Nov 18 U.S. universities and colleges should
expect to see sluggish tuition growth next year, according to a
report released Thursday by Moody's Investors Service.
Higher education institutions suffered the weakest tuition
growth in the history of Moody's survey last year. Such
sluggishness "appears to be the 'new normal,'" reported Moody's,
which is predicting another year of tuition revenue growth near
levels of inflation, approximately 2 percent.
That is a significant departure from the booming years of
2005 to 2013, when schools saw net tuition grow by more than 5
Almost two-thirds of public universities will see tuition
growth under 3 percent, in part because of state-imposed limits
to keep tuition low and student enrollments that are either flat
Among private universities, 44 percent are now discounting
tuition, meaning they are slashing their price tags by more than
half. Private colleges with only a regional draw, as opposed to
national recognition, will enjoy the least pricing power.
There is an increasing divide between schools with national
brands and a strong student pipelines and those without. Law
schools and other universities that cater to niche markets are
most exposed to volatile swings in revenue, Moody's noted.
Regional distinctions persist as well. Around the country,
schools in the south and the west are projected to have stronger
net tuition revenue growth. The Northeast and Midwest will
experience more pressure. Overall, 40 percent of universities
saw lower enrollments this fall than five years ago.
To ease the fiscal stress, many schools have turned to
recruiting international students that can pay full tuition.
"This growth helps buffer demographic challenges,
particularly in the Midwest and Northeast," Moody's reported.
But "it is not a panacea given the relatively small portion of
total enrollment and increasing competition for these students."
(Reporting by Robin Respaut; Editing by Cynthia Osterman)