How to Assess a College’s Financial Health

College enrollment has steadily declined 13% since 2010 due to the demographic cliff when birth rates dropped significantly following the 2008 financial crisis, and it is predicted to drop an additional 13% through 2041. Plus, more families are looking closer at the value of college due to rising tuition costs and high debt. However, the trend isn’t across all higher ed institutions. Public and elite colleges are still highly competitive, but many smaller colleges will be affected by these shifts and sadly will likely close in the coming years. 

As families compare colleges, financial health is becoming an increasingly important factor to consider. A recent Forbes analysis found that many private colleges are facing financial pressure due to declining enrollment, rising costs, and increased dependence on tuition revenue. Schools with strong endowments, healthy operating budgets, and lower debt levels are generally better positioned to continue investing in academics, student services, and campus resources.

When researching colleges, students should look beyond rankings and pay attention to signs of financial stability. Important indicators include a strong endowment per student, steady enrollment, limited tuition dependence, updated campus facilities, and consistent academic offerings. Warning signs can include frequent budget cuts, program eliminations, deferred maintenance, declining enrollment, or heavy discounting through merit aid. Understanding a college’s financial health can help students choose a school that will remain stable and supportive throughout their college experience.

It’s important to do your research before you commit to a college to ensure they will be financially stable to support your child throughout their college years and beyond. Additional information on college financial information as well as retention and graduation rate (which can be an indicator of student satisfaction and campus support at the school) can be found within the college’s Common Data Set.