Starting to look at colleges for DD2 who is a HS junior. With all of the concerns regarding the enrollment cliff as well as federal/state funding cuts recently, what tools are you using to gauge how financially fit a college currently is?
Disclaimer: I am not a parent but an older non-traditional student.
There are a few factors I look into regarding colleges’ financial health.
The first one is the Forbes College Financial Grades list. For this cycle, I only applied to colleges whose financial health received a rating of at least an A- based on Forbes’ formula.
After that, I look into how much endowment the college has. Of course, the higher the endowment, the better. With that in mind, I also look into how the college uses their endowment. I tend to rate colleges who use a very significant chunk of their endowment to recreational spaces and recreational spaces alone very low. I rate colleges who use a significant chunk of their endowment to research, labs, community and civic service programs, financial aids, and students’ health- and academic-related QoL improvements really high.
Lastly, I follow other news and opinions—most esp. from media outlets, financial analysts, and college stakeholders. This is important because, sometimes, finances reported on paper do not necessarily reflect the experiences of the stakeholders.
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Forbes has a financial health rating. You can also check muni bond ratings from Fitch, S&P and Moody’s.
But you can google the school name and cutbacks or budget cuts. If there’s anything out there, you’ll find it.
Good luck.
It’s an important question. I’ve been working with applicants for more than 20 years as a school administrator, and this wasn’t the factor it’s become now. For my own kids, I’ve been seriously investigating those tools and others. Having said that, I worry that too many of us rating colleges simply according to their wealth or perceived stability is likely to drive special schools out even faster. American higher ed’s great strength was once the diversity of its offerings, and I wish we recognized the current state of things for the slow moving crisis it is.
I do look at Forbes, who do a good and thorough job, but I think it unwise to take those grades as the whole story; their ratings may overvalue certain factors and undervalue others depending on a college’s individual circumstances. Those grades are pretty reductive. Many colleges receiving A’s or A-’s are facing greater enrollment problems than some earning B’s and below, and many are struggling with discount rates.
Also, with regards to layoffs, etc.–some perfectly healthy colleges are trimming employees in order to reflect appropriate staffing for the student body sizes they have now and assume in the future rather than the larger pools they once enjoyed.
Debt matters as much as discount rate and endowment, of course.
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In his recent book “Dream School” Jeffrey Selingo devotes an entire chapter to this topic. He also posts on this forum so you can search his recent posts to see if he has discussed it here on CC.