Governors confirmed the summer closure of the boarding school in a statement issued earlier this week.
"The school has been affected by the Government's inclusion policy because local education authorities are sending fewer children to schools like ours," it said. "Placements for the next academic year would not enable us to break even, so the governors have had no option but to announce this closure."
Renate Williams, 33, a former English teacher at the school, was cleared at Worcester Crown Court last November of indecent assault.
She admitted skinny-dipping in front of a group of pupils while drunk but always denied sleeping with a 15-ear-old pupil.
Now teaching in an Egyptian convent, she could still face civil action threatened by the boy's family and possibly new criminal charges. New information about the case received from a Sunday newspaper has been passed to the Crown Prosecution Service.
There is a history of court cases involving the school which cannot be named for legal reasons. A joint team from Her Majesty's Inspectors and social services is due to reinspect the school in July following a critical social services report last summer.
That report criticised the school's child protection procedures citing cases where incidents had not been reported, poor vetting of staff, inadequate night staff and unsatisfactory complaints procedures.