Moody’s: Negative outlook again for higher-education sector in U.S.
WORLD / U.S. – The higher education sector in the U.S. has received a huge knock.
Debt-rating agency Moody’s Investors Service has given the sector a negative outlook in its July 14 announcement.
The higher education industry is closely tied to the bond market, according to John Sandman – from the millions of people with student loans from private and government lenders to universities who have used their endowments to invest in fixed income.
Negative outlook since 2009
Moody’s also indicated a similar outlook for the higher education sector in 2013, a downgrade from stable. Since 2009, the majority of the sector has received the same negative outlook. In the 2013 report, the critical factors that attributed to the negative outlook were:
- Price sensitivity continues to suppress net tuition revenue growth
- All non-tuition revenue sources are also strained; diversity no longer offers a safe haven
- Rising student loan burden and defaults taint perception of value of a college degree
- Increased public scrutiny drives escalated risk of more regulation and accreditation sanctions
- Prospects for long-term sustainability depend upon strong leadership through better governance and management
The industry is expected to face short-term challenges as it continues its recovery and increase growth prospects. Not all is gloomy, however – Moody’s report indicates demand for higher education (masters and associate degrees) is expected to grow, as universities manage tuition revenue and operational costs.