Moody’s Investors Service gave U.S. higher education a failing grade in finance on Wednesday, presenting a negative outlook for the entire sector, with the exception of only the most elite private and public institutions.
The reason, according to The New York Times, is that “even the best colleges and universities faced diminished prospects for revenue growth, given mounting public pressure to keep tuition down, a weak economy and the prospect that a penny-pinching Congress could cut financing for research grants and student aid.”
“The U.S. higher education sector had hit a critical juncture in the evolution of its business model,” wrote Eva Bogarty, the report’s author. “Most universities will have to lower their cost structures to achieve long-term financial sustainability and to fund future initiatives.”
How can we turn around this pessimism? Bogarty writes:
The sector will need to adjust to the prospect of muted revenue growth. Strong governance and management leadership will be needed by most universities as they navigate through this period of intensified change and challenge.
The Times translates that as “bolder actions by university leaders to reduce costs and increase operational efficiency.”
“What’s new here is not the individual pieces,” a former college CFO told Inside Higher Ed. “What’s new is that in a collective way, the model that we in higher education have been employing since the 1960s is really being called into question by external factors. And it’s that collectiveness that creates a new sense of urgency.”
Sounds like the time is ripe for higher education to take bold action.
It’s our move.
Andrew Careaga 