Tuition Crunch Takes Big Toll: Net Revenue at Nearly Half of Colleges Loses Ground to Inflation in New Survey

Douglas Belkin:

Nearly half of the nation's colleges and universities are no longer generating enough tuition revenue to keep pace with inflation, highlighting the acceleration of a downward spiral that began as the recession ended, according to a new survey by Moody's Investors Service.

The survey of nearly 300 schools reflects a cycle of disinvestment and falling enrollment that places a growing number at risk. While schools for two decades were seeing rising enrollments and routine increases of 5% to 8% in net tuition, many now are facing grimmer prospects: a shrinking pool of high-school graduates, depressed family incomes and precarious job prospects after college.

The softening demand for four-year degrees is prompting schools to rein in tuition increases while increasing scholarships. Those moves are cutting into net tuition revenue--the amount of money a university collects from tuition, minus school aid.

For 44% of public and 42% of private universities included in the survey, net tuition revenue is projected to grow less than the nation's roughly 2% inflation rate this fiscal year, which for most schools ends in June. Net tuition revenue will fall for 28% of public and 19% of private schools.

Posted by Jim Zellmer at November 23, 2013 12:14 AM
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