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.
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.
- Significant 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.
In 2021, HLC suspended the use of indicator 6, Weak Graduation/Persistence Rates Compared to Peers. HLC will continue to evaluate institutional persistence and completion rates through other requirements and processes.
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