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Moody's Sees More Gloom in Higher-Ed Future


Moody’s has issued a negative outlook for the higher-ed sector for the second year in a row, noting that many colleges are skating on thin ice as enrollment and tuition revenue decline and their customers become increasingly price-conscious. The WSJ reports:

“Affordability remains a key issue as the weak economic environment continues to affect families’ ability to pay for higher education and reduces institutions’ discretionary spending capacity,” Moody’s Vice President Eva Bogaty said in a statement.

Federal budget pressures could limit Pell grants and other financial aid, while state funding is likely to remain stagnant, according to the report. In addition, federal research funding next year is expected to be trimmed beyond the 5% cut prompted this year by the across-the-board government spending reductions known as the sequester.

If this all sounds grim for college administrators, students should hope they get the message. The lack of price pressure on most colleges has been enabling the relentless tuition spikes we’ve seen over the past few years. They’re feeling the pressure now.

[Library image courtesy of Shutterstock]

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  • Fat_Man

    There is an old Sicilian saying: “Where there is death, there is hope”.

    Bankruptcy is the institutional equivalent of death, and revenue decline precedes bankruptcy, so we could say that where there is revenue decline, there is hope.

    Maybe if there a few bankruptcies, the Colleges will get the idea that cost control would be a good thing.

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