by Karen Herzog
An annual survey of colleges and universities found that a growing number of schools face declining enrollment and less revenue from tuition, particularly smaller, tuition-dependent schools and lower-rated universities with less ability to raise prices or attract students.
The survey released January 9, 2013 by the credit ratings agency Moody’s Investors Service found that nearly half of colleges and universities that responded expect full-time student enrollment to decline and a third expect tuition revenue to decline or to grow at less than the rate of inflation.
Before the financial crisis of 2008, raising tuition had little effect on the number of prospective students who applied. Some private colleges reported applications actually increased when they raised the cost, apparently because families equated higher prices with quality.
That attitude has changed, in part because families’ income has declined and crippling student loan debt is grabbing headlines.
Falling graduate school enrollments weigh on the total enrollments of many universities, says Moody’s. Nearly half (46%) of all universities were projecting enrollment declines for fall 2012, however the vast majority expected modest changes and total enrollment was expected to be stable, compared to the prior year. Undergraduate enrollment increased a median 0.5% from fall 2011 to fall 2012 and graduate enrollment declined a median 0.4% across all universities, Moody’s reported.
The survey results show there continues to be a flight to quality, with large, higher-rated universities generally experiencing enrollment growth.
For the last four years, Moody’s has surveyed its rated U.S. universities on expectations for tuition and enrollment. It received responses from more than half of the 515 universities that it rates. The Moody’s survey included 165 nonprofit private universities and 127 responses from four-year public universities.