Plan to monitor colleges’ financial health renews oversight debate

Education Dive

Jeremy Bauer-Wolf

May 27, 2020

Among the most long-standing complaints in higher education is the method by which the U.S. Department of Education tracks the financial health of private nonprofit and for-profit schools.

The financial responsibility composite score, a measure built into the Higher Education Act, examines colleges’ liquidity, equity and profitability in order to gauge their financial standing and control access to federal financial aid.

But the measure has been derided for relying on retrospective data that does not reflect the current condition of an institution. Some of the most recently available scores are based on data that is three years old. A U.S. Government Accountability Office report in 2017 found that the composite score predicted only half of college closures since the 2010-11 academic year.

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