Moody's: Smaller colleges and universities at greater financial risk
- Colleges and universities maintained their median financial stability in 2015, but smaller institutions struggled to realize revenue growth above 3% for the fiscal year.
- Larger institutions, both public and private, have stabilized outlooks in enrollment revenue and capital investment while a large percentage of smaller institutions failed to meet the threshold.
- Nearly 60% of schools currently rated as moderate credit risks have decreased in total enrollment over the last four years.
The news of financial instability at smaller institutions is not new, but it does accompany the potential for government inquiry and promotion as a ‘financially risky’ institution. This prospect should cause great concern for college leaders who do not have large endowments, and whose potential student pool figures to be decreased with states looking towards investing in community college enhancement.
Some factors are beyond institutional control, like budget cuts tied to Medicaid spending or industries leaving cities and states, which can limit the appeal of a major program. Smaller schools must quickly decide if their futures are in expansion through launching new programs and planning new facilities, or in retracting to streamline education with tech infusion and higher admission standards to strengthen retention.