Moody’s Investors Service last week downgraded its outlook for the higher education sector to negative across the board, saying even prestigious, top-tier research universities are now under threat from declining enrollment, government spending cuts, and growing public doubts over the value of a college degree.
Previously, its outlook had been stable for those better-positioned institutions, and negative for the rest.
The report explaining the decision outlines a range of financial challenges now burdening virtually all institutions. They include stagnant family income that limits pricing power, substantial state funding cuts, a demographic dip in the population of new high school graduates, and a federal budget standoff that almost certainly threatens the flow of dollars for research and student-aid programs like Pell Grants.
And despite the obvious pressure, Moody’s says too many college leaders still haven’t made the bold choices required to survive and thrive.
A version of this article appeared in the January 23, 2013 edition of Education Week as Moody’s Negative on Higher Ed. Sector