On November 21, 1821, the corporation turned to one of its own members, the Reverend Daniel Haskel, to be the university's third president. Daniel Haskel was born in Preston, Connecticut, in June 1784, and he graduated from Yale in 1802. After studying theology at Princeton and preaching in various parishes in Connecticut, he accepted the pastorate of the First Calvinistic Congregational Society in Burlington in 1810 and was appointed a member of the university corporation in 1816.

It was Haskel's misfortune to serve as president during a period of extreme trial and tribulation. Just prior to his appointment, during the autumn of 1821, notice was given that instruction would be indefinitely suspended after the close of that term. At this point, the university was saved by Arthur L. Porter, an energetic young professor of chemistry and pharmacy. At a remarkable meeting which the students called to divide up the library of the literary society, Porter charged that such action would constitute an act of treason in the realm of letters.He then outlined methods by which the threatened collapse could be averted, and a committee was appointed to carry out a plan of reorganization.

During this same period, a group of Burlington physicians, led by Dr. John Pomeroy, Dr. William Paddock, and Dr. Nathan Smith, banded together to create the first UVM medical college. As a result, during his first two years in office, President Haskel not only managed to keep the university open but even increased the student body from twenty-two to seventy students, including the first class of medical students who graduated in 1823.

However, the university's financial problems were becoming increasingly more difficult when a bleak situation turned into utter disaster. On May 27, 1824, a fire destroyed the entire College Edifice, including the library and all of the scientific apparatus. President Haskel suffered a mental breakdown as a result of this shock. He severed his relationship with the university and moved to Brooklyn, New York, where his health gradually improved and he was able to engage in occasional scholarly work before he died on August 9, 1848.

Once again it appeared that the university was on the brink of destruction, but once again this proved not to be the case. At a meeting on June 1, 1824, at Mr. Gould's Hotel in Burlington, the corporation bravely voted that measures should be immediately taken to erect suitable college buildings, and to raise the necessary funds for that purpose.

By this time, Burlington had become more prosperous as a result of lumbering, boat building, and small manufacturing operations, and its population had grown to 2,500 people, who were once more prepared to come to the rescue of the university. In August 1824, a committee representing the citizens of Burlington announced that the sum of $8,362 had been subscribed for rebuilding a new college edifice on lands in front and north of the original Old Mill. Thanks to this display of generosity, the University of Vermont was literally about to rise from the ashes.