WASHINGTON Jan 10 Tuition will likely decline
this fiscal year in a record 15 percent of U.S. public
universities, while schools expecting growth anticipate the
lowest increases in over a decade, Moody's Investors Services
said on Thursday.
"While a majority of universities continue to project net
tuition revenue growth, a growing share is not able to keep pace
with inflation," said Moody's in a report that also looked at
private education. "This growing revenue challenge is forcing
college leaders to pursue more aggressive cost cutting measures
and introduce innovative revenue strategies."
Enrollment declines and funding cuts to federal financial
aid, which primarily supports those attending state
universities, are keeping tuition from rising, Moody's said.
"Lack of growth in family income and depressed household net
worth continue to drive price sensitivity and demand for student
financial aid, resulting in weaker pricing power for colleges,"
Students are weighing the benefits of higher education in
light of the low job prospects for recent graduates, and some
come from families that cannot afford tuition payments after the
2007-09 recession. Meanwhile, the federal government is stepping
up scrutiny of colleges, at the same time as budget battles are
putting student aid funding in limbo.
Students are giving up on attending college altogether, not
pursuing graduate degrees, or turning more to community
colleges, Moody's said. There has also been a "flight to
quality," with students turning their backs on smaller or
The Moody's survey found that nearly half of all schools are
reporting lower enrollment.
As the recession hit states' revenues, many were forced to
slash spending in order to keep their budgets balanced. One
place they turned was higher education, and the reduced support
forced many public universities to raise tuition. Most states'
fiscal years end in June, mimicking the school year.
Still, state schools have remained a good deal for students,
with the median net tuition for a student currently projected at
$8,107, Moody's said. The median for those at private
universities is $20,996.
Moody's found that the largest enrollment declines for this
school year were in graduate programs, smaller and lower-rated
universities, and in public schools in the Northeast and
"About half of public universities project undergraduate
enrollment declines from fall 2011 to fall 2012, up
significantly from a third of institutions that experienced
declines from fall 2006 to fall 2007," Moody's said.