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Survey: 4-year colleges hurt financially

Jan. 10, 2013 at 4:00 AM   |   Comments

NEW YORK, Jan. 10 (UPI) -- A growing number of U.S. colleges are hurting financially as the economy mixes with demographic changes to make the schools less attractive, a survey indicates.

A third of 292 four-year colleges and universities that responded to the Moody's Investors Service survey to be released Thursday said they anticipated net tuition revenue would rise less than inflation in the current fiscal year.

This is because more schools are holding the line on tuition increases and giving out larger scholarships to attract students, the survey indicated.

Net tuition revenue is tuition income minus scholarships and other aid.

Of the 292 schools surveyed, 18 percent of 165 private universities and 15 percent of 127 public universities said they projected a net tuition revenue decline this year, said the Moody's survey, reported by The Wall Street Journal ahead of its release.

By contrast, 10 percent of 152 private schools and 4 percent of 105 public schools surveyed estimated declines last year, Moody's said.

"It's pretty clear that pricing power of colleges has reached an inflection point," John Nelson, a managing director of the credit-rating firm who oversaw the survey team, told the Journal.

Highly selective and highly rated colleges and universities still have "healthy student demand,'' Moody's said. Many of these schools have large endowments that can help pay for scholarships and pay for rising expenses that include faculty benefits and salaries, the Journal said.

But other schools might have to cut academic programs and search for additional income sources, such as expanding online courses and recruiting wealthy students from overseas who pay full tuition, the Journal said.

Nearly half the schools surveyed reported enrollment declines this fall as growing numbers of students are "increasingly attending more affordable community colleges, studying part time, or electing to enter the workforce without the benefit of a college education," Moody's said.

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