Moody’s Outlook on Higher Education Turns Negative

Ann McClure's picture

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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