Files
Abstract
The long-term financial viability of private higher education has been a topic of concern for some time, with experts predicting their decline. This concern has been exacerbated by declining enrollment, mounting deficits, and a wave of closures among small private institutions. Demographic changes, including declining high school graduate populations and the growth of minority students, are set to create a highly competitive and saturated college market. Moreover, the growing gap in income and wealth distribution, coupled with the rising number of non-traditional learners, adds further pressure on colleges to modernize their academic offerings and support services.This study investigated the relationship between student demographic characteristics and the financial health of 769 private non-profit colleges and universities. By analyzing 2021 data from the U.S. Department of Education's Integrated Postsecondary Education Data System (IPEDS), the study sought to determine the effect of student body demographic characteristics on institutional financial health. The independent variables for this study included the percentage of enrolled students by race, percentage of non-resident alien students, Pell eligibility, percentage of students receiving aid, age, and gender. The dependent variables were represented by the CFI and its four ratios: primary reserve ratio, viability ratio, return on net assets ratio, and the net operating revenues ratio.
Multiple regression analysis results indicated that student demographics have a modest role in predicting institutional financial health. Notably, only three of the student demographic characteristics variables were associated with CFI performance. An increase in the percentage of Black students was positively associated with CFI performance. However, growth in the proportion of Pell-eligible and adult students had a negative relationship with the CFI. These findings underscore the complex relationship between student demographics and institutional financial health, with indirect effects through variables like overall discount rates, retention, and graduation rates. Overall, the study provides valuable insights into the multifaceted factors impacting private institutions' financial viability.