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Most independent educational consultants (IECs) are not financial analysts, but to help our clients make informed choices, we need to have at least a basic understanding of the financial pressures that colleges and universities are currently facing. This article provides a starting point: you’ll find indicators of institutional financial health to consider just as you might assess any other “fit” factors, and resources that I use to stay current and vet colleges for my students’ lists.

A caveat: we don’t have the benefit of seeing colleges’ internal balance sheets, budgets, or plans. We are not in the business of predicting whether or when a college might fail (that’s outside of my expertise, and not something I want to do). It’s easy to go down a research rabbit hole, so consider how much information constitutes “enough” for you.

Know the Larger Context

In March 2025, the bond rating agency Moody’s downgraded the higher education sector’s outlook to “negative,” citing issues like cuts in research funding, staff reductions at the US Department of Education, enforcement actions against DEI programs, uncertainty surrounding federal student aid, and the potential expansion of the endowment tax.

We’ve seen federal actions this spring that will hamper international student matriculation. Broader, recent challenges include declining enrollments, the end of pandemic support, reported changes in families’ attitudes about the value of college and willingness to pay for higher education, FAFSA issues, inflation, and increasing staff turnover.

Add in long-standing issues for a fuller context: a changing student population with increased financial, academic, and health requirements, the growing complexity of programs and offerings at many institutions, and deferred facility maintenance and upgrades to technology infrastructure.

Look at a Variety of Factors

When assessing a college’s financial condition, I consider several principal areas and ask a range of questions, always within the larger context of what I know about the institution and the market.

Enrollment Trends

• What is the college’s yield rate?
• Are the overall enrollment numbers going up or down, and for how long?
• Is net tuition revenue growing, flat, or falling (and for how long)? Most colleges depend on tuition revenue for operations, so declining enrollment is a problem.
• Does the institution rely heavily on any single student demographic (e.g., full-pay, international, low-income)? We know from recent events that having a high percentage of international students can leave a school vulnerable to global and political disruptions.

Financial Statements

• Consider liquidity, assets, and debt. Does the college spend more than it takes in (and for how long has that been true)?
• How much debt does it have, and what kind?
• Does it pay its bills on time?
• Particularly timely right now: is the institution overly dependent on a particular revenue source, like tuition, federal grants, or charitable gifts?

Financial Aid Trends

• What percentage of non-need students receive merit aid?
• How has the college’s discount rate changed in recent years?
• Does it rely heavily on parent loans?
• Families appreciate big institutional grants, but when a college is overly generous, this can indicate difficulty yielding a class (and have a negative impact on tuition revenue, as noted above).

Endowment Status

• What is the overall size of the endowment and its value per full-time student?
• Is the institution drawing down its endowment at a regular, or increasing pace?
• How much of an impact might pending changes in endowment tax legislation affect the school?

Local and Regional Economic Conditions

• • Are there pressures specific to the college’s state or region?
  • Are political or social issues impacting enrollment or alumni giving?
  • Are appropriations for public universities being impacted by cuts to discretionary spending?

Leadership Issues

• Is there frequent turnover at the top (president, chancellor, provost)?
• Are you reading about clashes between the board and the administration in the news?

Accreditation Concerns

• Is the college meeting accreditation standards related to finances? Changes in accreditation may show up in the press; sometimes you will see sanctions listed on an accreditor or institution website. A college found not to meet an institutional resources standard, for example, could lose its ability to offer federal financial aid.

Consult Multiple Resources

Once you know what kind of information you seek, where do you find it? Each of the resources below has benefits and drawbacks; I don’t use any single one but rather look to several to get a broader picture.

Bond Ratings

Bond ratings are essentially a college’s “credit score”—they assess its likelihood to repay debt. Institutions might issue bonds to finance projects like new buildings, or to refinance existing debt; ratings tell investors how risky it is to invest in a college’s bonds. The three major rating agencies—Moody’s, Standard and Poor’s, and Fitch—use slightly different scales; look for upward or downward movement and reasons for changes. Access to bond ratings is limited (usually behind a paywall), but an internet search for a school’s bond ratings will often yield informative press releases.

Forbes College Financial Grades

Forbes has been assessing the financial health of private nonprofit colleges for over a decade. It uses nine key metrics to measure an institution’s health, then provides a letter grade and “GPA.” For the cost of a month’s subscription, you can access the most recent data (2024–2025). Older data and their methodology are free; I recommend reading the methodology to understand the metrics. Keep in mind that these grades just provide an annual snapshot and don’t give a comprehensive picture over time. I look at several successive years to see: Are they consistent? Are they trending upwards, downwards, or jumping around? For example, one small college called out by Forbes as a “dunce” in 2024 was labeled an “achiever” in 2025; its grade went from A+ (2023) to C (2024) to A+ (2025). During that time, it embarked on some major facilities improvements and completed a $325 million capital campaign; context is key.

ProPublica’s Nonprofit Explorer

Search for a college using ProPublica’s free tool and you can see tax filings and audits by year. This includes sources of revenue, expenses, and assets and liabilities; I particularly like the bar graphs that allow you to quickly see trends in these areas over 12 years.

Higher Education Press

Daily news updates from the Chronicle of Higher Education and Inside Higher Ed are invaluable. I also check Higher Ed Dive’s finance news, and The Hechinger Report’s higher education newsletter. College newspapers (print or online) give an inside scoop about the impact of financial challenges on the students themselves.

Industry Experts

Robert Kelchen, professor at the University of Tennessee, Knoxville, recently co-authored a working paper that used machine learning to predict college closures and financial distress. Kelchen’s articles in the Chronicle of Higher Education offer red flags for your research checklist. He presents and analyzes IPEDS data covering operating, enrollment, and endowment changes in a searchable table that makes it easy to highlight outliers (places that suffered a huge enrollment decline, or 10 straight years of enrollment losses, for example). His blog also offers a deep dive into college finance reading lists.

Jeff Selingo’s monthly newsletter, Next, features a new occasional “credit watch” section that highlights a bond rating change for a university and explains what it means. He co-wrote a brief with Bain & Company that includes an interactive tool that allows you to explore a college’s financial strength under different scenarios. You can hear Selingo explain how to calculate a college’s net tuition revenue per student and why it matters in the Your College-Bound Kid podcast (episode 430) and explore institutional budgeting in his FutureU podcast, “Higher Ed 101: College Budgets Explained.” Selingo’s forthcoming book, Dream School, will have a chapter dedicated to understanding the financial health of colleges, too.

Financial Responsibility Composite Scores (FRCS)

The United States government uses FRCS to determine whether a college can participate in the federal Title IV (financial aid) program. It takes metrics from a college’s audited financial statements to produce a score ranging from -1 to 3, together with a corresponding classification of either “financially responsible,” “responsible but requires additional oversight,” or “not financially responsible” and able to participate only provisionally in Title IV. This is a free resource, and it includes for-profit educational institutions; critics suggest that the FRCS uses outdated metrics, though, and can be gamed.

Understand How You and Your Clients Benefit

Researching college financial strength helps you be a stronger independent educational consultant. It enables you to recommend institutions with more confidence knowing you’ve taken their financial pulse; become equipped and familiar with tools and resources you can offer to parents who want to do their own research; and consume news about institutional changes and challenges more thoughtfully. In short, you’ll be better able to understand the different elements at play in making the tough decisions we see unfolding now in higher education.

Visit to access the resources suggested above, plus some additional material to support your research.

By Hannah Pierpont, MALD, 51�Թ� Associate (MA)