Private nonprofit colleges faced a difficult financial year in 2017, according to a recent report from Moody’s Investor Services.
About 25 percent of private colleges spent more than they took in in 2017, and median expense growth outpaced median revenue growth, Inside Higher Ed reports.
Moody’s report found that median revenue grew by 2.4 percent while median expenses grew by 3 percent.
The news comes after Moody’s downgraded its outlook on higher education’s future from “stable” to “negative” in December 2017.
The Chronicle of Higher Education reported at the time that the downgrade came largely as a result of diminished revenue growth. Uncertainty over changes in federal policy contributed as well.
This was not the first time Moody’s expressed consternation at the future of higher education. In 2013, the agency assigned a “negative” rating before upgrading that rating to “stable” in 2015. The upgrade came as a result of the agency’s view that revenue growth at public and private universities would stabilize around 3 percent, providing “predictability” in the future of higher education budgeting.
In 2017, that outlook changed again, despite some seemingly positive trends such as an overall increase in net tuition.
Moody’s report credited “the stronger pricing power of comprehensive private universities,” according to Inside Higher Ed. A number of larger private universities saw their per-student tuition increase by 6 percent.
However, smaller private universities experienced net tuition decreases. This hurt the smaller universities more, given the differences in wealth and size between various private universities.
Approximately a quarter of all private universities experienced net tuition revenue decreases per student in 2017.