Indicators of the financial health of colleges and universities are considered, along with causes of financial problems, a conceptual framework for institutional financial flows, and data sources. Five indicators are addressed: changes in institutional distress potential for private colleges, changes in institutional financial resources, changes in academic emphasis, changes in the extent of academic opportunity, and needs for more financial resources. Primary causes of financial distress are inefficiency and a suboptimal market segment. An institution's educational market segment affects its finances because of factors such as: (1) student demand for a college with certain programs, costs, and location; (2) the supply of competing educational institutions, and (3) the economies of operating in any particular educational market segment. The conceptual framework considers whether the institution has a favorable market segment and operating efficiency, along with inflows (e.g., tuition, appropriations, financial aid to students) and outflows (e.g., expenditures, students leaving the college). To develop indicators of financial health, the main focus is financial data from the Higher Education General Information Survey, with secondary attention to enrollments, degrees conferred, institutional characteristics, and faculty data. (SW)