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Moody's Sees Negative Outlook for Community Colleges

December 10, 2020

Community colleges are expected to take financial and enrollment hits through 2021.

Moody's Investors Services announced its 2021 outlook for the sector is negative, as is its outlook for four-year public and private institutions.

The poor outlook for community colleges is mostly due to the sharp enrollment declines this fall. The loss of tuition revenue is estimated to be between 5 and 15 percent in the upcoming calendar year. That combined with likely reductions in higher education funding due to declining state revenue will make the year difficult.

A bright spot is property tax revenue, which will likely be a stable revenue source for those community colleges that use it. It's also possible that enrollment will recover later in 2021, if the recession continues but public health improves. A federal stimulus would help the sector's outlook.

Community colleges' flexible operating models will help them weather the storm. The sector traditionally employs more part-time staff members than four-year colleges, making it easier to readjust its labor force to match projected enrollment.

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