Forbes 2025 College Financial Grades: A Deep Dive into the Financial Health of U.S. Colleges

In March 2025, Forbes released its highly anticipated financial grades for 868 private, not-for-profit colleges across the United States. Authored by Emma Whitford and Matt Schifrin, the report provides a comprehensive analysis of the financial stability of these institutions, offering valuable insights into how they are navigating an increasingly challenging higher education landscape.

The study focused exclusively on private, not-for-profit colleges with more than 500 full-time students, excluding public institutions and smaller schools. Using nine key financial metrics, Forbes evaluated the operational soundness and balance sheet health of these colleges. The metrics included endowment assets per full-time equivalent (FTE) student, primary reserve ratio, viability ratio, core operating margin, tuition as a percentage of core revenues, return on assets, admissions yield, percent of freshmen receiving grant aid, and instruction expenses per FTE.

The findings revealed a stark divide in financial health among the institutions. Out of the 868 colleges analyzed, only 51 earned an A+ grade, while 381 scored a C or worse, indicating significant financial struggles. This disparity underscores the growing gap between financially robust institutions and those facing instability.

Notable examples highlighted in the report include Rice University, which earned an A+ with a primary reserve ratio of 8.6, meaning it could cover over eight years of expenses with its expendable assets. In contrast, Princeton University, despite having $3.7 million in endowment assets per student, received a B+ due to a $555 million investment loss. McPherson College emerged as a success story, thanks to a transformative $500 million endowment gift that significantly bolstered its financial standing. On the other hand, The New School scored a C+, with a primary reserve ratio of just 0.75, reflecting its precarious financial position.

The report also emphasized the importance of revenue diversification. Institutions like Caltech and Johns Hopkins, which rely on tuition for less than 15% of their revenue, are better insulated against enrollment declines. In contrast, colleges heavily dependent on tuition are more vulnerable to financial instability.

Financial aid generosity was another critical factor. Schools like St. Olaf College and Howard University offer grants to over 90% of their freshmen, a practice that can attract students but may also signal financial desperation.

The implications of these findings are profound. Students and families rely on colleges to provide quality education and stable environments, but financial instability can jeopardize these expectations. As Whitford and Schifrin noted, the higher education landscape is rapidly shifting, with many institutions already on shaky ground.

For those interested in the full rankings, Forbes has made the complete list of 868 private colleges available on its website. This report serves as a crucial resource for students, parents, and policymakers, offering insights into the financial health of the institutions shaping the future of higher education.

In a world where the cost of education continues to rise, understanding the financial stability of colleges has never been more important. Forbes’ 2025 College Financial Grades provide a valuable snapshot of the challenges and opportunities facing private colleges today, highlighting the need for strategic planning and resilience in an evolving sector.