|[July 16, 2014]
Fitch: Financial Performance Weakens at U.S. Private Colleges and Universities
NEW YORK --(Business Wire)--
Link to Fitch Ratings' Report: 2013 Median Ratios for U.S. Private
Colleges and Universities http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=751667
Despite most Fitch rated private colleges and universities seeing higher
net tuition income and slower growth in scholarship discount rates,
operating margins were weaker across the board, according to a Fitch
'Weakened operating margins indicate expense pressures including net
student revenue and increased general operating expenses,' said Joanne
Ferrigan, Senior Director.
'Net tuition revenue is pressured by tuition discounting, competition,
and in some regions fewer high school graduates.'
While net tuition revenue increased between fiscal 2009 through 2013
according to the medians for all rating categories, expense pressures
constrained operating margins in fiscal 2013.
Fitch considers an institution with declining net student revenue as
challenged and likely to be operating in a competitive market requiring
high institutional aid, which could trigger rating actions.
Fiscal 2013 financial medans for private colleges and universities
maintain a strong relationship between revenue diversity and rating
quality. Institutions rated in the 'AAA' and 'AA' categories typically
have more diverse revenue streams and less reliance on net student fee
revenue. Private colleges and universities in the 'A' and lower rating
categories typically have higher net student fee dependence.
The enrollment growth rate slowed between fiscal 2012 and 2013 for all
private university rating categories, and was slightly negative for 'A'
and lower rated institutions. Fitch attributes this fluctuation in part
to competition for students, affordability concerns from families, and
in some regions fewer high school graduates.
For more information, a special report titled 'Fiscal 2013 Median Ratios
for US Private Colleges and Universities' is available on the Fitch
Ratings web site at www.fitchratings.com.
Additional information is available at 'www.fitchratings.com'.
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