Examining the Relationship Between Institutional Financial Stress and Student Enrollment

In a period of growing concerns about the financial viability of many colleges, students and their families have little information about the extent to which a particular institution is struggling. The U.S. Department of Education uses heightened cash monitoring (HCM) and financial responsibility metrics as two tools to identify colleges that require additional federal oversight, and these data are made available to the public. Being identified by these metrics could lead students to choose to attend different colleges and institutions to develop new recruitment strategies to try to shore up their finances. Using multiple analytic techniques, I found no evidence that student enrollment decreased following placement on the more severe level of HCM or having a failing financial responsibility score. Instead, there were some modest short-lived increases in enrollment across some specifications and subgroups, raising concerns about longer-term student outcomes.