I have spent most of the last year digging into the topic of heightened cash monitoring (HCM), perhaps the federal government’s most important tool in its higher education accountability toolbox at this time. HCM places colleges’ federal financial aid disbursements under additional scrutiny in order to protect taxpayer dollars. There are two levels of scrutiny: HCM1 requires additional oversight, while the more severe HCM2 requires colleges to pay out money to students before being reimbursed by Federal Student Aid.
This seems like an obscure topic, but it affects a substantial portion of American higher education. In 2023, 493 colleges were on HCM1 and 78 colleges were on HCM2—together representing about 10% of all colleges receiving federal financial aid. And in the mid-2010s, more than 1,000 colleges were on HCM1 or HCM2 at one time.[1]
Thanks to the generous support of Arnold Ventures, my graduate research assistant Holly Evans and I dove into whether colleges responded to being placed on the more severe HCM2 status by changing their financial priorities, closing, or influencing student debt and graduation outcomes. We compared colleges placed on HCM2 to colleges that were not on HCM2, but had failed the federal financial responsibility metric (and thus also had issues identified by the federal government). Using three analytic approaches, we generally found no relationships between HCM2 status and these outcomes. It was a lot of work for no clear findings, but that is pretty typical when studying institutional responses to government policies.
Here is a copy of our working paper, which I am posting here in the hope of receiving feedback. I am particularly interested in thoughts about the analytic strategy, interpreting results, and potential journals to send this paper to. Stay tuned for more work from this project!
[1] HCM1 data were first made public in 2015 following news coverage from Inside Higher Ed, while retroactive HCM2 data were also released in 2015 with the unveiling of the modern College Scorecard.
Robert Kelchen 
Found a similar outcome a few years ago when looking at HCM1 and HCM2. Still working on a model that can explain and predict this phenomenon.
It’s worth questioning the extent to which US Ed’s HCM1 and HCM2 data and methodologies are accessible through FOIA. Without detailed insight into these methodologies — data, parameters, thresholds, other inputs etc. — you have no idea what you are looking at — it’s just a Black Box and premature linking it to school closures.
Some years ago, I was astonished to find our school district career center on HCM1, and learned it had failed a US ED financial responsibility audit and was ordered to pay back $12.48 million. The district hired some lawyers and negotiated that down to $800,000 plus $50,000 legal fees, and fired the center director.
The other thing is, institutional closure is an exceedingly complex event, and in my opinion better scrutinized in the context of the sociology of institutions that considers the web of total relations in the institutional field and their various outcomes. As is the case with Wells College, a single metric is not the answer, like the Holy Grail, however seductive and tempting it may be.
But I do whole heartedly agree about the dearth of meaningful data in this incredibly important area. As the sector continues its gradual degradation, we need a better level of understanding — not just to make better predictions — but in order to shape the future, that is, determine what comes next to replace this particular social institution to which we seem inordinately attached. No social institution is permanent.
Here’s a recent HCM2 story in context.
There is a complicated relationship between NACCAS and US ED overlap as well as the differences that separate them. Notice the almost complete lack of transparency that makes meaningful interpretation unlikely.
https://www.republicreport.org/2024/beyonces-scholarships-shine-light-on-shady-cosmetology-school/