AUBURN, N.Y. (AP) -- A judge Thursday refused to block Wells College's plans to allow men to enroll next year, saying the main issue was the continued existence of the 136-year-old all-women's institution.

Two students had challenged the school's decision to go coed on several grounds including fraud, breach of contract and irreparable harm, but Acting State Supreme Court Justice Peter Corning said they failed to prove any of their arguments.

Ruling from the bench at the end of a 45-minute hearing, Corning said he saw the case as "balancing the inconvenience of two students against the annihilation of the college."

According to school financial records, the 400-student liberal arts school is losing $5 million a year while its enrollment continues to decline, forcing administrators to dip into the college's reserve funds to pay for its daily operations.

"If that continues, it will mean an end to Wells College within a matter of years," Corning said. "Trustees have an obligation to preserve the institution. I cannot second-guess the trustees."

The two students, Lauren Searle-Lebel and Jennifer LaBarbera, said they were disappointed by the ruling and would discuss their legal options with their attorney before deciding what to do next. Corning did not rule on the facts of the case, which means the students' lawsuit remains pending.

Searle-Lebel, a freshman from Arcata, Calif., and LaBarbera, a sophomore from Fredonia, both said they would finish the current academic year at Wells but would definitely transfer before next fall.

Wells President Lisa Marsh Ryerson, who attended the hearing, applauded Corning's decision.

"I'm very pleased by the outcome, especially since this means that Wells can move forward, knowing that we have received a record number of admissions applications since our decision was announced," she said.

The students' suit accused Wells of breach of contract through its admissions process, and violating state general business law by engaging in fraud and "deceptive acts." Specifically, it claimed the students were deceived into believing they would be attending a woman's college for four years.

Peter D. Carmen, the students' lawyer, said while the college was actively recruiting females, the trustees had been developing the plan to admit male students for more than a year.

At Thursday's hearing, Carmen argued for an injunction to at least delay the conversion to a coed college until the fall of 2008, which would allow the current freshman class to graduate.

The college's attorney, John Callahan, said college administrators and trustees took appropriate steps in formulating their decision and making students aware of the discussions.

Trustees agreed Oct. 2 to admit males to Wells beginning in 2005. For nearly two decades, Wells has been unable to stimulate enrollment beyond the 400 student level, despite intensive recruitment techniques and strong student financial-aid programs, say school officials.

The school, located 45 miles southwest of Syracuse, was established by Wells Fargo founder Henry Wells. It currently has 302 full-time students and about 90 commuters. The school wants 450 full-time students.

When the decision was announced, more than 150 students protested by camping out in front of the campus administration building for more than a week.