Moody’s Outlook on Higher Education Turns Negative

Ann McClure's picture
Thursday, January 17, 2013

The credit reporting agency Moody’s on Wednesday said that it has revised its financial outlook for colleges and universities, giving a negative grade to the entire sector.

For the last two years, Moody’s Investors Service had given the nation’s most elite public and private schools a “stable” forecast, while assigning a “negative” outlook to the rest of higher education. (Moody’s had previously assigned a negative outlook for the entire sector in 2009, but upgraded the most elite schools to stable in 2011-2012.)

On Wednesday, Moody’s explained the change by saying that even the best colleges and universities are facing diminished prospects for revenue growth, given mounting public pressure to contain tuition costs, a weak economy and the prospect that a penny-pinching Congress could cut funding for research grants and student aid.

The report advocates “bolder actions by university leaders to reduce costs and increase operational efficiency.”

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