The financial condition of U.S. colleges is only getting worse, at least according to credit-rating agency Moody’s Investor Service.
In a recently released research note, Moody’s observes that:
A significant and growing number of public and private universities are experiencing notable challenges. Regional public universities and small private colleges, particularly those in the Northeast and Midwest, are increasingly unable to grow net tuition at a rate higher than inflation.
Nearly a half of private colleges and more than a third of public universities are projecting enrollment declines.
Moreover, when it comes to revenue, ratings matter, especially for private colleges. Moody’s notes that pricing power (the ability to maintain or grow tuition revenue per student) is strongly correlated with ratings.
Small regional liberal arts colleges are particularly vulnerable.
So what are the implications of these findings? In short, more of the same.
- More cost cutting, program eliminations (academic and sports) and layoffs
- Larger class sizes
- Growing percentage of adjuncts vs. full-time faculty
- Greater disparity between the student experience at the strong institutions (private universities with large endowments and public flagship universities) and the weak ones (regional public universities and small private liberal arts colleges with small or modest endowments)
- More institutional mergers and closures