will be able to attract creative geniuses. Literary or artistic giants in the making are snapped up by bigger universities who pay better.

After 25 staff were fired the American Association of University Professors launched an inquiry. A report is expected to recommend that the college be put on its censure list.

Censure means that the AAUP has found academic freedom jeopardised. That deters academics from applying for jobs. "Once a college is put on censure, the administration is most eager to negotiate to be taken off the list," said Iris Molotsky, AAUP's press officer. She said it was "amazing" that an institution of Bennington's prestige and standing should have abolished tenure.

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