Heightened Cash Monitoring Weaponized: Failing Schools Skirt Scrutiny, Harvard Takes the Blow

Last week, the Trump administration, in its continued attempts to strongarm Harvard University, —seeking to wrest control over its admissions, hiring, and diversity policies and more—put the Ivy League giant on what’s known as heightened cash monitoring.

The U.S. Department of Education uses heightened cash monitoring, or HCM, as a tool to identify and monitor colleges that appear financially or operationally frail. Colleges under HCM must either send the Education Department information on their students and receive agency approval before receiving federal aid, called heightened cash monitoring 1, or they must front that funding themselves and then request reimbursement, referred to as heightened cash monitoring 2. These are protections for taxpayer money and students in the event a college collapses.

The Trump administration’s application of HCM here, however, is blatant political coercion. For months, the Education Department has pressed the university to kowtow to its demands, among them that it pay a $500 million fine, strike diversity programming, and reshape to federal specifications its Center for Middle Eastern Studies, which has come under antisemitism accusations.

The administration has tried to bleed Harvard into submission, including by attacking its patents, targeting its international enrollment, and denying it billions of dollars in research grants.

While these political attacks have stressed Harvard’s finances, the institution hasn’t folded to the Education Department’s demands. And after a federal court recently found the Trump administration unlawfully held back about $2 billion in grants, it’s now layering on more pressure in the form of the HCM label.

It’s a grossly unwarranted step, in part because it’s absurd to paint Harvard, with its $53 billion endowment, as financially insecure. The Education Department pointed to the possibility of it losing federal student aid over civil rights violations as a signal of its financial distress. But the government could also just strike a deal with Harvard over those accusations and not pull its federal aid. Harvard also isn’t failing under the formula the Education Department uses to determine colleges’ financial stability, which examines their audited financial statements and assigns colleges a score between -1 and 3. Any institution with a financial responsibility score less than 1 is considered “financially not responsible.” Harvard's most recently publicly available score was a 2.8.

Even worse, though, as the administration turns HCM into a political weapon, it appears to be allowing genuinely unstable colleges to continue operating without oversight, as reflected in the most recently released list of HCM colleges.

The Education Department this month published the names of institutions on HCM status, as of June. This is the first roster of HCM institutions the Education Department has shared publicly since the Trump administration hollowed out the agency earlier this year, and in doing so dismissed most of the Federal Student Aid staff charged with overseeing problem colleges, including the team responsible for reviewing institutions’ financial standing.

After the administration’s mass firings, the number of colleges on HCM2, the more severe version, has plummeted. These are colleges that must supply student aid from their own budgets before being reimbursed. The Education Department can place colleges on HCM2 for various reasons, such as if an institution has high debt levels, operating losses, or is at risk of insolvency. Sharp drops in enrollments, or abrupt campus closures, can also lead to an HCM2 designation, or if a college has lost accreditation or come under lawsuits or government investigations.

Colleges on the lighter HCM1 often have only minor issues, for example, not sending the Education Department their audited financial statements.

From March, when the administration last shared the list, to June, the tally of HCM2 institutions fell from 49 schools to 26, a staggering almost 50 percent drop.

The dip is a glaring anomaly, too. The number of institutions on HCM is the lowest it’s been in years. The Education Department typically releases its inventory of HCM colleges quarterly. And New America’s analysis of those lists from June 2021 onward found the number of HCM2 schools ranged from the lowest at 40 in June 2023, to the highest at 56 in June 2021 and March 2022.

The institutions still on HCM2 illustrate their risk.

They include Saint Augustine University, a financially weak private nonprofit college in North Carolina that has only survived by relying on high-interest, predatory loans, attracting alumni criticism. It has twice lost accreditation, and with it, access to federal aid, but those decisions were reversed in court.

Another HCM2 institution is Premiere Career College. It’s a California for-profit school that allegedly lost state board approval for its vocational nursing program, but seemingly concealed that setback from the state entity overseeing private colleges, according to public records. It also reportedly admitted 22 students into its nursing program who did not meet admissions testing requirements, an apparent effort to artificially boost retention or licensing pass rates.

Some of the schools that left the HCM2 list closed or lost accreditation, but others remain open, and their issues are apparently unresolved.

One no longer under HCM2 is Valley Grande Institute for Academic Studies, a Texas private nonprofit college focused on health care. Its accreditor has sanctioned it repeatedly for poor finances and operational plights. Most recently, in August, its accreditor ordered the Valley Grande Institute to defend why it shouldn’t revoke accreditation over its failings. Its financial responsibility score was a 0.5, far below the level considered financially sound, according to the most recently available public data.

The Education Department also removed from the list the Jenny Lea Academy of Cosmetology, a for-profit beauty school in Tennessee. Jenny Lea’s accreditor, the National Accrediting Commission of Career Arts and Science, or NACCAS, has continually sanctioned it for almost a decade, according to public records. Notably, it almost lost accreditation because of financial problems, according to a November 2023 letter from NACCAS. Withdrawing accreditation would have ended its ability to accept federal aid, but it apparently appealed the decision and is still operating. Last year, NACCAS warned Jenny Lea it was monitoring the school because the Education Department had put it on HCM2. Its financial responsibility score was an abysmal -0.1, according to the most recently available data. NACCAS demanded that it supply a 60-day financial plan outlining the financial burdens of being on HCM.

But now, Jenny Lea’s website advertises that new courses begin in early October.

As the Trump Education Department lumps Harvard in with the likes of predatory, for-profit colleges, without a sound basis, it is seemingly ignoring colleges on the brink by moving them off the heightened cash monitoring list—perhaps arbitrarily.

It’s also now possible the department doesn’t even have the staff to evaluate some of the nation’s most troubled institutions.

However, students will continue enrolling in these colleges, likely taking on debt for degrees that may never materialize. Taxpayer money will continue to subsidize institutions teetering on collapse.

Rather than funneling enormous federal resources into a political crusade against Harvard, President Donald Trump and Education Secretary Linda McMahon could protect students and taxpayers. They’re wasting limited federal power and funds in the hopes of toppling an anchor of American academia. That energy belongs to shutting down the sham and low-performing colleges that exploit students and drain public funds.