Problems and Outlook of Small Private Liberal Arts Colleges

HRD-78-91: Published: Aug 25, 1978. Publicly Released: Aug 25, 1978.

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Numerous studies have concluded that all higher education institutions have suffered financial distress. The schools that suffered the most severe financial trouble during 1975 and 1976 were small, private, liberal arts colleges. Many of these schools have experienced extensive deficit operations, borrowed substantially to cover current operating deficits, and have been delinquent in debt service payments. Some officials attributed their financial problems to: (1) insufficient revenues because of declining enrollments; (2) inflation and rising costs; and (3) lack of prompt and effective administrative controls.

The financial conditions at many of these previously troubled schools have improved due to actions taken to increase revenues, improve management of available educational resources, and make their schools more attractive to prospective students. State and federal higher education programs have also been an important factor in the small liberal arts schools' somewhat improved financial condition. The most pressing financial problems have been tempered by more stringent budgetary controls and intensive recruiting efforts, the increase in private gift-giving, and the addition of occupational programs to satisfy a wider variety of student interests and needs. College and education association officials believe that continuing federal and state programs would contribute to strengthening the institutions' financial condition, and some small schools believe they also have the capability to do some federally funded research. Most school officials were guardedly optimistic concerning the financial future of their institutions.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should require the Secretary of Health, Education, and Welfare to assess periodically the financial condition of postsecondary education institutions, considering standard indicators suggested by the National Commission on the Financing of Postsecondary Education. This information should provide Congress with a reliable basis to determine whether and to what extent a need exists to sustain postsecondary institutions that are experiencing serious financial distress.


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