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Abstract

This study uses the 2010, 2017, and 2018 data of the Integrated Postsecondary Education Data System to estimate which institutional factors increase the probability that a private, nonprofit, higher education institution will face financial stress. The study first estimates enrollment and net tuition with a reduced form market model. Those estimates, endowment dollars, and college rankings are used to identify institutions that are financially stressed. Our assessment indicates that approximately 11.5 percent of the sample institutions are stressed, suggesting that the earlier predictions of a 25-50 percent reduction are overestimated, at least for private-nonprofit institutions. The study next employs a probit model to identify those institutional characteristics that contribute to financial stress. Our results demonstrate that some common tactics to relieve such stress, such as online delivery, putting emphasis on admissions without consideration of graduation rates, or being in a more renowned athletic association, may not be helpful in reducing financial stress.

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