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 Higher education institutions suffered the weakest tuition growth
in the history of Moody's survey last year. Such sluggishness
"appears to be the 'new normal,'" reported Moody's, which is
predicting another year of tuition revenue growth near levels of
inflation, approximately 2 percent.
That is a significant departure from the booming years of 2005 to
2013, when schools saw net tuition grow by more than 5 percent
annually.
Almost two-thirds of public universities will see tuition growth
under 3 percent, in part because of state-imposed limits to keep
tuition low and student enrollments that are either flat or
declining.
Among private universities, 44 percent are now discounting tuition,
meaning they are slashing their price tags by more than half.
Private colleges with only a regional draw, as opposed to national
recognition, will enjoy the least pricing power.
There is an increasing divide between schools with national brands
and a strong student pipelines and those without. Law schools and
other universities that cater to niche markets are most exposed to
volatile swings in revenue, Moody's noted.
Regional distinctions persist as well. Around the country, schools
in the south and the west are projected to have stronger net tuition
revenue growth. The Northeast and Midwest will experience more
pressure. Overall, 40 percent of universities saw lower enrollments
this fall than five years ago.
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To ease the fiscal stress, many schools have turned to recruiting
international students that can pay full tuition.
"This growth helps buffer demographic challenges, particularly in
the Midwest and Northeast," Moody's reported. But "it is not a
panacea given the relatively small portion of total enrollment and
increasing competition for these students."
(Reporting by Robin Respaut; Editing by Cynthia Osterman)
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