Monday, July 14, 2014
First, this story from the New York Times dealbook reporting that companies offering to help students manage their educational loans (a/k/a the "debt settlement industry") are often predatory.
Then there's this story from the Chronicle of Higher Ed reporting that Moody's, which ranks creditworthiness, has issued a negative outlook for the higher education sector of the economy for the next 18 to 20 months. Beyond that, Moody's predicts a more positive outlook based on strong long-term demand for higher ed but between now and then, many schools may face the following pressures:
- Growth in tuition revenue remains stifled by affordability concerns, legislative ceilings on tuition levels, and steep competition for students.
- State financing of higher education will increase, on average, just 3 to 4 percent—not enough to meet the growth in expenses.
- Already stiff competition for sponsored-research dollars is getting stiffer, with success rates for proposals dropping from 19 percent in 2008 to below 15 percent last year.
- One in 10 public and private colleges is suffering “acute financial distress” because of falling revenues and weak operating performance.
- Public colleges will begin to feel the impact of underfunded pensions and health benefits for retirees.
- Most public colleges and many private ones will be unable to achieve a 3-percent annual growth rate in operating revenue, Moody’s benchmark for sustainable financing at a time of low inflation.
Continue reading the CHE story here.