Higher Education Outlook for U.S. Still Negative, Moody’s Says

Moody’s Investors Service repeated its negative outlook for U.S. higher education amid declining revenue and stagnant or falling enrollment.

The prospect for revenue growth and controlling expenses is restrained because of concerns about college affordability, a “highly competitive environment” for students and limits on colleges’ ability to raise prices, Moody’s said today in a report.

In fiscal 2013, net tuition revenue dropped for 25 percent of regional public universities, compared with 4 percent for flagship public schools and public systems as a whole, Moody’s said. More than half of all public institutions reported no growth in enrollment or a decline in the fall of 2013, the ratings company said. Revenue fell for 20 percent of private universities and colleges.

On the brighter side, improving U.S. employment numbers, which could lead to better job opportunities for educated workers, along with recovering household spending power, may help encourage people to invest in education over the next year, the report said.

“Longer-term demand for higher education is strong, and the earnings premium for having a college degree over a high school diploma continues to rise,” Dennis Gephardt, a vice president at Moody’s, said in the statement.

To contact the reporter on this story: Kelly Blessing in Boston at kblessing1@bloomberg.net

To contact the editors responsible for this story: Lisa Wolfson at lwolfson@bloomberg.net Mark Tannenbaum

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