Colleges face future of fewer students

Andrew Martin / New York Times News Service /

An annual survey of colleges and universities found that a growing number of schools face declining enrollment and less revenue from tuition.

The survey, released by the credit ratings agency Moody’s Investors Service on Thursday, found that nearly half of colleges and universities that responded expect enrollment declines for full-time students, and a third of the schools expect tuition revenue to decline or to grow at less than the rate of inflation.

Moody’s analysts say the problems are particularly acute at smaller, tuition-dependent schools and lower-rated universities, which have less ability to raise prices or attract students.

“The cumulative effects of years of depressed family income and net worth, as well as uncertain job prospects for many recent graduates, are combining to soften student market demand at current tuition prices,” said Emily Schwarz, a Moody’s analyst and lead author of the report, in a statement.

The growing financial challenges for colleges and universities come as students and graduates have amassed more than $1 trillion in student debt, and many are struggling to pay their bills. Nearly 1 in 6 people with an outstanding student loan balance is in default, the federal government says.

Before the financial crisis of 2008, colleges and universities routinely raised tuition with little effect on the number of prospective students who applied. Some private colleges said that applications actually increased when they bolstered prices, apparently because families equated higher prices with quality.

But that attitude has changed, in part because families’ income has declined. Schwarz also noted, “Tougher governmental scrutiny of higher education costs and disclosure practices is adding regulatory and political pressure to tuition and revenue from rising at past rates.”

In addition, she noted that budget negotiations in Congress could lead to cuts in student aid programs, even as the share of students who depend on government help continues to rise.