Moody's: One-Third Of Us Colleges Facing Falling Or Stagnant Tuition Revenues

Ann McClure's picture
Monday, January 14, 2013

Weakened pricing power and difficulty in growing enrollment are impeding revenue growth at an increasing number of US colleges and universities, according to Moody's Investors Service's fourth annual tuition survey. Moody's found that a third of universities expect net tuition revenue to either decline or grow at a rate below inflation in fiscal year 2013.

In all, 17% of both private and public universities are expecting declines in net tuition revenue, while another 16% are expecting percent increases that are less than the rate of inflation.

"The cumulative effects of years of depressed family income and net worth, as well as uncertain job prospects for many recent graduates, are combining to soften student market demand at current tuition prices," says Moody's Analyst Emily Schwarz, lead author of the report on the survey called "More U.S. Universities Expect Tuition Revenue Declines; Larger, Diversified Universities Favored in Tough Higher Education Market."

"In addition to these economic pressures, tougher governmental scrutiny of higher education costs and disclosure practices is adding regulatory and political pressure to prevent tuition and revenue from rising at past rates," says Moody's Schwarz.

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