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The coming year will likely see college enrollment and financial challenges increase, according to Fitch Ratings’ outlook for higher education in 2024.

The report, released Monday, indicates that increased labor costs and wage pressure, as well as elevated interest rates and an unclear enrollment picture, will create challenges for colleges next year. Those cumulative challenges “could weaken operating margins and strain financial flexibility,” particularly at small, less selective, tuition-dependent colleges, Fitch’s report declared.

“Flagship public universities and selective private colleges should see more favorable enrollment next year, while some regional public institutions and less-selective private schools in competitive markets may see continued softness in demand,” Fitch senior director Emily Wadhwani said in a news release. “The resumption of student loan payments, together with continued tight labor conditions, could further dampen overall enrollment prospects heading into 2024.”

The report also warns that more college closures and mergers may be on the horizon. That echoes a prediction Fitch made in September, when the ratings agency suggested that enrollment declines and other market pressures would likely prompt more institutions to go out of business.

Last year Fitch described the sector outlook for higher education as “deteriorating.”