Feds give Hamline, Mayo, 3 others failing financial grades

decline

Stannered via Wikimedia commons

A dip or longer decline?

The Chronicle of Higher Education has looked at U.S. Dept. of Education data showing that six Minnesota nonprofit colleges are among 150 across the country have failed the department’s test of financial strength.

More than a third of the 150 are in the Midwest.

No, it doesn’t necessarily mean that they’re tanking.

Read on, but first here are their scores this year, which are explained below:

  • Hamline University (1.3)
  • Mayo Clinic College of Medicine (0.8)
  • White Earth Tribal and Community College (1.1)
  • Crossroads College (-0.6)
  • United Theological Seminary of the Twin Cities (0.6)

All but Crossroads College are on the list for the first time. Adler College did receive failing grades two years ago, but passed last year and received the highest possible grade this year.

The grades run between -1 and 3 with a passing grade being 1.5. The rating factors in elements such as overall debt, assets, and current operating deficits and surpluses.

Colleges that score 1 to 1.4: These can stay in federal financial-aid programs, but face restrictions on the handling of financial aid money.

Colleges with scores below 1: These face more requirements:

They must post letters of credit equal to at least 10 percent of the federal student-aid funds they receive and face additional restrictions, or post letters of credit equal to at least 50 percent of the funds they receive and operate as if they had passed the test. Colleges that score 1 through 1.4 for three consecutive years become subject to the extra requirements.

The Chronicle said the test usually reflects a colleges “overall financial fragility,” but this year a number of institutions receiving failing grades said they made the list mainly because of the plunge in the values of their endowments.

I’m trying to gauge the urgency of the situation, and MPR higher education reporter Tim Post has a call out to Hamline, among others.
The Chronicle sounds a little speculative warning bell, though:

A failing score has also become a signal to investors that an institution could be ripe for a for-profit takeover.