Experts: Colleges on financial brink can show several red flags

Parents and college-hunting students can spot warning signs for a college at risk of closure, but experts warned the data, while public, is unlikely to be in the viewbooks and admissions pages that consumers rely on.

Higher education watchers say small- to medium-sized colleges are most at risk. Warning signs include:

• Small or declining enrollment;

• High tuition;

• Dependence on tuition for 80 percent or more of revenue;

• A small institutional endowment.

“You have the underfunded public system and small- to midsized private schools with declining enrollments that don’t have large endowments. They are really in danger,” said Zac Bears, executive director of the Public Higher Education Network of Massachusetts.

The underlying financial data that shows these warning signs is not easily available, said Peter Stokes, managing director of Huron Consulting Group in Boston.

“It’s certainly going to be challenging for parents or students to access the kind of information that would give them the financial health of the institution they would be considering applying to,” Stokes said. “There’s not sufficient transparency on the consumer level to be aware of those sorts of challenges.”

A significant number of colleges and universities have been missing enrollment targets in recent years, and public funding for higher education has dropped precipitously, Stokes said. Meanwhile, expenses are rising and colleges have had to offer tuition breaks to fill seats.

Bears said there’s a culture of “secrecy and transparency” in higher education that results in financial troubles being swept under the rug.

“Administrators and trustees are more interested in protecting the reputation of the institution for as long as possible and not on being open and honest with the students and parents who will be impacted,” Bears said. “Campuses are not being open with the community with the challenges they are facing.”