DOE Releases Financial Responsibility Composite Scores

Discussion in 'General Distance Learning Discussions' started by rmm0484, Feb 27, 2014.

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  1. rmm0484

    rmm0484 Member

    from the web site

    The composite score reflects the overall relative financial health of (non-profit and proprietary)institutions along a scale from negative 1.0 to positive 3.0. A score greater than or equal to 1.5 indicates the institution is considered financially responsible.

    Schools with scores of less than 1.5 but greater than or equal to 1.0 are considered financially responsible, but require additional oversight. These schools are subject to cash monitoring and other participation requirements.

    A school with a score less than 1.0 is considered not financially responsible. However, a school with a score less than 1.0 may continue to participate in the Title IV programs under provisional certification. In addition, this lower score typically requires that the school be subject to cash monitoring requirements and post a letter of credit (equal to a minimum of 10 percent of the Title IV aid it received in the institution's most recent fiscal year).


    Financial Responsibility Composite Scores | Federal Student Aid

    The Following Scores have been selected from the database by me, based on thier distance learning offerings:

    American Public University System Proprietary 3
    Aspen University Proprietary 1.8
    Averett University Non-Profit 2.3
    Capella University Proprietary 3
    Capitol College Non-Profit 2.2
    Florida Institute of Technology Non-Profit 2
    Grand Canyon University Proprietary 2.3
    Northcentral University Proprietary 0.2
    Nova Southeastern University-Davie Non-Profit 3
    Regis University Non-Profit 2.6
    Saint Leo University Non-Profit 3
    Strayer University Proprietary 2.5
    Taft University System (The) Proprietary 2.6
    Trident University International Proprietary -1
    University of Phoenix Proprietary 2.6

    Notable Absences were Cal Coast and Walden..
     
    Last edited by a moderator: Feb 27, 2014
  2. CalDog

    CalDog New Member

    Cal Coast isn't listed for this reason:

    Can't explain the absence of Walden. Walden is part of a larger group, the Laureate Education Network, but I didn't see anything under that name either.
     
    Last edited by a moderator: Feb 27, 2014
  3. Rich Douglas

    Rich Douglas Well-Known Member

    It would be interesting to compare:

    For-profit and not-for-profit
    DL and campus-based
    DETC-accredited and RA
     
  4. CalDog

    CalDog New Member

    One thing that I find curious is that some extremely wealthy schools do not seem to have have extremely high financial responsibility scores.

    For example, Harvard University has the largest endowment of any school in the world, at around $27 billion. Yet Harvard gets a financial responsibility score of only 2.2: this is a passing score, but it is obviously below the maximum of 3. Seems like the wealthiest school on the planet should do better.

    Princeton University has an endowment of "only" $14 billion, but it is much smaller than Harvard. On a per-student basis, Princeton is the wealthiest school, with an endowment of $1.8 million per student. Yet Princeton doesn't get the maximum financial responsibility score either, though they are higher than Harvard at 2.6.
     
    Last edited by a moderator: Feb 27, 2014
  5. Ed Edwards

    Ed Edwards Member

    These scores are self reported by the CPA firm hired by the school that audits the books (the firm has to have additional licenses to provide the annual financial aid reports I can't remember what it is called off the top of my head). The schools can influence the number down, but not up, based upon how different items are categorized.

    Many schools choose to show a more conservative number between 2 and 3 instead of 3 to avoid being to far outside the bell curve, which could potentially bring additional interest.
     
  6. rmm0484

    rmm0484 Member

    Discounting the massage academies, beauty and barber schools, truck driving academies and other assorted schools of this ilk, here are some results:

    Type School Average Number

    Non Profit 2.34 1666
    Proprietary 2.05 863
     
  7. Rich Douglas

    Rich Douglas Well-Known Member

    Very cool. Not as bad as one might assume, eh?
     
  8. CalDog

    CalDog New Member

    The Excel file provided by DoE lists a total of 3,382 schools.
    They are almost evenly divided between "non-profit" (1,672 or 49.4 %) and "proprietary" (= for-profit) schools (1,710 or 50.6 %).

    A school scoring below 1.0 is considered "not financially responsible".
    Among non-profits, 80 of 1,672 (or 4.8 %) had such scores.
    Among for-profits, 127 of 1,710 (or 7.4 %) had such scores.

    The "not financially responsible" rate is relatively low for both types of school.
    However, the for-profits do seem to be disproportionately represented in this category.
    The "not financially responsible" rate is about 55 % higher among for-profits than it is among non-profits.

    The worst possible score is -1, which was achieved by 25 schools.
    Of those, 22 (or 88.0 %) were for-profit.
     
    Last edited by a moderator: Feb 28, 2014
  9. CalDog

    CalDog New Member

    A question you might want to ask: Why does the government rank schools in this way ?
    Because it's not actually for the benefit of the students.

    They do it because a school closure is one of the rare events that will actually discharge a student loan. Under most circumstances, a student loan is forever -- it typically can't be discharged in bankruptcy. But if a school closes while you are still enrolled, your debt can be forgiven. So there is a risk that the lender might actually lose money (!!), which is not normally the case with student loans.

    If a school has a low score, the government makes it subject to cash monitoring, or makes it post letters of credit. These actions do nothing for you, as a student. They only ensure that the school is less likely to go under and leave the government holding the bag.

    The number that students should focus on instead is the Cohort Default Rate (CDR), which measures the percentage of students who default on their student loans within three years of leaving a given school. For example, the current CDR for University of Phoenix is 26.0% (more than 1 in 4 students who left the school in 2010 have since gone into default on their loans), while the corresponding CDR for Harvard University is 2.3% (less than 1 in 40 students).

    From a student perspective, those are more relevant numbers than the current Financial Responsibility Scores, which are 2.6 for UoP vs. 2.3 for Harvard. In other words, if you are considering a particular school, look at the "financial responsibility" of the former students from that school. The "financial responsibility" of the school itself is not nearly as important (assuming that your school is not in imminent danger of closing).
     
    Last edited by a moderator: Feb 28, 2014
  10. NMTTD

    NMTTD Active Member

    I noticed ASU isn't on the list.....

    I also noticed that Northcentral University got a 0.2, George Washington University got a 2.2, Georgetown got a 1.7, Nova Southeastern University got a 3, University of Miami got a 1.3, ASHFORD UNIVERSITY GOT A 3 (!!!), Liberty University got a 3, Mountain State University (who lost accreditation and closed due to mismanagement of funds among other things) got a 2.2.

    I notices many bigger schools like Penn State and Oregon State, along with many others, were not on the list.
     
  11. CalDog

    CalDog New Member

    The list is only for private schools, including both non-profit private schools and for-profit private schools.

    ASU is a state (public) school. So are Penn State and Oregon State, and U of Arizona and U of Oregon, and hundreds of other schools. The federal government is not concerned about the possibility that state schools are suddenly going to shut down, so it does not rank them.

    Mountain State University was a private school, even though it had the word "state" in its name. Same is true of Mountain State College, which is also on the list. Presumably they are both named after West Virginia, "the Mountain State".
     
  12. rmm0484

    rmm0484 Member

    Thanks for the explanation. Cal Coast, which has been the subject of much discussion pro and con in the past, is a very good DETC school,IMHO.
     

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