2017 Financial Outlook for Higher Education

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In December Moody’s published their annual outlook for higher education. Their report always provides an interesting overview of the financial condition of the industry and prospects for the coming year. For those of you who do not anxiously await the release of the annual report, I thought a brief summary would be helpful.

Moody’s has not been bullish on higher education in recent years. In 2015 they predicted that net tuition growth would be the slowest in a decade. The 2014 report anticipated revenue much lower than historical standards and that it would be eclipsed by expenses, due to pent-up institutional needs. The effects of the Great Recession are still being felt across the industry through mergers/consolidations, program reductions, closings and acquisitions.

Against that backdrop, Moody’s 2017 industry outlook provides some hope for overall stability. They are projecting a stable environment with “clouds forming on (the) horizon.”  The positive factors are strong enrollment and overall revenue growth at or above 3% for public and private institutions.  The optimism is tempered, however, by the continuing pressures on the industry for affordability and accountability that will limit the ability to raise tuition above the level of inflation.

A key caveat is that the financial situation for public institutions will vary widely by state based on economic conditions and the policy priorities of the political leadership.  Additionally, there are many unknowns regarding the policy direction of the Trump administration with regard to higher education.

Higher education still faces some significant economic headwinds, but a stable outlook from Moody’s for the coming year represents incremental improvement.  After the last few years let’s accept any good news we can get!

Mark Hall

Vice President - Spelman Johnson

Mark Hall earned his BA from Wake Forest University, his MEd from the University of North Carolina at Greensboro, and his MBA from the University of Central Florida. Most recently, Mark served as president of Campus Entertainment, LLC, a subsidiary company of the National Association for Campus Activities (NACA). During a career that spans over 20 years in higher education, Mark has served as assistant executive director at NACA, vice president for finance and administration at Columbia College, and director of the university centers at both Wake Forest University and the University of Central Florida. He served two terms as vice-chair of the NACA board of directors and was president of the Southern Region of the National Association of College Auxiliary Services.