Financial and Non-financial Indicators
Accredited and candidate institutions are required each year to provide data to HLC through the Institutional Update. HLC reviews financial and non-financial data for specific risk indicators and conducts follow-up with institutions when certain indicators occur. The purpose of this process is to identify institutions that may be at risk of not meeting components of the Criteria for Accreditation.
Financial Indicators
The financial data submitted in the Institutional Update generate a Composite Financial Index (CFI). For private institutions, HLC uses the financial ratios provided by the U.S. Department of Education and for public institutions, HLC relies on the financial ratios recommended in Strategic Financial Analysis for Higher Education: Identifying, Measuring & Reporting Financial Risks (Seventh Edition), by KPMG LLP; Prager, Sealy & Co., LLC; Attain LLC.
Revised Financial Indicator Process Due to COVID-19
In light of the financial and operational pressures caused by COVID-19, HLC is shifting the Financial Indicator process to a more time-sensitive model in 2020. HLC is requesting information from member institutions whose recent CFI score fell either “In the Zone” or “Below the Zone,” as defined below. HLC has developed a short survey that the Chief Financial Officer will be asked to complete on July 1, September 1 and November 2. Each survey is due back to HLC within two weeks.
Following the completion of the September survey, HLC will evaluate the responses, looking at the change between the July and September data. After review of the data, institutions may be required to submit a report. The survey in November will allow HLC to continue to monitor the trend of the institution's finances.
Please contact Michael Seuring at This email address is being protected from spambots. You need JavaScript enabled to view it. with any questions related to the survey.
CFI Ranges
HLC has identified ranges, or zones, of CFI values that indicate whether further review is required.
Above the Zone
Private Institutions: 1.5 to 3.0
Public Institutions: 1.1 to 10.0
No additional follow-up is required for institutions with a CFI that falls above the zone.
In the Zone
Private Institutions: 1.0 to 1.4
Public Institutions: 0 to 1.0
First Year
If an institution reports a CFI that falls within the zone for the first time, HLC will issue a Letter of Concern. The institution is required to acknowledge receipt of this letter by submitting an institutional response from the CEO either confirming the financial information that was reported in the Institutional Update or requesting corrections and/or modifications to the financial information submitted. Any modifications to the data require supporting documentation.
Second or Subsequent Year
If an institution reports a CFI that falls within the zone for a second or subsequent consecutive year, HLC will require the institution to submit a report and additional financial documents for review by a panel of HLC peer reviewers.
Below the Zone
Private Institutions: -1.0 to 0.9
Public Institutions: -4.0 to -0.1
If an institution reports a CFI that falls below the zone, HLC will require the institution to submit a report and additional financial documents for review by a panel of HLC peer reviewers. In subsequent years, the institution will be required to submit a report for panel review following each Institutional Update until its CFI is above the zone.
Non-financial Indicators
Note: “Small institutions” are those with fewer than 1,000 students, while “large institutions” are those with 1,000 students or more.
- Enrollment Changes—Three-year increase or decrease of 80 percent or more in enrollment for small institutions or 40 percent or more for large institutions.
- Degrees Awarded—Three-year increase or decrease of 75 percent or more in degrees awarded for small institutions and 65 percent or more for large institutions.
- Full-time Faculty Changes—Three-year decrease of 75 percent or more for small institutions or 50 percent or more for large institutions in the headcount of full-time faculty (not full-time equivalent).
- Minimal Full-time Faculty—The headcount of full-time faculty (not full-time equivalent) divided by the number of degree programs offered is less than one.
- Student to Teacher Ratio—The number of undergraduate full-time equivalent students divided by the number of undergraduate full-time equivalent faculty is greater than or equal to 35. Note: Does not apply to graduate-only institutions.
- Weak Graduation/Persistence Rates Compared to Peers—The number of full-time equivalent undergraduate students divided by undergraduate degrees awarded places the institution in the bottom five percent of the institution’s peers. Peer groups are either 2-year small or large undergraduate institutions or 4-year small or large undergraduate institutions. Note: Does not apply to graduate-only institutions.