Indicators of the financial condition of colleges and universities were compiled to assist the Department of Education in policy decisions, based on 1975-1978 institutional data, and site visits to colleges were undertaken. Findings include the following: (1) it is possible to monitor institutional financial conditions; (2) financial difficulty is spread unevenly among independent institutions; (3) public institutions appear to have become less financially flexible; (4) no major crises were evident in the financial condition of the 37 surveyed institutions; and (5) current financial conditions could be radically altered by precipitous enrollment increases/declines and major federal/state student financial aid policy changes. Basic concepts of measuring institutional financial condition were assessed, and it was found that indicators of stress, response, or system condition are useful in assessing the impact of environmental changes. The site visits focused on stresses and responses in the areas of marketing, financial problems, academic issues, and the physical capital issue. Three critical indicators selected for analysis are as follows: sorting public colleges by instructional budget support to students; sorting private colleges by level of financial reserves; and enrollment levels. A glossary is appended. (SW)