You've inspected the questions. Now inspect your college.
Financial Health Questions 11-20
11. How important is cash on hand when evaluating a college?
Very important. Colleges need liquidity to make payroll, maintain facilities, pay vendors, and handle unexpected problems. An institution can own substantial assets and still have serious cash-flow problems.
12. Where can families find a college's financial information?
Much of it is publicly available through federal databases, IRS Form 990 filings for nonprofit colleges, audited financial statements, bond documents, and other disclosures. The problem isn't always that the information doesn't exist. The problem is that families aren't accustomed to looking for it.
Here is a BIG ‘however’, College Viability has developed tools and data that use these government data sources. We have taken the data and made it easy to search for and compare colleges. We focus our tools on college financial health, graduation rates, value, and investment return.
Here are links to:
13. Why are audited financial statements important?
Because they let me move beyond marketing claims and examine the institution's actual finances. I can see revenue, expenses, assets, liabilities, debt, operating performance, and sometimes warnings from the institution's independent auditors.
These audits are performed by independent accounting firms.
14. What does a "going concern" warning mean for a college?
It is a serious warning. It generally means substantial doubt has been raised about the institution's ability to continue operating. I would never automatically conclude that closure is inevitable, but I would want answers before recommending that a family make a major financial commitment.
The time period for a “going concern” reference in an audited financial statement is 12 months.
15. What can a college's IRS Form 990 tell me?
For nonprofit institutions, Form 990 can provide valuable information about revenue, expenses, assets, liabilities, executive compensation, governance, and other financial activity. I consider it another piece of the inspection process.
It also lists the top 5 vendor expenses for each year. I use that to see if a college is spending too much in one area when compared to other colleges.
16. What does it mean when expenses consistently exceed revenue?
It means the college has to cover the difference somehow. Maybe it uses reserves. Maybe it borrows. Maybe it sells assets. Maybe it cuts expenses. None of those solutions can indefinitely compensate for a business model that consistently loses money.
In today’s higher education market, I see hundreds of private colleges with a chronic inability to manage expenses in line with revenues.
17. How much should a college spend on instruction?
Rather than setting one universal number, I compare institutions with relevant peers and examine trends. Is instructional investment increasing or decreasing? Is spending keeping pace with enrollment and tuition? Those comparisons can tell us a great deal.
18. What happens when employee costs consume too much of a college's revenue?
I use a target of about 55%. For every $100 in expenses, salaries should consume about $55. Colleges are labor-intensive organizations, so salaries and benefits will naturally be a major expense. But when personnel costs consume too much revenue, management has less flexibility. That can eventually lead to hiring freezes, layoffs, program reductions, or other cuts.
19. Can a college look financially strong on paper and still be in trouble?
Yes. That's why I don't rely on a single metric, rating, building, endowment number, or marketing claim. Financial health is about the relationship among multiple indicators and how those indicators are changing over time.
That is one of the many reasons we don’t suggest that a college will close. We provide tools and data that will let each student and family decide if a college’s financial health is too risky to consider.
20. What's the single most useful financial number families should check?
If I had to choose only one, I'd start with something called the FTE enrollment trend. FTE is a measure that standardizes enrollment comparisons. But my real answer is: don't rely on one number. College viability is about patterns. Look at enrollment trends, graduation rate trends, endowment value trends, and much more.
You've inspected the questions. Now inspect your college.
College Viability Questions 21-30
21. What does "college viability" actually mean?
When I talk about college viability, I'm asking a simple question: Does this institution appear to have the financial resources, enrollment base, operating performance, and student outcomes necessary to deliver on its promises into the future?
Higher education has a long history of being less than transparent with its students and families – especially as it related to the college’s financial health.
College Viability was created to create and improve the financial health transparency that colleges often ignored. That lack of financial transparency has put countless families in position of reacting when a college closes.
My experience shows that the closure of any college is preceded by a substantial period of bad trends over the course of many years.
22. What's the difference between financial health and long-term viability?
Financial health tells me about the institution's current condition. Viability asks where it appears to be heading. A college may be financially healthy today but moving in the wrong direction. That is why the College Viability Inspection Report and My College Decision Lens were created. They help users assess their individual risk in choosing a college based on its financial health results.
23. How can you estimate whether a college will still be healthy four years from now?
Nobody can predict the future with certainty. What I can do is examine several years of trends. If enrollment, revenue, margins, reserves, and student outcomes are deteriorating simultaneously, I have more reason to question the institution's future.
It is really the comparisons that make it easier to differentiate colleges.
The College Viability Inspection Report compares and contrasts:
a. Student outcomes:
Retention rates
Graduation rates
Pell equity gap (what rate Pell recipients graduate compared to non-Pell)
b. Financial health:
Revenue to expenses ratio (should be above 1.0)
Enrollment trend
Endowment value
c. Value for your money:
Cost versus completion
Tuition allocation
Price versus outcomes
The My College Decision Lens compares and contrasts:
a. Pre and post college visit comparisons
b. Academic profile acceptance comparisons
c. Priority factor college matching based on your:
a. Must-haves
b. Important
c. Lower priority
d. Data tables that rank your colleges against only your priorities
e. Bar charts for easy comparison of your colleges against 13 different measures
f. Scorecards for each of the colleges you are considering that show your college compared to national medians.
24. What makes one college more viable than another?
Usually it's a combination of student demand, financial resources, disciplined management, strong student outcomes, an appropriate cost structure, and the ability to adapt. Strong colleges aren't necessarily the biggest colleges. They're institutions whose resources and strategies match their realities. It is easy to identify both the financially strong and weak from their data.
That is one of the features that makes the College Viability products useful.
25. Why should families care about viability if a college isn't about to close?
Because closure is only the most extreme outcome. Financial weakness can show up long before closure through fewer majors, fewer courses, faculty reductions, deferred maintenance, reduced student services, athletic changes, and diminished campus life.
26. Are small private colleges inherently less viable?
No. Some small colleges are exceptionally strong. Others face significant challenges. Size alone doesn't determine viability. I want to know whether enrollment, resources, expenses, market demand, and outcomes are sustainable.
As a general guide, colleges with enrollment less than 1,000 students in non-urban areas carry more closure risk. There are certainly many exceptions, but if a college you are considering is small and rural, make sure to use the College Viability system and its tools to make a more informed decision.
27. Are public universities automatically financially safe?
Public institutions have advantages that many private institutions don't, but that doesn't mean families should ignore performance. Public colleges can face budget cuts, declining enrollment, program reductions, low graduation rates, consolidations, and campus restructuring.
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Customers have questions, you have answers. Display the most frequently asked questions, so everybody benefits.
Display their FAQs
Customers have questions, you have answers. Display the most frequently asked questions, so everybody benefits.
Display their FAQs
Customers have questions, you have answers. Display the most frequently asked questions, so everybody benefits.
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