July 31, 2012

Credit Agencies Release Reports on the Financial Health of the Higher Education Sector

Late last week, Moody’s and Standard & Poor’s released a revised assessment of the financial health of the higher education sector.

Not surprisingly, both agencies noted that the sector’s financial risks have intensified since January: state budget appropriations continue to fall, operating expenses are outpacing tuition revenue growth, and diminishing family net worth could affect enrollment as a growing number of colleges become unaffordable. At the same time, institutions’ ability to respond and adapt to these risks is limited by rising political and regulatory scrutiny of the industry and tougher accreditation standards.

S&P and Moody’s also highlighted the importance of successfully navigating the rising tide of technology change. They noted that administrators would need to be “flexible” and “bold” to take advantage of new opportunities for the delivery of educational content and new revenue streams.

Unfortunately, the reports are not public, but Moody’s and S&P subscribers can obtain copies of them through the agencies’ Web sites.