On September 29, 2026, the Massachusetts Department of Higher Education (DHE) announced proposed enhancements to its Financial Assessment and Risk Monitoring (FARM) process, the Commonwealth’s framework for identifying and monitoring Massachusetts independent colleges and universities that may be at risk of closure.
Planned changes would accelerate contingency planning, place greater emphasis on an institution’s resources to execute an orderly closure in addition to its ability to operate for 18 months, expand DHE’s financial-assessment capacity, and provide additional financial and fiduciary training for leadership of at-risk institutions that screen into the FARM process.
Most immediately, DHE plans to require any institution it determines may be unable to meet its obligations to enrolled and admitted students over the next 18 months to post a public notice of that risk by December 31 of that year. According to DHE, the early-notice requirement is intended to avoid spring notifications that may come after student deposit deadlines, giving students, faculty, and staff more time to plan.
For institutions currently in the FARM process, the changes underscore the need to move quickly on financial projections, transfer arrangements, teach-out planning, communications, and board and leadership preparedness. For other Massachusetts colleges and universities, DHE’s proposed system-wide encouragement of advance transfer agreements and curriculum mapping signals that closure preparedness should not begin only after an institution has entered financial distress.
What is changing?
Contingency planning will move earlier. DHE is condensing its previous three-phase contingency-planning approach into two phases and requiring key elements of closure planning to begin earlier. That includes earlier development of transfer agreements and curriculum maps, particularly for programs with specialized accreditation, licensure requirements, or limited transfer options. DHE also will expect earlier details on community communications and employee-reduction plans in the event of closure.
This means institutions should not wait until a potential closure is imminent to determine where students could transfer, how specialized programs could be completed elsewhere, and how the institution would communicate with its community.
DHE will look at resources needed to close, not just resources needed to operate. The updated approach will also place greater emphasis on both sides of the 18-month assessment: whether an institution has the resources to continue operating for 18 months and whether it has sufficient resources to execute a closure plan and cease operations in an orderly manner. DHE specifically identifies the distinction, and potential overlap, between an institution’s operating budget and its teach-out budget.
For institutions in the FARM process, this means that demonstrating sufficient resources to remain open is only part of the analysis. Institutions should also be prepared to identify the resources necessary to protect students and wind down operations if continued operation is no longer viable.
Public notice will come earlier. If necessary, DHE plans to require institutions to publicly post that they are at risk of not having sufficient resources to meet their obligations to enrolled and admitted students for 18 months by December 31 of that year. DHE’s stated rationale is straightforward: institutions may otherwise delay notification until the spring, after student deposit deadlines, in the hope that they can survive another year. DHE states that spring public notices are generally not helpful to students, faculty, and staff for planning purposes.
DHE will expand its financial-assessment capacity. DHE plans to procure external accounting and financial services consultants to supplement its financial-assessment work as needed. It also will explore adding staff to include an audit function within DHE’s fiscal-monitoring work. DHE explains that additional capacity is needed because worsening market conditions are placing more institutions at risk and DHE currently relies heavily on information submitted by institutions that is not independently verified. Institutions should therefore ensure that the financial information they provide through the FARM process is well-supported, internally validated, and capable of withstanding additional scrutiny.
Additional training will apply to leadership of at-risk institutions. The existing FARM law requires trustees of private colleges and universities to receive fiscal, fiduciary-duty, and accreditation training every four years. DHE now plans to review and revise that training and engage the leadership of all institutions that screen into the FARM process as early as possible for additional training. The additional training will be supported by an experienced firm and developed in collaboration with the Massachusetts Attorney General’s Office. DHE describes this as a heightened training requirement for leadership of institutions that have screened into the FARM process.
The change appears to extend beyond the boardroom. Presidents, senior administrators, and other institutional leaders should be prepared for increased attention to financial literacy, fiduciary responsibilities, and institutional oversight when an institution enters the FARM process.
DHE is encouraging transfer planning for all institutions. Finally, DHE will encourage all institutions, regardless of FARM status, to develop signed transfer MOUs and curriculum maps with partner institutions. DHE plans to reinforce that expectation through a Dear Colleague letter. Although this is not described as a new requirement for every institution, it is an important indication of DHE’s expectations around institutional preparedness. Institutions with specialized accreditation, licensure requirements, or programs with limited transfer options should consider prioritizing this work.
Financial distress considerations. The December 31 public notice may trigger bond continuing-disclosure obligations, loan reporting or covenant issues, and auditor going-concern questions, so institutions should coordinate with lenders, counsel, and auditors in advance. Teach-out budgeting requires identifying unencumbered liquidity, including whether restricted or endowment funds may be used and what assets are pledged. The earlier deadline also compresses the window to pursue mergers, affiliations, or asset sales before public notice. FARM planning should be coordinated with accreditor and US Department of Education requirements, as well as WARN Act obligations for any workforce reductions.
What happens next?
DHE’s September 29 announcement describes these changes as planned enhancements to the FARM process for fiscal 2027. The announcement itself does not amend the FARM regulations. Instead, DHE will need to translate the proposed changes into its implementation procedures, guidance, communications, and, where necessary, formal regulatory amendments.
The current FARM regulations give the Commissioner of Higher Education significant authority over the administration of the process, including the format and timing of public notification, and the existing FARM implementation procedures are designed to provide operational guidance consistent with the statute and regulations.
For the December 31 public notice requirement in particular, institutions should watch for additional direction from DHE addressing when the new deadline applies, how DHE will determine which institutions are subject to it, and how the new timeline will interact with the existing notice-and-cure process. DHE will also need to provide additional details about the condensed contingency-planning phases, the separate assessment of operating and teach-out resources, and the scope of the additional leadership training.
For institutions already in the FARM process, waiting for final implementation guidance is not a reason to wait to prepare. Institutions should begin assembling the financial, transfer, teach-out, governance, and communications materials that DHE is signaling it will expect. At the same time, institutions should distinguish between requirements that are already established under the FARM statute and regulations and new expectations that remain subject to DHE implementation.
For all Massachusetts colleges and universities, the direction of travel is clear: DHE is moving toward earlier intervention, more detailed contingency planning, and greater scrutiny of an institution’s ability not only to remain open, but also to protect students and execute an orderly closure if necessary. Institutions that build those capabilities before they enter the FARM process will be better positioned to respond if financial circumstances deteriorate.