Moody's Issues Negative Outlook for Higher Education

Jan 17, 2013

Moody's Investors Service is taking a pessimistic view of American colleges and universities. The agency says repeated increases in tuition are partly to blame.

Credit Moody's

The outlook for higher education is negative, says Moody's. This year, that also includes top-tier, research-driven schools, which had been viewed more favorably.

The credit rating agency points to factors like a decline in federal and state funding.

And Moody's analyst Karen Kedem says as universities raise tuition to try to make up the difference, families are less able to pay.

"Combine that with concerns over the value of a higher education in an economy with limited job prospects contributes to this issue of: have we reached a tipping point?" -Karen Kedem

University of Illinois spokesman Tom Hardy says the state's flagship school is aware of concerns about cost.

He says while demand for a U of I education remains high, the decline in state funding has been a problem.

"We're no longer really a state-supported university — we're really a state-assisted university." -Tom Hardy

 The negative outlook comes as the debt of Illinois' public universities are already getting extra scrutiny. State government has the lowest credit rating in the country, and last month Moody's said state schools could soon be following Illinois downward.

Illinois Public Radio's Brian Mackey contributed to this report.