The softening demand for four-year degrees is prompting schools to rein in tuition increases while increasing scholarships. Those moves are cutting into net tuition revenue—the amount of money a university collects from tuition, minus school aid.I've noticed that colleges seem a little more desperate to get the attention of students these days. There's been talk about a higher education bubble for a very long time now and it may be arriving. Based on what we've seen on college visits, it rings true. While that is good news for the Benster -- he'll probably get a better deal than he would have four years ago -- you could see a number of schools get pulled under. Back to the story:
For 44% of public and 42% of private universities included in the survey, net tuition revenue is projected to grow less than the nation's roughly 2% inflation rate this fiscal year, which for most schools ends in June. Net tuition revenue will fall for 28% of public and 19% of private schools.
This is the fifth year private schools have endured stagnant net revenue, and the impact has been compounding, as faculty wages are frozen and capital improvements and maintenance are put on hold, said Karen Kedem, the author of the Moody's report that accompanied the survey. The drop is just now hitting public universities, amid falling state aid and research dollars. Public schools are significantly more reliant on tuition revenue than they were a decade ago.And paying the debt service on all the fancy new buildings that so many colleges now have? That could be an issue, too. We're studying it closely, because the last thing you want is to have a degree from Block E University.
Last year, the same survey found 18% of private schools and 15% of public ones projected a decline in net tuition revenue.
"It's concerning because colleges and universities are mostly dependent on tuition to raise revenue," Ms. Kedem said. "If they're not able to invest in programs, personnel and facilities over time, their ability to attract students, faculty and donors will deteriorate."