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Moody's: Outlook for higher ed sector now negative

Published on NewsOK Modified: January 16, 2013 at 12:41 pm •  Published: January 16, 2013
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Enrollment fell this fall in about half of colleges, and there have been sharp drop-offs in graduate business and law programs, which traditionally have been key revenue sources for many institutions.

Even at brand-name universities "all of their revenue streams, whether it's research or fundraising or patient care, all of them are pressured in this environment," Kedem said.

Much of higher education has always operated on the financial edge, and with endowments recovering, times now may well be better than at the height of the recent recession. (Moody's also gave the entire higher ed sector a negative outlook in 2009-2010, returning to a stable outlook for top-tier universities the next year.)

But lately there have also been growing challenges involving the public's perception of the value of college.

In particular, the report notes "alarm over a potential student loan bubble and diminishing affordability of higher education has reached a fevered pitch over the last two years." While acknowledging postsecondary education "remains a valuable long-term investment," the report argues burgeoning student loan debt and seemingly endless tuition increases are raising public doubts that may continue to affect colleges even if the economy recovers strongly.

"It's been such a massive outcry that has caught the public's attention, and it has just intensified the stress on colleges and their ability to grow net tuition revenue," said Moody's analyst and assistant vice president Eva Bogaty . "The public discourse and the scrutiny has attracted so much attention, that's not going to just fall away in the next year or two. "

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Follow Justin Pope at http://www.twitter.com/JustinPopeAP