Dive Brief:
- The Department of Education has released data evaluating the subpar financial health of 160 private colleges during the 2013-14 academic year, 94 of which are nonprofit.
- The Chronicle of Higher Education reports the results from the department’s financial responsibility test found two more overall failures, but fewer nonprofit institutions on the list — last year, there were 158 failures, 108 of which were nonprofit.
- The department’s scale ranges from -1 to 3, with failure equating to anything less than a 1.5 — among this group are notable for-profits, ITT Educational Services Inc., and Trident University.
Dive Insight:
Most of the financially struggling colleges are small regional institutions. Low financial responsibility scores result in cash monitoring requirements from the Department of Education. The Department has two levels of heightened cash monitoring, the more serious of which precipitated the collapse of Corinthian Colleges Inc., because it delayed federal financial aid payments enough to put the school out of business.
St. Catharine College in Kentucky is suing the Department of Education for keeping it under heightened cash monitoring for more than a year and putting it at risk of financial collapse. The Department walks a fine line between protecting students and sabotaging institutions, a line that has more often hurt for-profit colleges during the Obama administration.
