Private Colleges Getting Weaker

Moody's is projecting "sharp deterioration" in the financial outlook for many private colleges in the next fiscal year. Not only will recent investment losses be showing up on balance sheets, but many factors related to the economic downturn are likely to be more evident in the next two years, Moody's said. Moody's issues bond ratings, which have a significant impact on the cost of debt for colleges. Among the trends that Moody's sees for many private colleges in the next two years: less tuition pricing flexibility, enrollment declines as students attend lower-priced institutions, delays in capital investment and slowing of tuition, gift, and endowment revenue.