Rivier gets top rating
When it comes to financial viability, it doesn’t get any better than Rivier College.
That’s according to the United States Department of Education, which each year uses a formula to rate the economic stability of private colleges and universities across the country.
Referred to as a Financial Responsibility Score, schools receive a score on a scale from three to zero, with three being the highest possible score. A score below 1.5 is considered failing. The three factors used to determine a school’s composite score are primary reserve, equity and net income.
According to data provided by the Department of Education through a Freedom of Information Act request, Rivier College in Nashua received a perfect score – 3.0 – from fiscal years 2006 through 2008. Figures for fiscal year 2009 were not yet available, according to the department.
That’s better than Dartmouth College, the state’s only Ivy League school, which dipped to a score of 2.2 in 2008, after having received perfect scores the previous two years.
Not all local colleges and universities fared so well, however.
Not surprisingly, Daniel Webster College in Nashua received a score of 0.5 in 2008, and scores of 0.9 and 0.3 the two years before that, respectively. Last year, the college was sold to the for-profit ITT Educational Services, a result of having struggled financially for several years.
The college’s poor results on the financial score were part of evidence provided in court documents to show just how dire a situation the school was in when it chose to sell to ITT.
Thomas More College of Liberal Arts in Merrimack also saw its financial score nosedive to 0.3 in 2008, after having received relatively high scores of 2.1 and 2.5 the two years prior.
In December, the college was put on probation by its accrediting agency, the New England Association of Schools and Colleges, for failing to meet certain financial standards.
The decision was a result of the private Catholic college failing to meet its “standard on financial resources,” one of 11 standards for accreditation.
The school will retain its accreditation as it works with NEASC to get out of probation, college President Thomas Fahey said in December.
The financial rating is used to determine whether schools can participate in the Title IV student loan programs.
Nonprofit and for-profit private colleges and universities must meet or exceed the 1.5 threshold on a composite score in order to be eligible. Publicly-funded schools are not given a score.
Schools that receive a score between 1.0 and 1.4 are allowed to stay in a “zone alternative” for up to three years, during which time they are subject to increased scrutiny from the education department.
Also locally, Hesser College, a for-profit institution, received a score of 2.1 in 2008, and 2.0 and 3.0 the two years prior.
Not everyone agrees that the way the score is calculated gives an accurate representation of a school’s financial viability.
Anne Gross is vice president of regulatory affairs for the National Association of College and University Business Officers.
Her organization has been pressing the Department of Education to modify the way the score is calculated.
The concern is that the current financial responsibility test doesn’t have enough flexibility that would take into account extraordinary market downturns and other kinds of unusual financial events.
Case in point is the recent recession, Gross said.
Last year, the Chronicle of Higher Education reported that 114 colleges and universities nationwide received a failing score, but Gross said it’s unlikely that any of the schools are just going to up and close, which is what the rating is meant to protect against.
Schools that depend on large endowments were likely to see their scores plummet in the most recent financial scores, but that isn’t necessarily an indication that they are struggling financially, Gross said.
“Schools that are completely tuition-dependent aren’t going to feel it as much,” she said. “For schools with bigger endowments, this year is going to be the worst.”
Gross said there have also been required changes in accounting procedures that exacerbate the problem.
She said progress has been slow in getting the formula changed, but her organization continues to have discussions with education officials on the issue.
Michael Brindley can be reached at 594-6426 or firstname.lastname@example.org.