Financial Trends Shaping Small, Private Colleges

(From Boston Globe) For over a decade, the fate of small, private colleges has been the center of much scrutiny. Now, two of the nation’s big credit rating agencies reported dire financial outlooks for the year for the higher education sector: Fitch Ratings says conditions in the sector are “deteriorating,” and Moody’s Investors Service says the outlook is “negative.”  Fitch expects the credit gap to widen further between larger, more selective institutions versus their smaller, less selective and more tuition-dependent counterparts over the course of the year.

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(From Chronicle of Higher Education) In order to survive the next decade, private colleges must be aware of emerging financial and enrollment factors, argued Mary B. Marcy, president of Dominican University of California. She pointed to the following trends:

• Demographic headwinds are already impacting institutions, as colleges are scrambling to meet enrollment goals.
• Federal funding made available during the pandemic has evaporated, further confusing budgets and planning. The result is an even higher discount rate and a further erosion of net tuition revenue.
•  Small colleges are partnering with each other — and outside vendors — to expand their capabilities.

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