Last week, an administrator at Holy Cross College in Notre Dame, Indiana, accidentally sent an email to students indicating that the college was in severe financial trouble and at risk of closing.
It’s no surprise that a college already bleeding money wouldn’t want to scare away current or prospective students with news like this. The administrator in question no longer has his job. But students shouldn’t have to rely on reply-all errors to find out that their school is in financial peril. A private third-party known as an accreditation agency is tasked by the federal government with sharing decisions on college oversight with the public. In fact, Holy Cross’ accreditor—the Higher Learning Commission (HLC)—has known about the school’s problems for years. The fact that this information never reached students—even though students attending similarly situated schools in other parts of the country are informed—speaks to serious gaps in our college oversight and transparency system.
The lack of financial transparency at Holy Cross
Holy Cross College’s financial troubles are well-known by HLC. The accreditor increased its watch over the school last December, following two years of operating budgets in the red. The situation required the college to use its entire $2 million line of credit and take out an additional $1 million loan until it received fall 2016 tuition revenue, a borrowing level that exceeds its $1.5 million endowment. To address financial concerns, HLC is requiring the college to submit plans to stabilize its finances this coming June, will send experts to review the college next year, and requires an additional report in four years.
But this information is nowhere to be found on the college’s website. Moreover, in 2016, HLC renewed the college’s accreditation for 10 years—the longest period available—stating that the school complies with all the agency’s standards. Without the accidental administrator email, prospective and future students would have thought everything at the school was totally fine.
Varying accreditor standards create confusion
It’s not surprising to see confusion over what accreditors disclose or require schools to report to students. Last year, the Center for American Progress released a report showing that accreditors are inconsistent in the terms and processes they use to sanction colleges. The report called for standard terminology and transparency when a college is deemed underperforming by its accreditor. Following the report, the Obama administration issued new guidance to accreditors and created a public database for reporting accreditor sanctions. The database was supposed to fix these inconsistencies and provide key information about colleges in consistent and understandable ways. However, it understandably still fails to capture the dozens of methods that accreditors use to take action against colleges.
In theory, the new rules should have required HLC to publicly report that it took action against Holy Cross and indicate that the sanction was because of financial reasons. A sanction of notice, probation, or show cause—an action that requires colleges to prove they are in compliance or lose accreditation—would have signaled the severity of concern about the college’s long-term financial viability. According to HLC policy, such a sanction would have required the college to inform current and prospective students and the public of the action within 14 days. Instead, students were shocked by the news—news they could have known between five months and two years ago.
The problem is that HLC treats financial problems separately from other issues of compliance and sanction. HLC evaluates a college’s finances every year. In some cases, when a college does not meet the accreditor’s standards, HLC requires institutions to undergo an additional review by a financial panel. The financial panel can recommend one of five actions, ranging from accepting a report without further review to requiring additional monitoring and visits.
Unlike sanctions, these actions do not explicitly require public reporting. HLC guidance tells colleges that in the event of a financial action, they may publicly state a continued accredited status, but if they wish to offer any new information to the public, such as the next HLC evaluation date, they must disclose all of the details of the evaluation including any interim monitoring, visits, or reporting.
In other cases, HLC uses a different action called an institutional designation of financial distress that does require public disclosure. However, it is not clear when or why the agency chooses one action over the other. HLC staff did not comment on the differences between actions or whether HLC issues different actions based on its level of concern about a school’s financial viability.
Since HLC issued monitoring and review instead of another action, Holy Cross College was not required to disclose the accreditor’s actions. And it didn’t choose to disclose them voluntarily. While it previously published its full self-study from 2006, it has not published its most recent study from 2016, the year in which it was placed on monitoring. Nor did it report to students that it was subject to additional monitoring for financial trouble when it was unofficially sanctioned this past December. In response to CAP’s questions over the phone, a Holy Cross representative said that they did not know why the college had not posted the information online, but it could be lack of staff. According to HLC, the college is in compliance with all of its standards. It’s not until one downloads a letter posted in the U.S. Department of Education’s new reporting database that they can tell the college has any problems at all.
Financial issues with a similar small, religious college in California demonstrate a better way to inform students. The Claremont School of Theology in Claremont, California, has also had shaky finances over the past two years; the college’s accreditor, the Western Association of Schools and Colleges Senior College and University Commission, placed the college on warning in 2015. Since then, the accreditor has posted on its website frequent, detailed updates on the college’s accreditation status and financial improvement. This sanctioned status requires the college to publicly disclose information on its own website and inform students. Although the college remains on warning two years later, it is still open to students and continues to make progress with increased oversight.
Public disclosure ensures an honest dialogue about a college’s future and allows students the opportunity to make informed decisions about whether to enroll or transfer. It also instills a sense of confidence that the accreditor is closely monitoring the situation and helping the college improve.
Varying accreditor approaches to sanctions and transparency matter. Differences mean that students at one financially shaky college in California are well-informed of issues at their college while students at another in Indiana remain in the dark. This does a disservice both to students currently attending a school and to students who may have just enrolled for the upcoming year, as they could be blindsided by a college at risk of closure.
Students deserve an open and honest conversation about the school in which they choose to invest their money. But a lack of transparency casts doubt on colleges themselves, as well as on the accreditors that oversee them. Accreditors need to work together to decide how to address problems such as finances in a uniform way—and be transparent about the solutions.
Antoinette Flores is a senior policy analyst on the Postsecondary Education Policy team at the Center for American Progress.