Private Colleges With Low Scores on the U.S. Department of Education’s Financial-Responsibility Test, 2015-16

Of the 259 private degree-granting institutions that fell short of a passing score on the U.S. Department of Education’s measure of financial health, 138 were nonprofit and 121 were for-profit. Many of the nonprofit colleges that scored low on the test were small religious institutions, and several colleges on the list have closed since the end of the 2016 fiscal year. Among them are Grace University and Saint Gregory’s University at Shawnee, in Oklahoma. The Education Department requires all private colleges that award federal student financial aid to participate in the annual test, which is based on information from their audited financial statements. The department develops a composite score for each institution on a scale of negative 1.0 to positive 3.0 that is based on financial ratios that measure factors such as net worth, operating losses, and the relationship of assets to liabilities. Institutions with scores of 1.5 to 3 are considered financially responsible. Institutions with scores lower than 1.5, but equal to or greater than 1.0, are also considered financially responsible, but they are subject to additional oversight. Those with scores below 1.0 are considered not financially responsible and may have to post letters of credit to continue to receive Title IV federal student aid.

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4-year private nonprofit institutions

4-year for-profit institutions

2-year private nonprofit institutions

2-year for-profit institutions

Note: The institutions on this list are among 2,039 degree-granting private colleges in the United States that were given financial-responsibility-test scores by the U.S. Department of Education for 2015-16. An additional 1,641 institutions that were given the test but that are non-degree-granting were excluded from this analysis. The latest scores cover institutions’ fiscal years ending from July 1, 2015, to June 30, 2016. The list may appear longer than previous years’ lists, in part, because the Education Department began this year to individually list colleges that were part of large corporate institutions that provide consolidated financial information. More information can be found here. Questions or comments on the Almanac should be sent to the Almanac editor.

Source: U.S. Department of Education data</small></p>