Citing uncertainty over federal policies as a contributing factor, Moody's on Tuesday downgraded its financial outlook for higher education to negative from stable. The credit ratings agency predicted that the growth of the industry's expenses will outpace revenue growth for the next 12-18 months, with public universities in particular facing money woes.
Increases of tuition revenue, research funding and state contributions will "remain subdued," Moody's said. And, over all, the sector's expenses will rise by 4 percent, according to Moody's. But less than 20 percent of public, four-year institutions will see their revenue increase by more than 3 percent. More than half of private institutions will achieve growth of at least 3 percent.
Cuts to federal financial aid programs or even funding growth that fails to keep up with inflation would exacerbate higher education's problems, Moody's said. Likewise, the report said the GOP's tax bills could hurt colleges' private fund-raising, increase borrowing costs for private activity bonds and depress graduate student enrollment. And federal immigration policies could decrease international student enrollment, the ratings agency said.