Moody’s Forecasts Moderate Growth Revenue at Public and Private Universities

IBL News | New York

Moody’s credit rating agency yesterday predicted that net tuition revenue will increase by 2.3% for private colleges and universities and by 1% for public schools in the 2020 fiscal year. Growth in state appropriations, gift revenue, and research grants and contracts will be in line to come in at 3 percent.

In its report, the agency forecasted that large comprehensive universities can expect operating revenue to increase 3.5% to 4.5% during the year, in comparison onto a 2% to 3% bump at small public and private institutions.

Overall, the outlook improved from negative to stable on the entire sector for this year. “Strong aggregate cash and investment growth in fiscal years 2017 and 2018, endowment support for operations will grow in the 3% to 5% range for most universities over the outlook period.”

However, several factors could disrupt the stable outlook, Moody’s warns, including the potential for a market downturn that reduces donations or hurts investments, and policy changes that decrease international student enrollment.

Moody’s said the business climate will remain difficult for some institutions in the coming 12 to 18 months, but it is not expected to deteriorate materially.

Across the nation, enrollment and finances on many campuses have been stressed within in the recent years for various reasons — among them declines in high school graduate numbers and the pressure to discount tuition, particularly among small private colleges.

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