Risk Indicators
HLC evaluates institutional data each year to identify early indicators that an institution may be at risk of not meeting HLC requirements. These processes allow us to follow up with institutions to address concerns as soon as possible.
Financial Indicators
HLC reviews the financial data that member institutions submit in the annual Institutional Update, which generate a Composite Financial Index (CFI) for each institution. HLC uses the following sources to calculate the CFI:
- For private institutions: Financial ratios provided by the U.S. Department of Education.
- For public institutions: Financial ratios provided in Strategic Financial Analysis for Higher Education: Identifying, Measuring & Reporting Financial Risks (Seventh Edition), by KPMG LLP; Prager, Sealy & Co., LLC; Attain LLC.
HLC identifies whether an institution requires additional review based on where its CFI falls in the ranges, or zones, described below.
CFI Ranges
Above the Zone
Private Institutions: 1.5 to 3.0
Public Institutions: 1.1 to 10.0
No additional follow-up is required for institutions with a CFI that falls above the zone.
In the Zone
Private Institutions: 1.0 to 1.4
Public Institutions: 0 to 1.0
First Year
If an institution reports a CFI that falls within the zone for the first time, HLC will issue a Letter of Concern. The institution is required to acknowledge receipt of this letter by submitting an institutional response from the CEO either confirming the financial information that was reported in the Institutional Update or requesting corrections and/or modifications to the financial information submitted. Any modifications to the data require supporting documentation.
Second or Subsequent Year
If an institution reports a CFI that falls within the zone for a second or subsequent consecutive year, HLC will require the institution to submit a report and additional financial documents for review by a panel of HLC peer reviewers.
Below the Zone
Private Institutions: -1.0 to 0.9
Public Institutions: -4.0 to -0.1
If an institution reports a CFI that falls below the zone, HLC will require the institution to submit a report and additional financial documents for review by a panel of HLC peer reviewers. In subsequent years, the institution will be required to submit a report for panel review following each Institutional Update until its CFI is above the zone.
Non-financial Indicators
HLC reviews data that member institutions submit in the annual Institutional Update for the indicator conditions listed below. Institutions that meet certain conditions are required to submit additional information for review by HLC staff or a panel of peer reviewers.
Note: For these indicators, “small institutions” are those with fewer than 1,000 students, and “large institutions” are those with 1,000 students or more.
- Significant Enrollment Changes—Three-year increase or decrease of 80 percent or more in enrollment for small institutions or 40 percent or more for large institutions.
- Degrees Awarded—Three-year increase or decrease of 75 percent or more in degrees awarded for small institutions and 65 percent or more for large institutions.
- Full-time Faculty Changes—Three-year decrease of 75 percent or more for small institutions or 50 percent or more for large institutions in the headcount of full-time faculty (not full-time equivalent).
- Minimal Full-time Faculty—The headcount of full-time faculty (not full-time equivalent) divided by the number of degree programs offered is less than one.
- Student to Teacher Ratio—The number of undergraduate full-time equivalent students divided by the number of undergraduate full-time equivalent faculty is greater than or equal to 35. Note: Does not apply to graduate-only institutions.
In 2021, HLC suspended the use of indicator 6, Weak Graduation/Persistence Rates Compared to Peers. HLC extensively studied ways to evaluate institutional persistence and completion rates and as of spring 2025, has launched the new student success indicator process.
Conditions for Graduate-Only Institutions
For an institution that only enrolls graduate students, HLC may issue a Letter of Concern or require the institution to submit information for review by HLC staff or a panel of peer reviewers if it meets the following conditions:
- Letter of Concern: Issued if the institution meets the conditions for any one of indicators 2, 3 or 4.
- Staff review: Required if the institution meets the conditions for only indicator 1.
- Review by a peer review panel: Required if the institution meets any of the following combinations of indicators:
- Indicator 1 and at least one of the four other indicators.
- Two or more of the indicators.
Conditions for Non–Graduate-Only Institutions
For an institution that enrolls undergraduate students, HLC may issue a Letter of Concern or require the institution to submit information for review by HLC staff or a panel of peer reviewers if it meets the following conditions:
- Letter of Concern: Issued if the institution meets the conditions for two of indicators 2, 3, 4 or 5.
- Staff review: Required if the institution meets the conditions for only indicator 1.
- Review by a peer review panel: Required if the institution meets any of the following combinations of indicators:
- Indicator 1 and at least one of the four other indicators.
- Three or more of the indicators.
Student Success Indicators
In spring 2025, HLC expanded our risk indicator processes to include student success indicators. HLC will use publicly available data from the IPEDS Fall Enrollment, Graduation Rates and Outcome Measures surveys to compute and evaluate three educational outcome measures for institutions that enroll undergraduate students:
- First-year retention rate
- Graduation rate within 150% of normal time
- Completion and transfer rate at eight years after entry
Documents and Forms
- Student Success Indicators Procedure
- Student Success Improvement Plan Template
- Student Success Improvement Plan Update Template
Peer Groups
HLC recognizes that the student success process has to take into account the diverse characteristics of our member institutions. To achieve that goal, HLC will divide institutions into peer groups for the purposes of setting benchmarks and evaluating institutional performance.
HLC will consider institutional characteristics in a tiered format at different points in the indicator process. This tiered approach allows us to set meaningful benchmark values and indicator conditions using larger groups of institutions, while still taking institutions’ unique context into account at other points in the process.
- First, to set benchmarks, HLC will assign institutions into three primary peer groups:
- Two-year institutions
- Four-year institutions
- Tribal institutions
- Next, to identify conditions that require HLC follow-up based on these benchmarks, HLC will consider the composition of entering student class for four-year institutions. As a result, institutions will be assigned into four groups at this point in the process:
- Two-year institutions
- Tribal institutions
- Four-year traditional institutions
- Four-year non-traditional institutions
- Finally, HLC will further refine the institutional groups for the purposes of evaluating those institutions that meet the indicator conditions. We will consider various institutional characteristics, including geographic area, enrollment size, institutional control and entering student class composition.
Benchmarks
For each primary peer group, HLC calculates the median value of each outcome measure. An individual institution’s outcomes will be compared against the median of their peer group and categorized as one of the following:
- At or above the median
- Between the median and 25th percentile
- Between the 25th percentile and 5th percentile
- Within the lowest 5th percentile
Institutions may be required to submit additional information for staff review or complete a three-year Student Success Improvement Plan if certain outcome measures are between the 25th and 5th percentile and/or within the lowest 5th percentile of their peer group.
Relationship to the Revised Criteria for Accreditation
In June 2024, HLC’s Board of Trustees adopted revised Criteria for Accreditation, which will go into effect on September 1, 2025. The revised Criteria include Core Component 3.G, Student Success Outcomes, which states:
The institution’s student success outcomes demonstrate continuous improvement, taking into account the student populations it serves and benchmarks that reference peer institutions.
In demonstrating compliance with this Core Component, institutions are not limited to the three measures evaluated under the student success indicators or the peer groups described above. Institutions may look at these measures and peer groups for that purpose, and/or they may develop more customized benchmarking activities using other data points and peer institutions. As is the case with all Core Components, an institution’s distinctive mission will inform how it demonstrates that it meets Core Component 3.G.

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