A Gloomy Report on Higher Education

Moody’s Investors Service has a new report on the state of American public higher-education, and it isn’t pretty. Among the negative trends it discusses:  

  • The decline in enrollment. Moody’s reports that more than half of America’s public universities saw no growth or declines in fall 2013.
  • The growing importance of tuition. Tuition now constitutes almost half of public university’s operating revenues, even as tuition revenues dropped 4 percent for flagship and system schools and  25 percent for regional public universities.
  • Increased cost pressures. The growth of expenses at public universities outpaced the growth of revenue for the second year in a row.

To be fair, the picture isn’t totally bad. Moody’s also reports that over 87 percent of public universities have increased their total financial resources since 2008, which puts them in a better position to manage declining enrollments and revenues.

This bit of positive news does not mitigate the overall story, however. Moody’s concluded the report by affirming its “negative sector outlook” for higher-education generally and public higher-education in particular. One suspects that investors will take heed. Will college administrators do the same?


One thought on “A Gloomy Report on Higher Education”

  1. “One suspects that investors will take heed. Will college administrators do the same?”

    Does the author really think that college administrators are not aware of the need to balance their budgets? By definition, by necessity.

    Actually, the news is not all that gloomy. Higher education had a boom at least in enrollment because of the Great Recession. Now enrollments are falling back a bit. The long-term trend line on enrollments looks entirely unchanged.

    Of course, declining public subsidies and resistance to compensating tuition increases is a problem. Somehow most of the colleges will manage to balance their budgets — the public ones mostly required to by law. Even if only by degrading services. If intro calc or chem classes go from 200 to 500, it’s probably not good, but not the end of the world.

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