Facing stagnant enrollment and increasingly price-conscious consumers, already cash-strapped universities will continue to see their revenues fail to keep up with inflation, the bond-rating agency Moody’s Investment Service says.
The proportion of public universities with expected revenue declines has doubled over last year.
Nearly 30 percent of public and one out of five private universities will suffer declines in revenue–more than the proportion that experienced this last year, and a sign that the problem is getting worse and not better, according to Moody’s, which annually reviews the financial condition of higher-education institutions whose bonds it rates.
Nearly half of universities expect to see declines in their enrollments.
Second-tier public universities and small private universities that are having trouble persuading families and students that they’re worth the price of their tuition are in the most danger, Moody’s says–and will have to take dramatic steps to win back business.
“At this pace, tuition-dependent colleges and universities will be challenged to make necessary investments in personnel, programs, and facilities to remain competitive over the longer term,” says Karen Kedem, a Moody’s senior analyst, who authored the report.