June 4, 2009

More Than 100 Colleges Fail Education Department's Test of Financial Strength

By Goldie Blumenstyk

A newly compiled analysis by the U.S. Department of Education and obtained by The Chronicle shows that 114 private nonprofit degree-granting colleges were in such fragile financial condition at the end of their last fiscal year that they failed the department's financial-responsibility test.

Colleges that fail the test are subject to extra monitoring on their use of federal student-aid funds. The 65 of these that scored the lowest also have to post letters of credit with the