Moody’s Issues a Negative Outlook for Higher Education

by Sabrina I. Pacifici on November 26, 2013

Chronicle of Higher Education: ”Moody’s Investors Service on Monday issued a negative outlook for higher education in 2014—which should come as a surprise to no one. The bond-rating agency’s report last week, a survey of net-tuition revenues, was grim, and its outlook for higher education in recent years has been mostly bleak. This year Moody’s cited a weak economy that will “affect families’ willingness and ability to pay for higher education.” It also anticipated federal budget pressures, including a looming sequestration threat, that could affect financial aid. Moody’s pointed to the “rapid rise” of massive open online courses, or MOOCs, as a factor that has “accelerated the pace of change in online delivery models over the last two years”—this despite a number of people lately who have declared the MOOC dead. However, it’s hard to argue with another threat outlined by the rating agency: that expenses are outpacing revenue for the higher-education sector. “After multiple years of stagnant capital investment and tightened control of operating spending, pressure is building to invest in capital, information systems, faculty compensation, and program renewal,” the Moody’s report says. The report is available to Moody’s subscribers.”

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