More Nonprofit Colleges Fail Federal Financial Test

One hundred fifty private nonprofit colleges failed the Education Department’s “financial-responsibility” test last year, 23 more than did so in 2008 and a 70-percent increase from 2007, says The Chronicle of Higher Education.

Institutions that fail the test, designed to measure colleges’ financial fragility, are subject to tighter scrutiny of student-aid funds and, for the lowest scorers, extra financial obligations. Low scores have also become an indicator that a college could be a target for a takeover by a for-profit education firm, according to the article.

Thirty-four of the colleges on the 2009 roster also failed the test in each of the previous two years. Several schools on the latest list attributed their presence to steep declines in the value of their endowments.