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Global Credit Research - 23 Jan 2012
New York, January 23, 2012 -- For 2012, Moody's Investors Service retains the mixed sector
outlook for U.S. not-for-profit private and
public colleges and universities that was established last year.
The rating agency expects slower revenue growth, greater student
resistance to tuition increases, and heightened public scrutiny
requiring universities to operate more efficiently and to keep costs down.
Moody's has a stable outlook for the diversified market-leading
colleges and universities with strong market positions and balance sheets
and multiple revenue-generating business lines. A negative
outlook is in place for the bulk of rated colleges and universities,
which are far more dependent on state appropriations, student tuition,
"The market leaders are typically rated in the Aaa and Aa categories,
though not exclusively, and represent a minority (about one third)
of our rated higher education portfolio," said Kim Tuby,
author of the report. "The majority segment with a negative
outlook attracts students more regionally, retains less pricing
power, and maintains thinner balance sheets."
During the past year, Tuby said, public and political scrutiny
of colleges and universities, both not-for-profit
and for-profit, have escalated and that "the sector
will remain under the microscope in 2012 and beyond."
Prospective students and their families are increasingly price-sensitive,
discerning consumers, and donors, research-granting
organizations, and state governments have more limited resources
to invest in higher education, according to Moody's.
"Colleges and universities are under rising pressure to improve
disclosure and limit tuition increases," said Tuby.
"They must work harder to distinguish themselves and clearly articulate
their unique product values in a more competitive environment."
Despite stiffer headwinds, the Moody's report concludes,
the large majority of rated colleges and universities have fared well
since the start of the 2008-09 financial crisis, demonstrating
organizational nimbleness during a prolonged period of economic stress.
The report, "U.S. Higher Education Outlook Mixed
in 2012," is available at moodys.com.
* * * * *
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Kimberly S. Tuby
Vice President - Senior Analyst
Public Finance Group
Moody's FIS Domestic Sales Office - Boston MA
1 Post Office Square, 39th Floor
Boston, MA 02109-2103
John C. Nelson
MD - Public Finance
Public Finance Group
Moody's: U.S. higher education outlook remains mixed in 2012
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
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