The U.S. Department of Education acknowledges the limited utility of its recently released list of colleges and universities subject to Heightened Cash Monitoring. The Department released the list in response to media inquiries, with the stated desire of increasing transparency and accountability. With the release, the Department explained, “Heightened Cash Monitoring is not necessarily a red flag to students and taxpayers, but it can serve as a caution light.”
Not every school on the list is in dire financial straits or has engaged in gross misconduct.
The Department imposes Heightened Cash Monitoring—an increased level of oversight for Title IV Federal Student Aid programming—on schools for a number of reasons, ranging from late report filings to severe program review findings. As seen in the Federal Student Aid Handbook, the Department can set requirements for schools under Heightened Cash Monitoring on a case-by-case basis. In a recent Inside Higher Ed post, education insiders (while recognizing the need to ensure Title IV program responsibility) suggest that the process for placing and watching schools on Heightened Cash Monitoring is less than clear.
The factors most likely to put a school on the Heightened Cash Monitoring list do not correlate consistently to poor financial or administrative capability. Analysis from The Chronicle of Higher Education indicates most schools made the list because they failed the Department’s financial responsibility score requirements; those scores represent Departmental efforts to scout warning signs in institutional student aid administration, but have been repeatedly questioned as measures of financial health (for example, here and here and here). The second-place category in the Chronicle’s analysis goes to schools with high cohort default rates; in releasing these rates, the Department notes that they can be deceiving, particularly at smaller institutions—like many on the list.
What this means to you
The list is another piece of information in the growing forest of data points reported on colleges and universities. Though joining the list is not a reliable sign of incurable problems, institutions would prefer to avoid membership—and its attendant administrative responsibilities and unwanted attention. To avoid the most common triggers, schools should keep an eye on their financial responsibility numbers and default management programs.