The US Dept. of Education’s “Financial Responsibility Test” was recently announced. This test indicates that according to certain ratios, a private higher education institution may be at risk for failure. These schools are subject to extra monitoring on their use of federal student aid funds.
114 private, nonprofit, degree-granting institutions scored below 1.5, the passing level, and are thus in financial jeapardy. There are a number of Catholic institutions on the list as having financial difficulties:
- Ave Maria School of Law (Michigan/now Florida) -0.9
- Saint Vincent Catholic Medical Centers of New York (New York) -0.6
- Thomas More College of Liberal Arts (New Hampshire) 0.3
- Caldwell College (New Jersey) 0.7
- Southern Catholic College (Georgia) 0.7
- Siena Heights University (Michigan) 0.8
- Springfield College in Illinois [now Benedictine U] (Illinois) 1.0
- Christ the King Seminary (New York) 1.4
- Elms College (Massachusetts) 1.4
- St. Vincent De Paul Regional Seminary (Florida) 1.4
Please note that Dominican College of Blauvelt (New York) which also scored a low 0.9 is no longer a Catholic institution. The college is very clear that it is an independent school with only a Catholic “heritage” or “origin”. I suppose schools like people can forfeit their souls.
All private colleges that award federal student aid must participate in the Department of Education’s financial-responsibility test, which is based on information from their audited financial statements. The department develops a composite score on a scale of 3.0 to minus 1.0, 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 pass. In addition to extra monitoring for all institutions that “fail,” those with scores below 1.0 are required to post a letter of credit with the department equal to 10 percent of the federal student aid that goes to their students annually.