June 30th was the last day of the fiscal year for many private colleges.
It typically takes from six to 18 months to see audited financial statements from private colleges. It can take up to two years to see the financial data appear in a usable format comparisons at the National Center for Education Statistics (NCES) and its IPEDS database.
Since there is substantial financial viability risk for many small- to medium-sized private colleges, we now recommend private colleges publish their 2019-2020 financial statements within 90 days of the end of their fiscal year. In my experience, it takes about 30 days for accountants to ‘close’ a reporting period. It’s reasonable for an auditing firm to take another 30 days to review an annual financial statement draft. Add 30-60 days as an additional buffer, and each private college should be posting their most recent financial results no later than the end of October. This gives current and potential new students the time to compare finances and other important decision factors about whether any given college will be viable through their college years.
With the dizzying speed of financial decline of many private colleges, their students, parents, faculty, staff, communities, and others need their financial information in a more timely manner than has historically occurred. IPEDS data needs to be released to the public more quickly, as well. We are 20 years into the 21st century. Taking more than 12 months to post college data is inexcusable. How many students are choosing underfunded or failing colleges because the information needed to make those determinations is unavailable?
One of the arguments private college leaders make about judging their results based on financial data is that the data is too old to be useful. I don’t buy that ancient argument. Here’s why: We use six years of comparative data in our College Viability App. That six-year time period provides clear trends -— good and bad. While it is possible that a bad or good six-year period can be reversed at any time, it is a method that anyone can use to compare one college to others over the same time period. It can provide students and their families with better questions to ask about the viability of a college they are considering.
A final note to private college leadership teams: You have the financial data from your students and their families (FAFSA). Be fair to them, and provide them with your financial information by prominently releasing your audited financial statements to your website and through the Federal Audit Clearinghouse.
If you want to look at your private college and compare it to others, our College Viability App is available at no charge through September 30, 2020.